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Why choose BIE?
What's New?The evolution of Interim Management
Converging trends
The BIE/MORI research confirms that companies that have tried interim management have found it to be highly effective. This and other developments augur well for the future of interim management. They suggest that the industry is now better oriented to address specific market segments. However, the greatest obstacle remains that of attitudes in UK boardrooms. Senior management is the last bastion of old-fashioned staffing practices. Many companies still assume that highlevel executives must be permanent appointments. This feeling persists despite evidence that senior managers are more mobile than ever before.
The turnover of senior managers is accelerating. In parts of corporate America, at least, this now resembles a very expensive game of musical chairs. Research carried out by the Centre for Creative Leadership in Greensboro, North Carolina, and by the US executive search firm Manchester Partners International, found that 40 per cent of new executive hires leave within the first 18 months – “being terminated for poor performance, performing significantly below expectations, or voluntarily resigning from the position.”
The origin of the species
Precisely when the first of the interim executive species emerged is unclear. Most commentators agree that this momentous event occurred somewhere in the Netherlands in the mid to late seventies. (At that time, the strict Dutch labour laws meant that companies taking on full-time managers incurred substantial fixed costs. Interim managers offered a more flexible way to bring in additional resources.)
The first of this new managerial species must have gazed around himself in bewilderment at the absurdity of a permanent job, before raising his arms in triumph. It must have dawned on that first interim manager that he was ideally suited to the changing business landscape.
The species quickly established itself in the US and other parts of Europe, including the UK. Yet despite the obvious evolutionary advantages – namely the ability to step in at short notice to get a specific task done, and then leave quietly without costing an arm and a leg – companies have been slow on the uptake. In particular, they have largely failed to take advantage of the benefits of using interims at senior levels.
Today, interims in the boardroom are still a rarity, but the idea is gaining ground. Probably the best-known example is Steve Jobs at Apple Computers. At the end of 1997, when Jobs returned to the company he co-founded, he anointed himself as interim CEO. The unusual corporate moniker intrigued the business press, but few commentators saw it as anything more than eccentricity on Jobs’ part. Certainly it was not regarded as part of a trend. Jobs was a special case – one that many felt had little relevance for other companies. It didn’t help either that he refused to take a proper fee for his services. What might have been a defining moment that opened the boardroom door to more interim managers passed. When Jobs later dropped the interim from his title, the door closed behind him.
Such appointments can actually reassure investors. In September 1996, for example, PepsiCo appointed Karl von der Heyden to be chief financial officer (CFO) and vice-chairman for a year. A former chief of RJR Nabisco, his main role at Pepsi was to help chart strategy in the wake of a string of operational problems that had plagued the company and to find a “world-class” CFO to succeed him. Wall Street clearly approved of the idea; when the announcement was made, Pepsi shares promptly jumped 50 cents to $29.50.
Other high-profile examples have gone unrecognised because they did not wave the interim banner. The appointment of David James to take charge of the troubled Millennium Dome, for instance, was a clear application of the interim principle. James, one of the UK’s best-known company doctors, was brought in at short notice to provide leadership and gravitas as the Dome sailed into a political storm. Had the situation been different, James, an advocate for the interim concept, might have used his appointment to promote the cause. But, with the Dome already steeped in controversy, he kept a low profile. The “i” word was notable by its absence.
Meanwhile, regular interim managers have been left to make their own way in the world. For many interims, that has stopped short of a strategic role. Thankfully, this is now beginning to change.
Conclusion
The shortage of talent is already having an impact. Professional interims would seem to offer a cost-effective alternative. Where an injection of management expertise is required for a transition period, the choice has tended to be between employing a senior manager on a permanent contract or using consultants.
The challenge for the interim industry as it matures is to present the business case in a more compelling way. At present, in an environment where senior executives increasingly arrive and depart with unseemly speed, many companies already use de facto interims, without getting any of the benefits.
By Des Dearlove, Freelance management journalist
To discuss your interim management requirements with BIE call +44(0)20 7222 1010