Interim Executive

8/7/2019 Interim Executive

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A Report rom the Human Capital Institut

March 200

Te Interim Executive:Gaining a Competitive Business Edge

through Interim Executive Management



Executive SummaryInterim leadership is the strategic use o human capital to urther a

company’s business goals rapidly and expertly. Interim executives a

oten engaged to ll an unexpectedly vacant position, lead a transi-

tion in the company, guide the development o new initiatives, mana

merger and acquisition or initial public oerings, or execute comple

restructurings. Interim leaders, who approach a company to solve a

problem rather than climb a career ladder, bring to the employing r

experience, expertise, dedication and commitment which research

tells us cannot be duplicated rom the use o internal stang initiativ

In North America, the placement and management o the contingenworkorce is a huge business, time-tested and well-understood or

both its economic and business value. Here, the contingent worko

is expected to grow at three to our times the rate o the traditional

workorce and will make up approximately 25 percent o the entire

workorce by 2012.1 Surpassing that, however, is the growth mar-

ket in the placement o high-level executives to ll specic roles, to

execute on critical projects or to manage transormational change a

an interim position.2 And in both the UK and Europe, deployment o

executives as interim employees lling critical business roles is wide

spread among corporations o all sizes, in part because o the oner

labor laws that aect continuation o employment.

The business edge these executives bring to a company include:

Experience and rapid time to value

Execution management

Sustained value

Risk mitigation

Lower cost o leadership talent

This white paper details the value proposition these interim executiv

bring to a business.



Addressing the Talent GapThe scarcity o skilled talent is cited as the greatest issue or today’s

business leaders as they consider their stang requirements or

the next decade.4 But these statements are based on what is

known today—not what might happen in the uture. Young, small

and mid-market companies, especially, oten lack the experience

on-sta to recognize the “stall points” that can seriously impede

their business success.5 It is oten the unoreseen that initially

drives these corporations to seek the contract-based experienced

proessionals—“hired guns,” as they are sometimes called—that

constitute the growing ranks o interim executives lling C-level and

board-level positions, usually on temporary basis. Whether they arehired or two months or two years, interim executives bring a wealth

o experience to the positions they now ll.

Why Interim Executives?

Perhaps the most apparent use o an interim leadership is to ll

the seat o an executive who suddenly or unexpectedly leaves the

company. Around 25 percent o all interim executives are hired

to ll shoes suddenly let vacant.6 And despite the lip-service

currently paid them, succession plans are lacking in the majority

o businesses, especially middle-market companies. Whether theexecutive is suddenly dismissed, quits, or or other reasons cannot

continue in the position, the eect o the loss on a business can

appear catastrophic. And standard steps toward replacement

are slow: When a new hiring initiative or a permanent executive

is begun, it is, on average, an 18-month process to secure a new

senior level manager.

In this case, an interim executive is oten the best choice to ensure

business continuity.

In addition, oten a company needs to execute a strategy in anew area—or example, Sarbanes-Oxley compliance. The goal

o creating and applying compliant business practices may be

a stretch or the current nancial team in addition to the existing

management responsibilities they are already undertaking.

Furthermore, the goal is such that once the processes and

procedures are in place, they would not require a dedicated

executive to manage them.

The Value ofInterim Executives

Interim executives are poised

to bring objectivity, maturity, and

experiential depth to the existing

senior management teams they

are assigned to lead.3



The skills brought to the required strategic business planning may

well not be ound in mid-market companies. Rarely is there a

management team with experience in mergers and acquisitions, IPO

planning, turnarounds, reorganizations, strengthening or re-position

a company to sell, or risk management, or sales-related strategies

such as increasing market share, advancing into new markets or

geographies, or opportunity proling.

This is a prime example o the business use o an interim executive.

The experienced proessional would create and execute a program

and, once it was running smoothly, transition it to, or example,

the internal accounting sta. Thus a project or which internal skillsor expertise—or sometimes just time—is lacking can be ar more

expeditiously managed by an outside proessional expert on an

interim basis.

In addition to strategic planning, interim executives are assets

oten relied upon in executing specic projects. Projects—generally

described as events with a beginning and an end—requently requir

a particular skill set to execute correctly and oten represent the rst

oray into interim leadership a company may make. Project creation

management and execution can be strategic or tactical, but researc

studies show ar more avorable results when a leader without the

handicap o internal politics or past relationship which may taint the

project steps is brought in to manage the job. These results include

aster time to market and time to production or new products, or ne

marketing or branding initiatives, or projects with very explicit goals,

such as a need to increase prot margins or improve operational an

nancial eciencies.

But why not hire a management consultant? Are they not the

same thing? Management consulting rms typically have standard

methodologies and long assessment periods ater which expensive

consultants “consult” and provide advice. They develop a plan

o attack, but only hal the time do they implement their own

recommendations. And even more rarely do they put the training an

knowledge transer in place to ensure that the best practices initiate

are maintained by the permanent employees at the company.



