Interims come of age as boomers grow up

There is no steady state in business today. Companies need to make decisions now and implement them tomorrow, which requires a recruitment policy that can deliver senior management talent as soon as it’s needed – yet few can recruit with this ease. Our Executive Talent 2006 report shows that it typically takes three months to find the people companies need and then three more to see if they will deliver. That’s six months of uncertainty – and that’s assuming the senior recruit isn’t the ‘one-in-three’ who leave after just a few months. Frustrated by this gap between what companies need and conventional recruitment can deliver, UK corporates are increasingly resorting to interim management.

How interim management works

Interim managers are senior executives recruited on a temporary basis to strategically resource a key initiative or plug a gap while a permanent employee is found. Over-qualified for the job and ‘doers’ rather than consultants, interims work to a tight timeframe (a typical interim assignment is three to six months) and therefore hit the ground running. As an independent resource, interims avoid company politics, and with no long-term career plan in mind they’re rarely seen as a threat. Indeed, they often mentor the internal team, passing on their contacts and knowledge during the assignment. With thousands of highly experienced senior interim managers spanning every job function and industry sector, someone with exactly the right mix of industry experience can be found and in place in weeks.

Attracted by this, interim management has developed a strong following in the UK. It has become a US$925 million business and is growing fast. Indeed, the 2005 Mori Captains of Industry study showed that the majority of the UK’s top businesses have used interim executives at senior/board level.

So why – given that they face the same pressures – haven’t US companies followed this trend? Many happily use temporary employees and contract staff at the lower level to fill immediate needs while searching for their long-term solution, but few adopt this strategy for senior management positions. For some there is a commitment issue – “you can’t have people working at the top of an organization who aren’t full-time employees” – but the vast majority are simply not aware that interim management exists. However, there are a number of emerging trends in the US market that could change all this.

Boomer influence

Unemployment is at its lowest rate in the US in years, and baby boomers are beginning to exit the workplace. Labor analysts are nervously predicting major shortages that will put the country at a distinct disadvantage in the worldwide economy. What’s more, the problem is set to get worse: by 2010, more than 51 percent of the US workforce will be 40 or older, while the portion of the workforce aged 25-39 will decline 5.7 percent.

Commentators are calling on corporate America to find a way to keep older managers in work past the traditional retirement age. However, baby boomers won’t simply want to work on – they will want a different challenge, one that utilizes their skills and experience but offers greater flexibility. Interim management appears an obvious solution, meeting the needs of the business community and the boomer generation.

The web

Demographics aside, the web may also accelerate interim management in the US. Millions routinely turn to the web when looking for jobs. While this has spawned thousands of job sites, kicked the print media hard and resulted in 96 percent of Fortune 500 companies using some sort of online recruitment process, the real story is at the senior executive level. Web-savvy recruitment companies, by combining the power of new media with the traditional executive search, now have incredible databases of senior executives that they can expertly mine. Executives Online’s database of pre-screened, interim senior executives has reached 10,000 and as baby boomers hit retirement (and hit the web for work) such talent banks will become even richer – a key requirement if interim management is to take off in the US.

Employer/employee relationship

Lastly, there has been a shift in the employer/employee paradigm, as Peter Cappelli, Professor of Management and Director of Human Resources for the Wharton Business School, notes. According to Cappelli: “The most important connection employees have today is not to their employer but to the market”. He reports that the US workforce feels ‘empowered’ and that secure employment ranks only fifth out of 10 attributes in importance after interesting work, open communications, opportunities to develop and performance management.

Employees realize that jobs are not for life, while companies have found that running a business is essentially made up of managing a series of projects. As such, both employers and their senior managers are buying into each other on a far more temporary basis.

US take- up

These factors already appear to be taking effect, and interim management is beginning to achieve some traction in the US. For instance an interim operations director from Executives Online recently completed a six-month assignment in the US at a corrugated manufacturing company, streamlining its operations and turning around the plant’s performance, delivering more than US$2 million straight to their bottom line.

Similarly, just weeks ago, an interim sales director from Executives Online took up a position with a US$650 million document management company. This company had spent the past three years restructuring and had significantly improved its processes and service delivery capabilities. The restructuring exercise somewhat compromised top-line growth and the company wants to reorient itself from an inward-facing process oriented to a growing, client-facing, sales-oriented organization. It needed an interim executive to manage this transition.

In both cases, the companies had struggled to find local independent management resources with the appropriate hands-on results orientation that could deliver rather than just advise and consult – and so turned to the web to find it. As news of such successes builds, it will surely only be a matter of time before corporate America takes a serious look at interim management.

To find out more about interim management or for a copy of Executive Talent, please visit www.ExecutivesOnline.com.