One of trustees' most common concerns during a search for a new executive is how to treat internal candidates for the position.

Why is this? While qualified internal candidates have always been welcome in the search process, today they are playing a greater role in executive searches for health care organizations. In our experience, more than 60 percent of CEO searches for health care and nonprofit institutions have included an internal candidate, and nearly 30 percent resulted in the internal candidate's placement. This surprises some, as many people assume that the goal of a search is to recruit an external candidate when in fact the goal is to identify the best candidate—internal or external.

Additionally, there are unique dynamics at play when an internal candidate is involved in a search. These include the tendency to make assumptions about an internal candidate's capabilities and interests, the intricacies around interviewing and communicating with internal candidates, and the risk of alienating those candidates and their allies in the organization. All this suggests that boards and search committees are wise to handle internal candidates with care.

Here are several best practices for trustees and senior leaders to ensure that they manage internal candidates appropriately.

1. Recognize the mindset of the internal candidate and the organizational dynamics at play. Internal candidates frequently assume there is a bias in favor of an external candidate when a formal search is being conducted. They often are less familiar with the typical search process and timeline and even the rationale for the search itself. Therefore, it is important to communicate regularly with internal candidates and emphasize that the goal of a national search is to find the best person for the position, not to find someone better than the internal candidate.

Also, bear in mind the organizational dynamics at play when internal candidates are in the mix. There tends to be more speculation and side conversations among staff. In the extreme, divisions can arise between groups rallying behind different candidates.

2. Avoid making assumptions about internal candidates, whether positive or negative. A common frustration for internal candidates is being pigeonholed based on their current or prior roles. It is not unusual, for example, for chief operating officers, chief financial officers or chief marketing officers to be seen as having too limited experience for the CEO role because their current set of responsibilities is narrower. During the interview process, internal candidates should have the opportunity to explain how they have demonstrated the necessary competencies in previous roles.

Even when an internal candidate is perceived initially as not qualified or as competitive for a role, it is important to keep an open mind. The search timeline can work in favor of an internal candidate, especially when he or she is in an interim role and has the opportunity to perform. On more than one occasion, an individual's performance and dedication during the search period has won them the job.

3. Do not take short cuts with internal candidates. Qualified internal candidates should go through the same interview process as external candidates. Search committees or hiring managers should not assume they know everything about the internal candidates and therefore do not need to formally interview them.

4. Maintain the confidentiality of the search process for all candidates. An air-tight search process protects the privacy of individuals and minimizes disruption to the organization. Breaches of confidentiality reflect a poorly managed process and can damage an institution's reputation. They can also complicate a search. Sometimes, hearing about one internal candidate can encourage others to throw their hats in the ring even if they are less qualified or discourage qualified candidates from competing for the role.

Some breaches of confidentiality can be inadvertent. For example, on-site interviews can expose internal and external candidates if they are seen arriving or leaving the interview location.

5. Carefully define the needs for the role, and evaluate all candidates based on those requirements. The foundation for a successful search is a thoughtfully developed set of requirements for the role. Candidates should be evaluated based on how well they meet these requirements.

When internal candidates are involved in a search, internal groups may lobby in favor of a specific candidate. However, the decision about which candidate to choose should be based on the requirements for the role, references and the search committee's thoughtful deliberations.

6. Have a plan for communicating with internal candidates who are not selected for the position. When an internal candidate is not selected, the chair of the search committee should be the first person to speak directly with that individual. Internal candidates genuinely appreciate having a one-on-one conversation with the chair, and the chair's willingness to spend time on this step can leave a lasting positive impression with the candidate. If involved in the process, the search firm will then play a role by following up with the internal candidate to garner feedback.

In cases where retaining the candidate is important for the organization, it may be helpful to have a discussion with the individual about his or her career progression and create a retention strategy. Candid, supportive conversations about an internal candidate's career aspirations and role in the organization can help solidify his or her loyalty and strengthen the organization's ability to retain this individual in the longer term.

It is increasingly common for searches for senior health care leaders to include one or more internal candidates. How well an institution handles these candidates affects its own operations and its external reputation. Carefully managing the delicate issues surrounding internal candidates can help ensure the most successful outcome in leadership transitions.

Lynn R. Olman (lolman@spencerstuart.com) is a consultant in Spencer Stuart's Healthcare Services and Education, Nonprofit & Government practices, Chicago. Kathryn S. Sugerman (ksugerman@spencerstuart.com) is a consultant in Spencer Stuart's Healthcare Services and Diversity practices, Los Angeles.