Everything seemed to be going well for a public software company. Growing at a rate of 50-100% for three years straight, the company was gaining momentum until one day it all came to a screeching halt. Just weeks before the annual 10-k report was due the board uncovered that the CEO and CFO had been taking a few too many creative liberties with expense reports and were stealing money from the company…yes, they were embezzling funds – a nightmare scenario for a public company.
The board went to work, firing both of the full-time executives for cause. They immediately appointed an Interim CEO and reached out to us at InterimExecs to bring in an Interim CFO to help them navigate through murky waters.
“It was a full-fledged crisis that included issues with culture, staff, investors, analysts, debt holders, Board members, auditors, the SEC and activist shareholders,” said a board member.
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.
Many private equity funds hear the words “interim executive” and think the only application is turnaround or short-term fill-in. But for PE funds seeking a great return, they look to interims for their unique abilities to build and transform companies.
Here are six major use cases for interim executives in PE-owned portfolio companies:
Interim Executives in Diligence
Most funds hope to spread their wings – work beyond industries where they’ve already had success, by looking at new industries where acquisitions may cost less and produce higher returns. The further afield they go, the more they need expert leadership removed from prior operating teams.
Interim executives, or interims, have recently become an important tool that organizations can use to effectively address a variety of pressing needs. Having said that, many companies are either unaware that interims are even available or appropriate for their current situation. The most common understanding of the role of an interim is to fill an immediate need in the executive team caused by a sudden voluntary or involuntary departure. In this case, a seasoned executive can step right in and allow the company to progress unabated. While much of what an interim does is similar to consulting, successful execution is critical and unique to the role of interims. This blog presents seven case studies to help companies better understand other instances where interims can help. There are certainly more examples, but these are representative. While seven represents everything from the apocalypse to luck in gambling, we’ll stick with seven.
In a recent interview with The Philippe Matthews Show, Association of Interim Executives Chairman, Richard Lindenmuth sheds light on the most important component of any company in transition: its people. Lindenmuth, who has been an Interim CEO in a number of industries ranging from high technology to services shows how to gain people’s respect, trust, and engagement.
Interim executives are becoming a popular alternative to using a consultant or leaving a position vacant while a search for the right person is conducted. An interim executive also brings a fresh, unbiased review of factors driving organizational health and operational results. The interim executive does not waste time or company resources trying to secure a full time job, but is driven by the opportunity to make changes which lead to a sustainable value increase for all the stakeholders of the business. The client and their customers can expect immediate improvement in delivery, quality, and cost while a search is conducted to fill the permanent position.
Nearly every one of us has experienced leadership transitions that could be described as “good,” “bad,” or “ugly.” And the percentages of disastrous transitions are astoundingly high. As Australian sociologist Hugh Mackay says, “Nothing is perfect. Life is messy. Relationships are complex. Outcomes are uncertain. People are irrational.” So what else should we expect but to experience our share of bad leadership transitions?
What I want to share here are a few of the complexities that make leadership transitions difficult and, more importantly, how to prevent these ugly transitions from happening to you.
Today companies operate in a complex global economy which is more diverse, connected by the Internet, and not very predictable. Many companies still pursue classic business approaches (inside-the-box thinking) with a focus on short-term results. Failure to focus on business improvement and adapting to the new business environment can cause many issues and eventually lead to delisting from a stock exchange, bankruptcy, or liquidation. How many of 1960’s “Fortune 500” companies still exist today?
What do Bill George (Medtronic), Meg Whitman (eBay), Bob Wright (NBC), Lou Gerstner (IBM), Larry Bossidy (Allied Signal), Ted Turner (CNN) and Howard Schultz (Starbucks) have in common?
They were all outstanding leaders who revolutionized their companies by applying outside experiences and viewing through different lenses. Unshackled by past memories or limited perspectives, their successes were a product of “what can be?” versus “what has happened?”
Does that mean industry experience is overrated? Not necessarily, but I believe a talented leader with an outside perspective, fresh eyes and an open mind will usually outperform an industry veteran when important change is needed. Why?
I’ve done it for three decades, turning around companies from agriculture (such as Styrotek) to telecommunications giants (such as ITT). As interim leader, I have to parachute in, quickly gain trust and respect from all levels, determine a course of action, and unite everyone to stay that course—all within a limited timeframe.
It takes leadership strategies far beyond business and managerial chops, though certainly those are necessary. You can’t lead effectively without a connection to the people in the company; emotional intelligence is a must. Think of it as ‘strategic empathy’—being sincerely focused on the individual, but always with the big picture top of mind.
Whether you are an interim or a permanent CEO, these 7 tips for using strategic empathy bear relevance for anyone in a leading role.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.
Interim Nonprofit Executive
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