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Personnel Today

So what is an interim manager?

by Personnel Today 17 Oct 2000
by Personnel Today 17 Oct 2000

Definitions of an interim manager are as varied as the roles
they perform. But one factor is common – they are invaluable for steering
companies through periods of change, By Alison Thomas

In an ideal world, every organisation would have just the right mix of staff
and skills to cope with whatever the business world threw at it. The reality,
as we know, is somewhat different. In the unpredictable environment of the
global marketplace companies need to be lean enough to compete yet agile enough
to respond instantly to changing circumstances, whether that means seizing new
opportunities or warding off threats. It is an impossible balancing act unless
you take a flexible approach towards staffing. This is where interim management
comes into it’s own. It allows you to expand and contract your executive
capacity at will, cater for peaks and troughs, solve problems and implement
solutions.

Interim managers are independent senior executives, hired at short notice
and for limited periods to provide extra management resource or fulfil a
specific assignment. When their task is complete they leave with no fuss – no
terminal bonus or generous severance payment. The US calls it head-renting, as
opposed to head-hunting.

It is a stunningly simple idea yet it is often misunderstood. Interim
managers go under a bewildering variety of names such as freelance executives,
bridging managers, portfolio executives and free agents to name a few. It also
means different things to different people. "The term has been used very
liberally, from a £200-a-day finance executive or book-keeper to a £3,000-a-day
company doctor," says Martin Wood, a pioneer of interim management in the
UK and head of BIE Board-level Interim Executive. "You could argue that
David James is fulfilling an interim assignment at the Millennium Dome,
although he might not agree. There is so much confusion about exactly what an
interim manager is."

Wood sees the market as falling into two distinct sectors. At one end,
interim managers are facilitators who go into a company at or near board level
to implement transition and manage change. Typical situations include company
start-ups, turnarounds and task-oriented projects which need a heavyweight to
make things happen. At the other end it encompasses a much broader church and
is more commonly used to ensure continuity or to "keep the seat warm"
until a permanent post-holder is recruited. "It is important that clients
understand the difference," he says. "Otherwise they may pick the
wrong supplier for their particular need."

It is equally important to grasp the difference between management
consultants and interim managers. The former diagnose problems, proffer advice
and recommend solutions. Interim managers take full line manager
responsibility. They roll up their sleeves and get on with the job in hand.
They also have more gravitas. Where many consultants are able but relatively
young, interim managers are usually in their mid-40s to late 50s and their value
lies in the depth and breadth of their experience.

The origins of interim management go back about 25 years to the Netherlands,
when the effects of recession coupled with stringent employment legislation
encouraged the practice of hiring senior executives on a temporary basis. Since
then it has spread to the US and other parts of Europe and is catching on in
other countries too, as far a field as Australia and South Africa.

Two recessions have played a significant role in fostering its development.
On the one hand, downsizing created a pool of talent; on the other, companies
which had pared their management resources to the bone needed supplementary
skills at short notice. This produced what would appear to be a perfect balance
of supply and demand. Yet UK companies are only beginning to exploit the
transformational power of a pool of expertise that can be turned on and off
like a tap. The stigma: "If they were any good they would have a real
job" has been slow to disappear.

"Interim management is a hugely misunderstood resource," says
Nigel Corby, co-founder of interim provider Global Executives. "The sector
is not peopled by jaded, out-of-work executives – on the contrary. All sorts of
people become interim managers and once they discover how their skills and
expertise can make a difference and taste the flexibility that comes with that
working lifestyle, they do not want to give it up. These are hugely
professional people who are very successful. They want to work this way and
they are very good at what they do."

His remarks are borne out by research conducted by the interim recruitment
company Interim Marketing and Management. Of 176 interim managers interviewed,
74 per cent viewed interim or bridging management as a long-term option and
potential career path in its own right. The most frequently cited reason was
the desire to take on fresh challenges and widen experience.

As a career option it demands a special blend of skills and personal
attributes. Most successful interim managers are financially secure and are
motivated by the desire to achieve results rather than the need to earn money.
They take on assignments not in the hope of securing a permanent position but
because they relish new challenges and welcome change. They are highly
dedicated, enjoy making decisions and are not afraid of taking calculated
risks. They are quick to assimilate culture and context, can inspire the
workforce and get things moving almost immediately. It all adds up to an
exacting role which relatively few senior managers can fulfil.

As a resourcing option, interim management offers several distinct
advantages. One is flexibility. Interims can be deployed by the day or week for
anything from a few weeks to a couple of years. Another is speed. It can take
months to recruit a permanent senior executive; an interim manager can be in
the post within days.

It is also an effective means of tackling specific problems outside the
routine skills base of a company. For example, when air and gas handling
equipment manufacturer Howden was acquired by Charter, David Kitchen was placed
by BIE in the role of interim HR director. "Howden did not have anyone on
hand with enough HR experience to manage change – and why should they?" he
says. "They had not had to undergo such tremendous restructuring before
and it needed special skills. Very few companies need people like me around on
a permanent basis."