Thereore, the hard work o execution and potential results rests

on the internal team, which may not have the skills or the time to

execute the project to completion. The goals sought go unmet.

The interim executive is in a very dierent position. In addition

to the advisory role o a consultant, interim executives ll a vital,

active role: bringing extensive talent and management experience

to execute projects to their successul conclusions. Because

their tenure may be relatively short, interim executives are results-

oriented. It is the achievement o results, not an internal career

path, that motivates these proessional executives. Companies that

hire them select rom a veriable resume o rich experience in thesame activity that they now wish to address. Interim proessionals

come in with an assignment —to open a new geography, lead a

new product development eort, or evaluate and negotiate a new

acquisition, or example—that they have successully completed in

the past, perhaps many times. They are uniquely positioned to add

objectivity, detachment and depth to existing senior management

teams. Their resh perspectives can be invaluable. The value o

the interim employee is generally sustained with the transer o

knowledge to the rest o the company. Research rm MORI ound

that companies regarded interim executives as both more suitable

and cost-eective than management consultants.7

The Interim SolutionWhen a key position-holder is lost, or whatever reason, CEOs,

CFOs, CIOs and director-level positions are lled temporarily by

interim executives who held these positions successully in the

past. These executives may not be hired to initiate something

dramatically new in the company as much as to keep that part o

the company or which they are responsible on an even keel and to

ensure business continuity.

These interim positions are oten used as a sounding board or both

the executive and the company—the executive can ll a role on an

interim basis while considering whether that company would be a

good t or permanent employment, and conversely, the company

has an easily managed way to evaluate whether that person would

prove a long-term hire worth adding to the payroll.

Interim Executives Achieve

Goals 20 Times Faster Than

Permanent Senior Managers

An interim executive—who hasjoined a business at perhaps

as little as a week’s notice—will

learn 90 percent o what he or

she needs to know on the frst

day in the job. By the end o the

frst week, that interim executive

would have learned 99 percent o

what he or she needs to know.8



In addition to lling empty seats, times o transition and change or

companies are oten key motivators or introducing interim leadersh

As companies move beyond the rst ounder, enter a growth phase

acquire new rms or are themselves acquired or acing restructuring

they turn to the experienced guidance o leaders who have aced

those issues beore. Executives skilled in corporate transormation,

and the accompanying cultural change management that oten

ensues, and those skilled in talent management during times o

downsizing are invaluable to companies at unsettling times.

The Interim Executive Value PropositionBeyond looking at the reasons an interim executive is hired by a

company—to ll a vacancy, lead a project, implement a new strateg

or business initiative, or to undertake a corporate turnaround or exit

strategy—companies must evaluate the business value derived rom

a senior interim employee. Oten or start-ups, smaller or mid-marke

companies, the interim executive provides a level o expertise and

experience ar beyond what the company could attract or aord on

permanent basis. Other key points o value include:

Experience and rapid time to value. Executives who work as

interim employees have the experience to hit the ground running,because they have successully dealt with the issues at hand

beore. They can start contributing and providing high-value

impact immediately. As they are hired to complete a task or ulll

a specic role, they are very results-oriented, thus continuously

identiying, clariying and veriying the criteria by which the compa

will measure his or her perormance. In addition, because o their

unique role within an organization, the interim executives are

goal-oriented, rather than career-oriented. Interim leaders are not

distracted by internal politics, nor rom their experience, bringing

resh views to issues at hand.

Unencumbered by processes, sta issues or politics, interim

executives provide an objective, resh perspective and ocus

on the business strategies or processes at hand.



The Demand and the Value

of Interim Executives

“The skills shortage, the

Baby Boomer retirement and

a general acceptance or

contingent labor is driving the

demand or interim executives.

Interim execs can make good

business sense because you are

getting the expertise you might

not otherwise be able to hire—

and much more quickly.”

—Greg NetlandCEO o Vedior North America9

The executives who ll interim positions in companies elect

this as their career: these are individuals who enjoy putting

out res, relish the challenge o change, and thrive on walking

into a new situation condent o a successul outcome. Their

commitment is to the task at hand; their condence is based

on “been-there; done-that” experience.

Execution management. Rather than acting in an advisory

or consultancy role, interim executives are responsible and

accountable leaders who expect to implement and manage a

business or project to its successul conclusion, and be measured

on delivering results.

Sustainability. While their tenure may relatively short, interim

leaders have long-term impact, as they share their expertise with

the internal teams with which they work and ensure that solutions

are integrated into the company’s business processes.

Risk mitigation. Seasoned executives constitute a risk mitigation

strategy or small and mid-sized companies in that they have

a public track record. Because they have conronted similar

challenges previously, they can articulate the pros and cons o

planned actions based on experience rather than hypothesis.Change can be an inherent risk in itsel: Executives with change

management experience can ease painul transitions and serve as

catalysts or positive change in the organization.

