Print Edition
August 2010 
|
|
|
|
|
|
|
Interim Management In The Current Climate |
« Back
|
|
Muazzin Mehrban, October 2009 |
|
|
|
In light of the harsh economic environment, it is clear that struggling companies cannot afford to make mistakes. Revenues are decreasing, expenses are increasing, and as a consequence, the demand for interim management has increased significantly over the last 12 months. Companies are looking to optimise their restructuring processes and improve both short and long-term economic performance, and the hard-line approach used by interim managers is something that they are keen to tap in to. As such, experts envisage that leadership on-demand will continue to increase in popularity over the coming months.
Ultimately, many companies are now focusing on restructuring their businesses and generating cash, and this requires a different type of leadership than is effective during a boom period. Pamela Wasley, chief executive of Cerius Interim Executive Solutions, highlights some of the other drivers behind the hiring of interim specialists.
“Hiring an interim executive with a specific skill that does not exist in the management team currently is a smart strategy for accelerating the change, increasing momentum and introducing new perspectives that address the challenges companies face today,” she says, adding that an outside perspective on strategy can be critical. “The need for an executive who can return value from day one and who is always focused on execution and outcomes has made interim management a popular route for growth-focused companies. Interim management also fulfils the need for executive talent that ordinarily you could not afford on a full-time basis,” she says. So by tapping into proven interim talent, businesses can avoid the risk of poor execution and the transitional failures that can occur with a permanent hire.
The role of interims
The high-profile failures of management have been widely reported over the last few months, and in many cases, it is clear that the individuals in question were unable to fulfil the requirements of a more restructuring-focused role. Consequently, the appointment of an interim chief restructuring officer (CRO) in such cases can enhance a company’s ability to undergo a successful turnaround. “Employing a CRO allows the CEO to focus primarily on customers and suppliers, as well as the outward elements in a company,” explains Pippa Wicks, a managing director at AlixPartners. “It also allows CFOs to focus on key financial aspects, such as reporting, control and forecasting. The CRO, with remit from the board, can then support and drive negotiations to improve company debts and covenants,” she says. This relieves some of the pressure placed on CFOs, many of whom will have struggled in times of serious distress, and are often the first to be dismissed in a crisis.
Experts report that there has been a particularly noticeable increase in the uptake of interim executives by small to mid-sized enterprises (SMEs). In the past, interim management was mostly the domain of larger companies. “We see expansion across every industry, with retail, business services, and media starting to use interim executive management. In past years, it was mainly seen in manufacturing, technology, finance, and government,” explains Ms Wasley. “Also, private equity firms are seeking more than just interim CEOs as they realise that their portfolio companies need an influx of specific executive talent in order to turn them around,” she says. Like many others at this time, private equity firms are using interim executives to help them mitigate risk.
Drawing on a wealth of past experience, a successful interim executive must act quickly and execute, rather than develop a long-term plan. By the end of the first week, he or she should have a good understanding of the company’s issues and how to go about remedying them. Further, experts maintain that although interim staff should familiarise themselves with their employers, it is not their duty to get involved with the political side of the organisation. There is no denying that these methods have been effective. Indeed, research by the Human Capital Institute reveals that interim executives can achieve goals 20 times faster than permanent executives, due largely to their performance accountability and the fact that many can expect to have their results measured closely. Consequently, interim managers will often embark on a strategy that involves executing measurable tasks with the quickest returns first.
But in order to achieve such swift results and to realise their full potential, interim managers must be granted independence and mobility by the board. “Executives may be engaged for a variety of roles including managing gaps in organisations, initiating projects, managing change, and providing specialist skills or advice,” explains Jonathan Hawes, sector head for Financial Services at Penna Interim. In so doing, a board can achieve better results at a lower price – adequate recompense for a bit of trust. “They can offer alternatives to using advisory firms or consultants to perform these roles. Strategies employed vary between situations – the best interims tend not to have too many pre-conceived ideas, tools or models, but bring an ability to home-in on critical success factors – with superior stakeholder engagement being a prerequisite,” he adds.
Potential drawbacks
Benefits notwithstanding, there are some drawbacks to the interim manager role, notably with respect to their position as external members of staff. In some cases, interim executives are not accepted by incumbent executives, leading to a lack of collaboration which could potentially derail restructuring efforts. The best way to avoid such an issue is to hire an executive whose business culture is aligned with that of the company and its current workforce – as much as possible. Clearly then, the hiring of interim managers should be a considered approach, based on bringing in a person who can provide the right solution for the company. That means first, identifying the solution to the problems faced by the business.
|
|
|
|
|
= requires subscription
