Why HR Departments Are Changing How They Approach Executive Search

Most HR execs have been trained to look for candidates who have a track record sticking with companies for long periods of time. For many companies going through upheaval, rapid growth, or dramatic changes in their markets, that long-term permanent employee mindset may actually be more detrimental. When a company must evolve quickly, an executive hired on full-time may not be the right leader nine months or a year down the road.

The speed at which companies move in today’s world to stay relevant has paved the way for the new specialty of interim management, which includes executives focused on operations to finance, technology, sales and marketing. Interims are skilled operators who run, build, grow, and fix businesses. They take on accountability in C-level roles making decisions, reporting to the board, and being held responsible for the results.

Unlike executives who choose long-term, permanent jobs, interims are wired for transformation and usually are called in when companies need a leadership boost to get them on the right path. Once an interim brings an organization, division, or department to a better state of affairs, that new-found clarity and direction gives the HR team a cleaner slate by which to recruit and hire the next permanent person in the role.

So when do HR departments look to interim versus perm? Here are three common drivers.

1. Executive Gaps

When a C-level executive suddenly exits the scene, sometimes by choice and sometimes not, the typical 4-6 month hiring process for a permanent executive could be devastating for the company’s progress.

Public companies typically task a board member to babysit until a new permanent hire is made. But this is not a true interim, just a placeholder necessary for signing off on financials.

Private companies and nonprofits may also tap the board. Interim executive, Michelle Barnes, warns against this practice: “I’ve never seen that work out well. The challenge comes once the permanent leader comes on and a board member has already inserted themselves in the day-to-day operations. It creates really muddled lines.”

Vision Share, a non-profit consortium of eye banks, fell into this trap inserting a board member into the CEO role. Cindy Reed, Executive Director of Vision Share observed, “it was really destabilizing. You have one view as a board member, and one view as a CEO running an organization. And with the split responsibilities it was very difficult for him to lead.”

The board got it right when they brought in Interim CEO, Greg Steinberg, who in six months revamped the organization, restructured staff and helped lead the permanent CEO search.

Like Greg, interim executives provide a fresh outside perspective, taking a holistic view of the organization to make sure operational issues and talent gaps are identified and addressed before determining what that next full-time role looks like.

2. Company Turnaround

Declining revenue, staff turnover, customer dissatisfaction, unethical activity. All red flags indicating restructuring may be needed. No company wants to be put in a situation where shareholders, investors, or employees lose faith, so having an executive who will go to bat for them is essential. Permanent executives are good at profit and operational improvement, but when massive trouble strikes, a different skillset may be needed and interim executives are called in to bring their problem solving skills and deep operational expertise.

In one situation, a $175M parent company with 20+ holdings was hemorrhaging cash. There were questions of whether the previous executive team had committed fraud, and the pieces didn’t add up. The company brought in an interim exec to do a deep dive into financials and operations, ultimately finding that 2 companies were the source of most of the bleeding. After shutting down the unprofitable divisions, and working with the remaining portfolio companies to streamline reporting and cut inefficiencies in process, the consortium was much better positioned to bring in a permanent executive who could walk into a stabilized environment with a clearer operating plan.

3. Project Needs

Sometimes transformation may mean a specific project like technology upgrades, acquisition integration, rebranding, or creation of sales processes. In many cases a company’s permanent resources are completely maxed and additional talent is needed for one-off projects.  Versus consulting firms which tend to give more advice than action, HR departments can expand their talent base with interim executives. Interims set out and execute on a plan, exiting the scene once a project is completed.

A $500M+ consumer goods company experienced this firsthand when their SAP implementation efforts went sideways. HR called in an Interim CIO to put the project back on track.

HR departments now benefit from both the speed that comes with interim leadership and the luxury of having an on-call bench of interim executive talent that span across a company’s needs.