The project-based executive, also known as an interim executive has been around for 30+ years, having originated in the Netherlands, later expanding to the UK, the rest of Europe and finally reaching America around 2000.
The early model for interim engagements was invariably focused on turnaround and distress situations: an organization in pain would eventually decide they couldn’t solve the problem on their own, and would seek an outside resource, often through executive search firms, where the executive was never a permanent employee.
Interims have played a part since the early days of private equity funds, where fund managers would use executive search services as part and parcel of their post-acquisition ownership strategy. A fund would see big potential in a struggling company, and would realize big returns by bringing in an outside executive to turn the company around. Thus the early version of interim – interim 1.0 – was all about fixing what was broken.
The next phase in interim executive deployment launched in the US, arguably emerging out of the tech community.
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.
Private equity funds or venture capital funds get one use of their dollar. Just one. Fund managers have a sacred charge of evaluating opportunities and investing the funds they’ve been entrusted with by their limited partners in hopes of maximum returns.
We view deploying executives into companies in a similar way: we get one chance to make a great match, one chance to deploy the executive to best advantage. Like finding a great investment opportunity, deploying interims is a timing game. We must catch an executive during the brief period of time they are in between assignments assessing the next opportunity they want to take on.
So how do we best deploy genius leadership when we only get one chance every day to maximize everyone’s time, unique skillset and results? We start by being selective about the clients we work with.
The concept of an Interim Executive Director (ED) isn’t well known in the nonprofit arena…yet. But, it’s becoming more mainstream and for many good business reasons.
Did you know? On average, it takes a Board of Directors 9 months to recruit a new Executive Director. By the time they are on-boarded and contributing, a year may have passed since the departure of their prior leader. While Board members may step up to “mind the gap”, the truth is that employees, partners and funders can lose confidence in your organization during this leadership transition and key employees may leave. Just organizing payroll, developing a budget and/or supervising the employees may keep the lights on, but without professional leadership, your organization can be harmed and stymied while the Board should be focused on finding your next leader.
Interim, acting, project, contract, fractional. The array of titles can make your head spin, but they all point to a specialized type of executive that companies call on when they are going through transformation. So let’s break it down:
Interim Executive: Interim executives typically engage for 1 month to 2 years. This title can cover a lot of use cases, but in all cases, the company needs some kind of change or upgrade. The organization may have a leadership gap. Maybe they are not sure if they are on the right track, and they need an executive to create an operational roadmap and then execute and implement to ramp up growth. Maybe its technology or security issues; or an effective leader to reposition the company, update brand and build out a best-practices sales team to bring them into the new digital era. In all cases, executives across the C-suite can be drawn on for these types of assignments: CEO, CFO, COO, CIO, CMO, CSO.
Acting Executive: Acting executive is another word for interim, though typically points to a time frame where an executive is stepping into a role for a short time while the permanent search takes place.
Most HR execs have been trained to look for candidates who have a track record sticking with companies for long periods of time. For many companies going through upheaval, rapid growth, or dramatic changes in their markets, that long-term permanent employee mindset may actually be more detrimental. When a company must evolve quickly, an executive hired on full-time may not be the right leader nine months or a year down the road.
The speed at which companies move in today’s world to stay relevant has paved the way for the new specialty of interim management, which includes executives focused on operations to finance, technology, sales and marketing. Interims are skilled operators who run, build, grow, and fix businesses. They take on accountability in C-level roles making decisions, reporting to the board, and being held responsible for the results.
Unlike executives who choose long-term, permanent jobs, interims are wired for transformation and usually are called in when companies need a leadership boost to get them on the right path. Once an interim brings an organization, division, or department to a better state of affairs, that new-found clarity and direction gives the HR team a cleaner slate by which to recruit and hire the next permanent person in the role.
The truism that every business needs marketing cannot be denied, even by businesses that owe the majority of their growth to word-of-mouth referrals. However, confusion arises when businesses mistake marketing for sales. In simple terms, marketing builds demand, sales closes the deal.
The goal of marketing is to increase sales and, by perforce, grow revenue. The trick is in measuring the success of your marketing efforts. What metrics do you use to measure marketing effectiveness? Although profit is the ultimate goal, it’s not the sole measurement of success. Other benchmarks along the way indicate the effectiveness of your marketing efforts.
Many private equity funds hear the words “interim executive” and think the only application is turnaround or short-term fill-in. But for PE funds seeking a great return, they look to interims for their unique abilities to build and transform companies.
Here are six major use cases for interim executives in PE-owned portfolio companies:
Interim Executives in Diligence
Most funds hope to spread their wings – work beyond industries where they’ve already had success, by looking at new industries where acquisitions may cost less and produce higher returns. The further afield they go, the more they need expert leadership removed from prior operating teams.
Once owners, board members and investors figure out exactly what an interim is and how an interim can help them, the next question is invariably, how much does an interim executive cost?
The short answer is: there is no off the shelf rate card for interim execs. Or more precisely, it doesn’t exist for the best interims in the world. There are a couple reasons rate cards don’t exist, at least not amongst our RED Team, an elite group of interim, project and fractional executives who have been selected because of their track records creating incredible results in companies.
Company Situations Vary Greatly, So Scope of Work is Always Unique
Your company is your baby and your baby isn’t like anyone else’s in the world. As such, the caliber of leader you need and the process and deliverables necessary to achieve the best outcome is a tailor-made solution – not an off the rack, one size fits all experience.
Interim executives, or interims, have recently become an important tool that organizations can use to effectively address a variety of pressing needs. Having said that, many companies are either unaware that interims are even available or appropriate for their current situation. The most common understanding of the role of an interim is to fill an immediate need in the executive team caused by a sudden voluntary or involuntary departure. In this case, a seasoned executive can step right in and allow the company to progress unabated. While much of what an interim does is similar to consulting, successful execution is critical and unique to the role of interims. This blog presents seven case studies to help companies better understand other instances where interims can help. There are certainly more examples, but these are representative. While seven represents everything from the apocalypse to luck in gambling, we’ll stick with seven.