The New Interim Report

Research and Analysis on the UK Market for Interim Managementand Other Fast-Track Executive Resourcing

CONTENTS

I n t ro d u c t i o n 1

Re s e a rch objectives and methodology 2

D e fining interim manage m e n t 3

The interim manage r 4

The benefits of interim manage m e n t 8

Business ex p o s u re 1 0

I n t e rim management and project manage m e n t 1 2

I n t e rim manage rs as agents of ch a n ge 1 3

Women and interim manage m e n t 1 5

I n t e rims in permanent re c ru i t m e n t 1 8

Co n c l u s i o n 1 9

INTRODUCTION1

The pre s s u re on business to deliver re s u l t s , and tos i mu l t a n e o u s ly operate at eve r- i n c reasing effi c i e n c i e s ,has never been gre a t e r. Headcount re d u c t i o n s , h i ri n gf re e ze s , o u t s o u rcing and re o rganisations are eve r y d ayo c c u r re n c e s , as are corp o rate ch a n ge prog ra m m e saimed at delive ring stra t e gic business tra n s fo r m a t i o nor even just short-term improvements to net pro fi t . I nthis cost- and re s u l t s - o riented business climate, t h equestion of optimal re s o u rcing is never far from thes u r fa c e , and the debate doesn’t stop at nu m b e rs ofp roduction wo r ke rs or front-line customer service staff– it extends straight up to a company ’s most seniorexe c u t i ve ro l e s .

An effe c t i ve re s o u rce in responding to these competingp re s s u res is being embraced by a growing number ofcompanies in the UK: i n t e rim manage m e n t . By this wemean the strengthening of a company ’s manage m e n tteam by the addition, on a fi xed-term contra c t , of oneor more highly ex p e rienced senior exe c u t i ve s .

E xe c u t i ves Online is an innova t i ve re c ruitment companywith a 15-year history of interim management pra c t i c eand re c ru i t m e n t . We have seen the interim manage rsre gi s t e red with us grow from a few thousand in 2000to over 15,000 UK interim manage rs today. Vi s i t o rs toour web site www. E xe c u t i ve s O n l i n e . c o. u k , a ve ri t a b l et re a s u re - t rove of helpful information on interi mm a n a gement and other fa s t - t ra ck exe c u t i ve re s o u rc i n g,h ave grown to number tens of thousands of visits perm o n t h . Our own business and the interim manage m e n tsector have grown by ord e rs of magnitude over thepast eight ye a rs . We believe that as more and morecompanies come to re c ognise the benefits that interi mm a n a gement can offe r, a continuing expansion of thissector is highly like ly.

H oweve r, the nature of the industry is such thatreliable financial and measurement information is noteasy to come by. Ac c o rd i n g ly, in 2000, E xe c u t i ve s

O n l i n e , in conjunction with the Institute of Manage m e n t

Co n s u l t a n cy, commissioned Sambrook Re s e a rch

International to carry out an independent study of the

i n t e rim management market in the UK. The Sambroo k

Re p o rt on UK Int e rim Management was published in 2000.

In 2004 and 2006, E xe c u t i ves Online published In the

I nt e ri m and the fi rst edition of The Int e rim Re p o rt.

Since then, things have moved on and in order to ke e p

pace with this fa s t - m oving sector we have once aga i n

conducted further market re s e a rch , both among users

of interim management and interim manage rs

t h e m s e l ve s . In this new re p o rt we present the re s u l t s

of that re s e a rch .

We believe the re p o rt will make interesting re a d i n g

not just for companies that are alre a dy familiar with

i n t e rim manage rs , and current and aspiring pra c t i t i o n e rs ,

but also for companies or organisations for wh i ch

i n t e rim management re p resents an as-ye t - u n t a p p e d

re s o u rc e .

N o rrie Jo h n s t o n

C h a i rm a n , E xe c u t ives Online

Introduction

The interim managementsector has grown by ordersof magnitude over the pasteight years.

“

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RESEARCH OBJECTIVES AND METHODOLOGY 2

Objectives

The aim of our research was to seek answers to anumber of questions, among them:

Which business sectors are most likely to useinterim management?

What are the key factors driving the market?

How many days a year on average do interimmanagers work?

What daily rates apply in this sector and how dothey vary between job functions?

What do clients (and practitioners) think are thebenefits of interim management?

What roles leave organisations the mostvulnerable if they are left vacant?