Lower cost of leadership talent. Expense management is aided

with interim employees at all levels. Particularly in times o scal or

economic uncertainly, the ability to readily add and subtract both

sta and executive management represents a return on capital

strategy that impacts the bottom line. As assignment-based

employees, interim executives provide a cost-eective, short-term

solution to ll business-critical gaps or drive major initiatives suchas mitigating or overcoming crisis situations including nancial

shortalls, takeovers, turnarounds, or amily conficts. Companies

can avoid unnecessarily tying up capital in human capital: They

can avoid a permanent hire they do not need or things that

should run by themselves i set up correctly (GAAP compliance

in accounting, e.g.) or or initiatives that have an identiable

conclusion—such as a recruiting initiative that, once complete,

does not require the long-term employ o a proessional recruiter.



In addition, companies can avoid the cost o a bad hire, hired

quickly and with insucient evaluation. Oten i a new hire provesa mistake, it takes months or years to undo the damage and

rell the position. Plus, hiring the wrong person is expensive.

The company suers recruitment costs (or the mist and or

a replacement), lost productivity, lost business opportunities,

severance pay, unemployment compensation and maybe

even legal ees.

Many experts agree that, added up, hiring the wrong person

will cost a company three times the person’s annual salary.10 In

addition to the monetary cost, a bad hiring decision adversely

aects the morale o other employees. Hiring the wrong person,

especially in a management role, can actually result in the loss o

good workers.

ConclusionBusiness leaders are continually challenged to deliver results,

oten under severe time constraints, while maintaining a vision or

their company’s long-term strategy. However, when key skills are

missing rom the management team, due to a sudden resignation,

a gap in experience as the company expands or enters a new

market, explores new business models, or requires immediate

expertise in a new area, the company can nd itsel at a competitive

disadvantage or suer serious nancial setbacks.

Interim executives are generally part o a team o skilled

proessionals who have their own pool o talent to draw rom,

adding bench strength (i needed) to the hiring company. And

when very specic skill sets are in demand, these executives can

span their broad network to help locate people with the skills

required. The executives who ll interim positions in companies

elect this as their career: These are individuals who enjoy puttingout res, relish the challenge o change, and thrive on walking

into a new situation, condent o a successul outcome. Their

commitment is to the task at hand; their condence is based on

“been-there; done-that” experience.

Companies that leverage their ability to access leadership talent on

an interim basis have a competitive edge in their time to market,

their return on executive investment, and their ability to execute

their business strategies.

Growing Demand for

Interim Executives

“The use o interim executives

is going to be a solid trend

over the next several years as

the market becomes tighter or

specialized talent. The labor

orce is going to lose many

executives over the next several

years as the population ages.

The need will be particularly

acute or managers in their late

30s and early 40s. The result

will likely be a lengthening o the

permanent search cycle, and

this should create a vacuum that

the interim executive flls.”

—Randy Mehl

Robert W. Baird & Co.



Te Human Capital Institute

The Human Capital Institute is a global think tank,

educator, and proessional association dening the agenda

and setting the pace or the new business science o

strategic talent management. With more than 107,000

members in over 40 countries, HCI oers a new association

ramework that cuts across the silos o recruitment,

HR/OD, nance, sales and marketing, operations,

manuacturing and IT. We provide key executives, line

managers and talent management proessionals with the

newest education, most eective tools and best practices

in talent strategy, acquisition, alignment, engagement,

deployment, measurement, and retention.

Through research and collaboration, HCI programs collect

original, creative ideas rom a eld o the brightest thought

leaders in talent management. Those ideas are then

transormed into measurable, real-world strategies that help

our members attract and retain high-perorming people, build

a diverse, inclusive workplace, and leverage individual and

team perormance throughout the enterprise.

The uture belongs to leaders with innovative ideas and

strategic knowledge. We invite you to learn, share and grow

your career with HCI’s comprehensive resources, and to join

our high-achieving, orward-looking membership community.

1250 Connecticut Avenue, Suite 200

Washington, D.C. 20036

Te Author

Dr. Katherine Jones is a member

o HCI’s Research Advisory Board

and was principal advisor to this

research study. Dr. Jones is the

Director o Marketing or NetSuite,

Inc., a Bay Area company that

provides integrated ERP solutions

as a hosted service to middle-

market enterprises. She was a

research director at AberdeenGroup in Boston or eight years,

ocusing on research and consultin

services in workorce managemen

ERP and mid-market companies.

She has written widely on many

areas o talent management,

technology and business practices

A veteran in enterprise application

Jones has been responsible or

technical product marketing andstrategic alliance management in

several computer companies since

1984. She ounded Independent

Consulting Services in 1994 to

provide marketing services to

high-tech companies. Prior to a

high-technology career, Jones

was a university dean, involved in

academic administration, research

and teaching. Jones is a requentspeaker and is widely published

in the U.S. and abroad. She has a

master and doctorate rom Cornel

University.

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Interim Executive