Kitchen is one of a small, select band of top-flight executives, much
sought-after for their outstanding expertise and wide-ranging experience.
"He has worked in law firms, engineering factories and on international
assignments," explains Wood. "He has acquired such a broad range of
transferable skills that he is very useful."

In contrast to BIE, an interim provider catering for the top end of the
market, HRI Human Resources International is a recruitment agency which covers
the full spectrum of HR and training functions, from administrator to director.

Some of its interim placements provide continuity in circumstances such as
maternity leave and sickness. Others have more strategic importance.

"For example, if a company was introducing a new computer system that
had a big knock-on effect for HR, that would be spot-on for the interim
route," says general manager Jenny Rollinson. Sometimes even a cover
situation requires specialist skills. She recently placed a manager to bridge
the gap between the departure of one post-holder and the arrival of the next.
But the organisation is in the process of restructuring and the two jobs are
completely different. The task of the interim is to pull it all together and
manage the transition before the new appointee arrives.

Post-merger restructuring is another classic scenario where interim
management comes into its own, according to Frazer Jones’s John Anderson, a
recruitment consultant specialising in interim HR management. "The company
might need someone to come in on a specific project – perhaps to look at the
new structure of the organisation or to address the issues surrounding
redeployment and redundancy," he explains. "Sometimes for political
reasons it can be more effective to bring in an outsider to deal with such
issues."

The range of situations where interims can add real value is as diverse as
the terms used to describe them. They can be used to supplement senior
management expertise during periods of significant corporate change such as a
privatisation or the setting up of a new operation. They can also be assigned
to lead specific projects where real management experience is needed and there is
no time for a learning curve. They can step in to open new markets, especially
abroad where the company may lack the necessary cultural and linguistic skills
in-house. Preparing a business for sale, turning a loss-maker into profit,
launching a new product, handling relocation or expansion – wherever specialist
skills are needed at short notice, they can give an organisation the momentum
it needs to dig itself out of a hole or climb to new heights.

To be successful, an interim manager has to be supremely adaptable and
capable of taking new developments in his or her stride. This was certainly the
case for Paul Barton when he stepped in as interim financial director of the
German subsidiary of UK-based pharmaceuticals services company Innovex.
"The previous financial director had left somewhat unexpectedly and at a
critical time," explains HR director Chris Morley. "Recognising the
length of time it would take to find a suitable permanent replacement, we
urgently needed cover. Interim management seemed the most appropriate
solution."

Barton was placed by PA Interim Management (now imPAct executives) for his
international business experience, knowledge of UK, European and US tax and
accounting procedures and fluency in German. His task was to maximise financial
performance and provide support and direction to the general manager, helping
him to establish a productive relationship with the head office in the UK.

Two months later, however, Innovex was taken over by US company Quintiles
and Barton’s brief was changed. A new financial director was recruited with his
help and he concentrated his efforts on guiding the German subsidiary through
the acquisition process. His particular combination of skills proved invaluable
and when, some time later, the company needed to set up a self-accounting unit
in Mannheim it called him in again.

Compared with management consultancy, whose value is estimated at £3bn a
year in the UK, the market for interim management is still tiny. The latest
Russam GMS Market Research Report, published in August, puts it at £500m, while
at board level it has barely reached £100m. But all the signs indicate that it
is in a rapid growth phase. Estimates range from an annual increase of 10 per
cent to 30 per cent or even 40 per cent. It all depends on what you include in
your definition of the market. What is beyond dispute is that it is beginning
to mature as more companies test the waters, like what they find and come back
for more.

Since 1986, interim management has had its own professional body, the
Association of Temporary & Interim Executive Services (ATIES) and
membership has risen from a handful of specialist providers to 23, which are
growing not only in number but also in size. "ATIES is looking at a number
of core ways to improve its organisation as a supply body," explains Nigel
Corby. "Clients who use ATIES member companies need to be confident of
high standards. We are giving ourselves teeth."

Over the past 10 years demand has diversified into virtually all sectors,
from manufacturing and retail to financial services and local government. It is
also taking root in the world of HR. Since Frazer Jones branched out into
interim management three years ago it has had to expand its specialist team.

"It is one of the faster-growing areas of our business," comments
John Anderson. "It is also maturing quite rapidly. Clients are becoming
more demanding, and rightly so. They expect a higher level of service and of
course they are always looking for more rapid results."

He attributes this development to a combination of factors, including the
general trend towards more flexible work practices and the drive to
outsourcing, which makes people realise that they do not have to do everything
themselves. He also sees a link with the development of HR itself, as it moves
away from its traditional administrative and support function to become a key
part of business.

Now that interim management is beginning to find its feet, its future looks
promising.

"It has caught the mood of the times for its immediacy, flexibility and
lifestyle attractions," says Charles Russam, founder and managing director
of Russam GMS. "I believe the market will continue to grow as businesses
of all sizes and in all sectors look for better ways of achieving their goals
while reducing their overheads."

