Having a qualified and competent executive management team is integral to the success of any organization. Problems arise, however, when an executive suddenly vacates a position or there is a mismatch between the internal capabilities of a leadership team and the actual skillsets needed for a specific stage of a company’s growth.
Red flags may start to arise in an organization whether it be a lack of a clear vision, high team turnover, stagnant sales, missing innovation, or breakdowns in communication. The knee-jerk reaction of many companies is to look at a leadership change via a full-time executive search, which can take 6-9 months and include long-term contracts with added costs of perks like severance and benefits.
The world of interim management, a specialty that has grown significantly through the years, has offered an alternative route for companies wanting to maintain forward motion while re-evaluating what is needed to take them into the future. As opposed to a full-time executive search, interims can be on board in a matter of days and come with flexible contracts and pricing models.
Executives who specialize in interim management have track records building, fixing, stabilizing, and growing companies around the globe. In an executive-as-a-service model, companies can bring in an executive to temporarily fill a specific role – CEO, COO, CFO, CIO, etc. – or to serve alongside the current management team to execute on a big initiative where clear vision, leadership, and even mentorship is needed.
While interim executives are often tasked with first assessing the state of a business and putting together an action plan, they are more than a consultant and embed themselves in an organization to execute on a plan. Interims are held accountable for results, so while they work to address some of an organizations most pressing challenges or opportunities, they may help define what is needed in a full-time executive before finding their permanent replacement. Or they may prepare someone internally to step into the full-time role.
Is interim management right for your company? Here are five common situations where hiring an interim executive may be appropriate:
1. One of your top executives is fired or suddenly leaves.
A top-level executive can leave for a multitude of reasons – sometimes by choice and in other cases because the board or management team decides they are not a fit. Mark Murphy, author Hard Goals: The Secret to Getting from Where You Are to Where You Want to Be, interviewed board members on why they fired their CEOs and found that “Thirty-one percent of CEOs got fired for poor change management, 28% for ignoring customers, 27% for tolerating low performers, 23% for denying reality and 22% for too much talk and not enough action.”
Whatever the reason, it’s rarely beneficial to keep their role vacant for too long. You risk disrupting workflow. You risk losing operational momentum. You risk decreasing employee morale.
When there is a collective misunderstanding for the absence of executive leadership, this can lead to underlying anxiety, uncertainty, and demotivation.
Before reaching this point, interim management can be a solution. While sourcing a replacement for the executive position, an interim exec can keep things running as the business transitions.
The organization doesn’t need to pause all operations just because an executive leaves. An interim steps in to move the organization forward while helping to re-evaluate what is required long-term for a leader to be successful. What is needed in the next permanent executive might be a much different picture from what was needed in the last.
Additionally, an interim executive can help evaluate and groom internal talent to transition into an executive role. Many companies – whether family owned, private, or public – might have someone internally who is very talented, but not quite ready to step into a CEO, CFO, or COO role. With the proper training and mentorship from an interim executive, they can develop over a year or two to step into the permanent role when an interim exits.
2. The business is growing fast, and needs help getting to the next level.
While a good problem to have, if your business is growing too fast, it can come with a host of new challenges. What you need to generate that initial $50 million will be different from what you’ll need to do to scale to $200 million, and from $200 million to $1 billion and beyond. Some executives can keep up with the demands of a growing business. They evolve and manage to lead their companies to reach greater heights. But for others, the growth can be overwhelming, and it demands different skillsets and expertise.
Interim management provides on-demand, specialized executive leadership to help through these different growth stages. Maybe a division CEO is needed to establish and expand operations in a different country, or an Interim COO is required to implement or streamline systems and process for a more efficient operation.
Assignments are not just about a timeframe but are about the challenge at hand. In a private equity or investor backed company, for example, an interim may step in for 2 or 3 years to grow operations and prepare for sale. In a family owned or private business, an interim may put structure in place before bringing in a permanent replacement or handing off to the current management team to continue to expand on that structure.
3. You are venturing into a M&A or post-integration process.
Companies may find themselves preparing for a sale or other similar milestone events. These are usually one-time events that require a specific skillset or expertise where interim management can be a huge asset. In InterimExecs 2020 Interim Executive Survey 64% of interim executives said they helped integrate and merge companies and 54% said they sold a business. Another 51% had a role in a recap or spinoff, 30% helped a family-owned company execute a succession plan and 31% participated in a roll-up or series of acquisitions.
Interim executives may be called on to head up business development or even supplement management when there is no deal experience internally. The CFO, for example, serves an important role in the M&A process and if the permanent CFO has not been through a deal process before, looking to outside help can be a great solution. An interim or temporary CFO can be engaged on a project-basis to manage everything from due diligence, to interfacing with potential buyers or acquisition targets, to focusing on a post-deal integration plan. Hiring a M&A expert with validated accomplishments and acumen in these specific business situations can assist your company with achieving the most successful outcome possible.
4. Your business is in trouble and needs restructuring or turnaround.
Challenges for businesses can take many forms: managerial misalignment; costs are too high; Black Swan events; fraud or unethical practices; competitive disruption; staff morale is down; loss of customers. When these situations are unforeseen, or more appropriately unaccounted for, it can cause strain on an organization. If your business is in trouble it may be time to rethink your approach.
For some companies, bringing a turnaround expert on board is the best-case scenario. 79% of interim executives reported having turned around or reorganized a company or division. Interim management provides a fresh, unbiased perspective from experts who have seen and helped companies emerge from seemingly worst-case scenarios. Bringing in an outside executive who can apply vast experience to assess the root of the problem and make the tough decisions, is often necessary to get a company back on a positive track. Once the fix is complete, interims move to their next challenge, handing the keys back to the company or new permanent executive to run with.
5. You need unique skills and experience to lead a big project or business transformation.
High-level and technical projects such as ERP implementations, product launches, or new manufacturing facility rollouts can be quite challenging. They often need people who have validated experience of operationalizing them successfully. A management team trying to embark in a business transformation for the first time can risk making common mistakes that could easily be avoided with experience. Additionally, executives are often strapped for time with their day-to-day responsibilities so taking on an additional big project or initiative may only serve as a distraction.
As such, companies that are exploring implementing specialized projects can hire interim executives that have required technical experience to enable their successful execution. Whether a technology executive to set up a PMO (program management office), a financial executive to create new reporting and financial controls, or an operations pro to complete a performance improvement initiative, companies can choose to bring in the specific type of talent they need on a temporary basis.
Whatever stage your company is at, interim management can serve as an on-demand solution to draw on the best executive leadership for your most unique and pressing needs.
InterimExecs RED Team is an elite group of CEOs, CFOs, COOs, and CIOs who help organizations through turnaround, growth (merger, acquisitions, ERP/CRM implementation, process improvement), or absence of leadership. Learn more about InterimExecs RED Team at www.interimexecs.com/red-team or call +1 (847) 849-2800.