The evolution of Interim Management

"The availability of interim managers has been invaluable to me. interims have been particularly useful in turnaround situations, where skills are required to introduce changes the incumbent team are unable or unwilling to implement" Keith Jordan, Chairman, various private equity investments, including Bank of Scotland and Murray Johnstone

In the future, when corporate anthropologists trace the evolution of the executive species, they may see the end of the 20th century as a watershed. Somewhere in the nineties, they will surmise, between the early downsizing and dot-com eras, corporate man and woman became an endangered species. As their numbers dwindled, companies were left with little or no spare management capacity. This created a fertile environment for a breed of rapacious management consultants. But by the early 21st century, the consultants gave way to a new, better adapted species – the interim executive.

Unlikely? Perhaps. But think about it. Innovations that, with the benefit of hindsight, are natural progressions often seem far from obvious at the time. The most useful ideas are also often the least understood. Interim executives are a prime example. Sometimes called “head-renting” – as distinct from head-hunting – interims are freelance executives brought into a company at short notice to do a specific job. Once the task is completed, they leave without a fuss – or a large pay-off.

As the New York Times explained: “They [interim executives] go into a company for a short period to fix problems for a daily rate, without all the bells and whistles that accompany so many pay packages. In essence, they like to make changes and move on, rather than manage a stable situation or jockey for position in the hierarchy of a large corporation.”

Interims, then, would seem to offer an ideal solution to a variety of corporate situations, including turnarounds, start-ups, close-downs, acquisitions and mergers, and one-off projects. When a management role becomes vacant at short notice, they can also step in to provide leadership while a permanent replacement is found – a process that often takes many months.

Changes in the business world underline the usefulness of the interim concept. Work at companies is becoming increasingly project-based. At the same time, many companies have cut staffing levels to the bone. With little or no spare capacity, there is a growing need for competent managers who can step in at short notice and get the job done.

Interims offer a neat solution to a prickly problem, and one that’s well suited to address a whole range of situations. So why isn’t the technique more widely used? The fact is that many companies simply don’t consider interim management as an alternative. Instead they do much as they have always done. Faced with a need for additional management resources, they either turn to headhunters to source a permanent addition to the payroll, or they bring in consultants to fill the gap. Both approaches are expensive – and often inappropriate. Interim executives offer a cost-effective alternative to this classic dilemma.

Research indicates that the interim approach is gaining ground. A BIE/MORI Captains of Industry survey, conducted in December 2001, found that company directors with direct experience of interim management believe that interims are a more suitable and cost-effective way to implement change or transition than management consultants – by a ratio of more than 5:1. Interestingly, the three most popular interim roles were finance director (52 per cent), special project director (30 per cent) and managing director (26 per cent). Other roles included manufacturing/operations director (17 per cent); IT director (15 per cent); and sales director (13 per cent).

The survey also revealed that an acute shortage of skilled staff remains a major concern in UK boardrooms. Yet despite the obvious attractions of interims, companies remain rooted in their old ways. For example, the majority of the directors in the BIE/MORI survey had not used them to solve their resourcing issues.

The poor take-up is partly due to a lack of understanding about the interim concept. The fact that 49 per cent of the directors surveyed had used interims is encouraging, particularly as the figure is considerably up on the previous year's 33 per cent survey finding. However, it also means that the majority have still not tried this approach.

The time appears to be ripe for change. At present, many companies have an urgent need to restructure, but are also facing a hiring squeeze. Longer term trends also point to increased use of interim executives.

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The evolution of Interim Management

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