Nigel Corby agrees. "Even City institutions, those bastions of
conservatism in business, are increasingly turning to interim managers to deal
with the pace of rapid change that is sweeping through loft halls like a
hurricane. I think the interim management market will become a much more
exciting way of managing change in the next 10 or 15 years. I am sure it is
here to stay."

How does it work?

When selecting an interim manager you may be tempted to rely on the old boy
network, but it is not to be recommended. "It is difficult to say ‘no’ to
a friend or network colleague or fire him if things go wrong," says Nigel
Corby. "Even if all goes well, you cannot be sure of getting the best
person available."

Charles Russam agrees. "If you appoint someone you like who is not a
good fit, this can be a recipe for disaster. You are also giving yourself a lot
of work."

When time is of the essence, it makes sense to turn to an intermediary, who
can find the best match for your requirements with the minimum delay.

So how does the process work? Practice varies but as a rough guideline,
quality providers of interim management services proceed as follows.

Interim managers start by working closely with the client to define the
assignment, its objectives and anticipated duration. These conclusions are
recorded in writing, guaranteeing the client full confidentiality.

Using their pool or database of active interims, they select one or two
potential candidates who have appropriate technical expertise and match the
chemistry of the organisation. These candidates are introduced to the client,
who makes the final decision.

Once a contract has been agreed and the assignment has begun, the best
providers monitor progress closely from beginning to end. This can be
particularly important in the crucial first few weeks.

The exit process is equally vital. A good interim manager knows when the time
has come to move on and will provide any coaching or mentoring necessary to
ensure a smooth handover. A serious provider will audit the assignment to
measure its success.

How intermediaries source their candidates depends on the market sector.

Providers at the top end of the market interview all potential candidates
before entry into a "bloodbank" of a few hundred high- calibre
executives.

Those catering for a broader range of assignments have databases of several
thousand potential candidates covering everything from director to functional
posts.

Interim executives usually operate as limited companies and charge a daily
fee. According to the GMS Market Research Report, this ranges from just under
£300 to almost £500. For a top-flight executive operating at or near board
level, rates begin at about £600, rising to £2,000 or more.

Specialist providers of interim management services charge a percentage of
the daily fee – usually about 25 per cent to 30 per cent. This buys not only
the best technical and cultural match available, but speed. You could be
meeting potential candidates within days.

Recruitment agencies operate differently. They charge an introduction fee
and require the client to negotiate terms with the successful candidate.
Interim managers are sometimes taken onto the client’s payroll – a practice
which is not prevalent in the specialist interim sector – and they do not
usually receive the same level of support once they are in the field.

Productive asset or expensive liability?

In November 1999 a Mori Captains of Industry survey commissioned by BIE
Board-level Interim Executive found that a third of senior managers had used an
interim executive at board level to implement change or manage transition. The
majority, by more than three to one, rated them as more suitable and
cost-effective than management consultants.

This reflects a growing awareness of the dynamic potential of interim
management as a strategic resourcing option.

"Interim managers offer a broad range of experience and are a very
effective resource," says Nigel Corby. "They have no axe to grind and
won’t play corporate politics. They can also prove invaluable to the chief
executive when he wants to discuss internal problems. He can grapple with
issues and gain from their experience and wisdom knowing that his confidence
will be respected. This is something he cannot do with a team member who is
permanently employed."

Corby believes that most interim assignments return well in excess of three
times their cost. Why should this be and what are their advantages over
permanent solutions?

Value for money Interim managers come with no hidden costs – no
contract of employment, no pension provision.

Flexibility They provide additional resource as and when the need
arises for specific projects or at times of peak activity.

Speed of appointment They can be in post almost immediately. The cost
of delay in tackling a crisis or implementing a crucial project can be huge.

Focus Unlike their colleagues in the organisation, they are not
distracted by career manoeuvring, their diaries are not filled with conferences
or industry meetings.

Objectivity Uncluttered by cultural corporate baggage, they bring
fresh eyes to the business. They have no emotional ties to the company and can
carry out unpleasant tasks with detachment.

No learning curve They are usually overqualified for the assignment.
Their experience allows them to hit the ground running.

A special breed They are committed to independence as a career
choice. They thrive on challenge and derive their job satisfaction from
resolving problems.

Single-minded Because they have been hired for a specific purpose,
they are deeply committed and focus all their energy on delivering results.
This is heightened by the fact that they stand or fall by their reputation. As
one practising interim manager puts it, "You always give over and above 100
per cent because you want the client to ask you back, recommend you to someone
else or provide great references."

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The benefits of interim management are not confined to large organisations,
as HR recruitment consultant John Anderson explains: "Many small
e-commerce businesses are taking on interim recruitment managers to help them
handle a campaign of expansion from perhaps 10 staff to 100. It is the most
cost-effective approach, as six months from now their needs may change.

"The same applies to HR. When it requires initial strategic input, they
bring in a heavy hitter to set up the processes, policies and procedures, get
them going in the right direction and establish best practice. Once that is
accomplished, they recruit a more junior successor."

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

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