Many owners and boards are new to the game of hiring an executive specializing in interim management.
As the gig economy has gained momentum, more companies are drawing on executive level resources for specific growth initiatives or to help troubleshoot inefficiencies or problems. Interims come in on a project basis as contractors, therefore not adding to permanent overhead.
Because the majority of companies have never written a contract for an interim, they draw on what they know – the playbook for searching and hiring a full-time exec.
Yet, interim management and permanent employment are two different worlds.
Interims are change agents. Problem solvers. Executives choose this career because they love a good challenge and have made a name for themselves going into organizations where an outside perspective is desperately needed. Interim executives aren’t looking for a full-time job, because rather than spend an entire career at one organization, they love positioning company after company to be better.
There are many use cases for why companies choose an executive specializing in interim management versus a permanent executive, but here are a few of the most common situations interims parachute into:
Set a Roadmap for the Future
Many times, the full-time executive needed to take the company forward in the long-term is not the same executive needed for points in a company’s lifecycle where change and transformation is needed, whether it’s branding, technology and systems, or thinking about new products or markets. Some companies fight change, staying on the safe path banking that their name and legacy will take them into the future. Unfortunately, that isn’t always a foolproof plan and it is that mindset that has led established leaders to their doom (anyone say Kodak?). But for companies who recognize that reinvention and innovation is essential to meet changing market demands and a more sophisticated customer in a technology driven world, interims are brought in to lay out the roadmap for the future, get a plan into action, and hand off the keys to the long-term team to build on that success.
The Permanent Executive Exits
Imagine a CEO suddenly leaving the company. Sometimes it’s by choice, sometimes the executive is asked to leave for subpar performance or ethical lapse. Morale could take a big hit. Without a solid leader painting a picture of where the company needs to go, employees question themselves and everything around them: will they have a job? Should they start looking elsewhere? The board jumps into a full-time search, but six to nine months without a leader moving the company forward could be very damaging.
Instead an interim comes in to stabilize the situation, putting the company back on a solid path. This is the strength of interim management. In these instances an interim first provides comfort to the organization, making sure everyone is heard. They take time to listen to managers and employees to understand what is and what is not working, and provide an objective assessment of the organization. Typically, within 30 to 60 days an operational roadmap is delivered, outlining an action plan that keeps the organization moving forward and defines the type of full-time executive that needs to be hired (which may look very different from the previous full-time exec).
Project-Based Systems & Process Improvement
Typically, when a company is quickly growing a lot of things get duct-taped together. Technology, operations, and financial reporting work for a while, but when a company reaches a certain inflection point, things start to break down. Even Fortune 500 companies run into this. Certain divisions may not be performing as well as they could be, and the fresh perspective provided by interim management can work wonders.
In these instances, interims are often brought in to serve alongside or mentor the full-time management team. A CIO at a multi-hundred-million-dollar company, for example, found that his plate was full managing technology across the globe. He brought in a project-based technology executive to help lead an ERP implementation and outsourcing project. Or this: an $80M family-owned food packager brought in an Interim COO to help assess supply chain operations, put systems and processes in place to help increase production and save on costs, all while mentoring a team member who could step into the future COO role. Interims are called on as an extension of the permanent management team, and once the project is complete they exit. A critical distinction between interim management and consulting is that companies also get true operators acting within the company versus a consulting firm that gives great advice from the outside, but is not responsible for implementing the plan.
Prep for Sale
A company that has been quickly growing could see the owners start to think it’s time to go to market to sell the company. In many cases they hire an investment banker to approach potential buyers, but unless their management team has been through the deal process, extra leadership can provide just what is needed to complete a successful sale. An Interim CFO, for example, can prepare financials for more rigorous presentation, create a pro forma to show a strong future for the company, maximize the value of IP, and make sure that everything is prepared for a smooth diligence process leading up to closing. Private equity funds are not immune: sometimes interim management makes the vital difference for a portfolio company’s management team completing the sale or having to go back, improve operations and re-attempt an exit.
Figure Out What is Wrong
Unfortunately, it’s not all roses when an interim gets called in. Red flags are flying if revenue is declining, customers are leaving, employees are dissatisfied, or there is infighting amongst the board and management team. The full problem may not be visible on the surface, so an interim steps in acting as a doctor to diagnose the problem and provide the fix. Nothing is off limits and a deep dive into people, processes, and financials is typically done to get a company back on track and confident in their new course.
Look to Interim Management for a Solution
Ultimately, interim management has become its own career calling and as such it self-selects only the best and brightest operating executives. Think about it: if you choose a career that is inherently lacking in job security, you have to perform at a high level to get the next gig.
Match this high competence with past experience usually in more than one industry, and the end result is a rich cross pollination of best practices, skillsets, and problem-solving ability that makes interims just the right solution.