Highly
skilled interim managers are a popular choice for carrying out short-term top
management level assignments in all professions from HR to finance. But why are
interims favoured over a permanent solution? Liz Simpson reports
Imagine a situation where your organisation’s finance director leaves
unexpectedly and you need someone to fill their shoes while you look for a
permanent replacement. Or a sudden change in strategic focus has highlighted
the need for a senior executive to head up a new, time-sensitive project, and
no-one in the company has the requisite experience.
In many scenarios, day-to-day business in today’s fast-paced marketplace
cannot wait while you track down the perfect, permanent candidate. And
sometimes that time and expense isn’t the right solution anyway – which is
where an interim executive comes in.
As Digby Jones, director general of the CBI says: "To adapt to
fast-changing market conditions, companies have to be nimble and that means
adopting a more flexible approach to HR. Interim management can play an
important role in strategic resourcing, allowing companies to implement change,
cover unexpected absences, manage particular projects and offer a helping hand
in a time of crisis."
The concept of interim management should not be confused with temping or
contingency search. "Think of David James, whose ‘interim’ spell trying to
salvage something from the UK’s Millennium Dome fiasco has helped our industry
by flagging up the concept of putting someone in charge for a fixed period to
bring about change," says Martin Wood of BIE – a specialist ‘headrenting’
(as opposed to headhunting) firm, which, since the early 1990s, has placed
interim executives in many European countries as well as Australia, India, Singapore
and the US.
"Up to 2,000 assignments a year require interim individuals operating
at board level or one layer below. Half of these are covered by executives new
to this kind of career," continues Wood.
"These are people who have the competency profile to hit the ground
running, be immediately credible and have the experience to achieve a
clearly-defined and measurable set of strategic objectives. They are not
management consultants; they are not brought in to advise, but to get their
hands dirty, staying on average six to nine months per assignment," he
adds.
According to specialist Russam GMS, whose clients range from British Gypsum
to Zurich Financial Services, the size of the UK market for interims is around
£5bn (around $7.3bn), growing at just over 10 per cent a year.
In the US, experts report a 25 per cent annual growth rate and a potential
value of $1bn for the temporary placement of board level interims. Driving the
trend are talented executives whose skills will always be in demand and who want
to blend work with lifestyle issues , allowing them to undertake a nine-month
assignment and then take the next three months off.
Plus, the new world of work has seen stakeholders require businesses to
achieve even greater efficiencies, breaking down large initiatives into
discrete, concurrent projects with specific timeframes. This is highly
compatible with engaging project-oriented individuals who don’t require a
severance package, pension rights or handholding when it’s time for them to
leave.
Of course, top talent doesn’t come cheap and an interim solution is no
exception. Tom Friel is the Silicon Valley-based president of Heidrick &
Struggles Ventures, which has recently launched a global interim management
service. Demand has grown steadily over the past five years, predominantly in
the UK, Germany, France and Australia as well as in the US.
Friel says: "One model that a number of US firms use to calculate the
cost of an interim is 1 per cent per day of the annual compensation package for
the position that the interim is holding. Others quote between 1.5 and two
times the expected annual salary. Just remember that an interim doesn’t require
the company to make contributions to a pension scheme, pay for holidays or sick
leave or any executive perks."
Some companies do go it alone and hire an interim directly, thereby saving
the 25-33 per cent agency fee. But few recommend this course of action.
Chloe Watts, who heads the Interim Practice at specialist UK HR search and
selection firm Courtenay HR, says the only occasion she could envisage when an
interim doesn’t work out is when a client chooses not to use a third party
provider. "As experts in the interim market we understand the different
skill sets these kinds of executives need to successfully complete a project,
such as professional maturity and credibility.
"When interims walk into an organisation they don’t have long to make
an impact. They need to be comfortable with changing priorities and, while
understanding the politics of the organisation, have a knack of not getting
involved."
A professional provider will also ensure that areas such as tax liability
and intellectual property issues are agreed upon before the interim begins the
assignment.
Hiring an interim executive differs from traditional forms of recruiting in
many ways – not least being that a good third party provider can often meet a
client’s needs in a matter of days. When asked for one key piece of advice for
selecting an interim to work for your company, Martin Wood of BIE suggests:
"When meeting candidates, think of it less as an interview, and more like
an audition. Your concerns should be around proven methodology and process.
Once you’ve outlined the details of the task, you need to seek proof that the
candidate has done this kind of thing before.
"It’s not a question of how many degrees or other qualifications an
interim has – more their experience of handling very specific situations. What
you look for is someone who will be effective from day one."
Chloe Watts, of Courtenay HR’s Interim Practice, offers the following advice
for making the most of your relationship with interim management providers:
– Challenge the interim provider on their service. How do they source and
verify the credentials of candidates in their networks?
– Work with individual consultants on understanding your business and
culture to help them respond with "best fit" candidates
– Have well-formed outcomes so you can say, "In three months I expect
x, y and z to have happened"
– Agree terms (covering issues such as non-disclosure agreements and
intellectual property) prior to commencing a search to avoid potential
misunderstandings
– Feedback promptly after meeting candidates as turnaround times are quick
for experienced interims
– Communicate regularly during the assignment and debrief the provider when
it ends so they can tailor their service to your ongoing needs.
Case history: Managers’ bonuses are cut if they cannot lead effectively
It isn’t lifestyle issues that keep David
Kitchen happy not having a permanent job. After all, this 60-year old HR
veteran has worked virtually non-stop as an interim executive for the past 10
years. It’s the continuing professional challenge of working in different
industry sectors for a variety of companies that appeals to him.
"As a member of the Institute of Personnel and Development
I need to have an ongoing record of professional development, which I think is
more difficult to fulfil when working for one company," says Kitchen, who
turned to interim work in 1991 when he found it was easier to come by than a
permanent position.
Kitchen’s international change management experience was called
upon to integrate various European operations when global engineering giant
Charter acquired Howden in 1997. During the one-year project four sites had to
be closed – involving large-scale redeployment, recruiting and retraining
initiatives – which required Kitchen to work closely with the Howden European
Works Council and local unions.
Following Kitchen’s success, the company – which had largely
devolved the HR function to line managers – saw the need to appoint a permanent
HR director to continue developing the various systems Kitchen had initiated.
Apart from the reward of fresh challenges, Kitchen finds
interim work quite lucrative. He earns around £1,000 a day (approximately
$1,455) – sometimes more. "A good rule of thumb is to divide your last
permanent salary by 100, given that you may be on assignment for half of the
average 200 working days a year. The agency you are working through will
invoice the client, adding their fee on top of that," says Kitchen.
He adds: "My longest period between jobs was three months,
back in 1995, after I completed a 22-month long assignment. I’d been out of the
market so long that my name wasn’t as well-known as it had been previously."
However, there are downsides to this kind of employment.
Kitchen points out that new Inland Revenue regulations in the UK mean, despite
having set himself up as a limited company, his fees are now taxed as salary
and he can no longer take the money as a dividend. Plus, he is liable for both
individual and employer’s National Insurance contributions – even though he is
one and the same person.
One thing Kitchen would like to see changed, which some
companies are now beginning to address, is the chance for interims to receive
bonus pay. "More than anyone else an interim is judged by deliverables,
yet we are not eligible for the rewards accorded to members of a company incentive
scheme," he says.
However, the advantages definitely outweigh the disadvantages,
according to Kitchen. "For one thing, being independent allows you to stay
aloof from the minor politics that go on in business life," he adds. I had
to be part of that for 25 years and, believe me, I don’t miss it."
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