What types of business exposure are created bygaps in a management team?

To what extent is interim management aneffective alternative to consultancy?

Can interims be leveraged as an alterative sourceof candidates for permanent roles?

What prevents more women from pursuinginterim careers, and is this possible to change?

What role do interims play in ch a n ge manage m e n t ?

Methodology

In nine separate market re s e a rch initiatives over 2002-2007 we obtained the views of a large number ofp ractising interim manage rs and the clients who employt h e m , both by telephone and via online questionnaire s .In most cases the respondents submitted their answe rsa n o ny m o u s ly and we re not awa re of the identity ofthe firm sponsoring the re s e a rch .

To obtain the views of clients and potential clients forinterim management services, we conducted in-depthtelephone interviews (lasting between 20 and 30minutes) with 100 directors of UK companies in 2002and, in February 2004, with 84 senior managers ordirectors from companies which are established usersof interim management. In 2006 and 2007 weupdated these findings via online surveys with thesame audiences.

The interim managers approached for participation inthe research were all registered onto our Talent Bank

of c a n d i d a t e s . Some had been placed by Exe c u t i ve sO n l i n e into interim management roles, but most hadnot. ( Their areas of functional ex p e rtise are shown inTable 1.)

Research objectives and methodology

The survey timings and numbers ofrespondents are as follows:

Online research among 189 interim and changemanagers – March 2002

Telephone research among 100 managers anddirectors of UK companies – March 2002

Online research among 519 interim managers –June 2003

Telephone research among 102 interim managers– November 2003

Online research among 127 interim managers –January 2004

Telephone research among 84 corporate users ofinterim management – February 2004

Online research among 170 interim managers –May 2006

Online research among 200 customers andprospective customers of Executives Online’sinterim recruitment services – July 2006

Online research among 102 interim managementcustomers and prospective customers, and among327 interim managers – September 2007

TABLE 1

Call Centre Management 3%

Change Mgt 10%

Finance 9%

HR 10%

IT 6%

Sales/Mktg 7%

MD/CEO 17%

Supply Chain 4%

Operations 28%

Mgt Consulting 7%

Functional Expertise ofInterim Managers Surveyed Percent of total

DEFINING INTERIM MANAGEMENT3

For the purposes of this report we define interimmanagement as being:

The provision of a mature , p rofessional manager, we l lq u a l i fied by re l evant practical ex p e r i e n c e , either to fi l la gap in permanent staffing or to deliver a specifi cbusiness result within a limited time period.

It is important, however, to recognise that theboundaries between interim management, changemanagement and consultancy are not always clear-cut. An individual who is temporarily on assignmentwith a company may think of him or herself as aninterim manager but be viewed by the employer as aconsultant. Or vice versa.

In our most recent re s e a rch , b ri d ging a slow permanentre c ruitment process was the #1 reason for the cliente n ga ging the interim manage r. We address the use ofinterims as candidates for permanent executive rolesin more detail later in this report.

This flexibility in job title is borne out by theresponses given by 327 interim managers in ouronline research September 2007:

Only 16% of respondents said they operatedexclusively (100%) as an interim manager, consultantor other. This openness to new labels and positioningsappears to be on the rise; in our May 2006 research,

more interim managers preferred to classifythemselves as one thing or the other, with fully 42%describing themselves purely as an interim manager.

When asked how much of their time was spent as aninterim manager and how much as a consultant, 65%said they spent more than half their time in an interi mmanagement role. Most of the remainder (28%) saidmore than half their time was spent as a consultant.

The views of clients on the issue of interimmanagement versus consultancy are also interesting.Although the market does not wholeheartedly seeinterim managers as a natural alternative tomanagement consultants, a significant number ofclient companies do subscribe to this idea. In ourtelephone survey of the client sector, 43% ofrespondents agreed that interim managers were analternative to management consultants, while 52%disagreed. The reasons they gave are set out in Table2 below.

Defining interim management

CHART 1 Base: 327 interim managers (September 2007)

Average percentage of time spent as:

An interim manager

A consultant

A contractor

Other (project manager,mentor, change agent)

5 %

3 1 %

5 5 %

9 %

TABLE 2 Base: 84 senior executives (Feb 2004)

Reasons for agreeing Mentioned by

More cost-effective 39%

Get experience and skills 8%

More results orientated 8%

Focused 6%

Reasons for disagreeing

Consultants advise & bring ideas 2%

Internal perceptions 2%

Cost 2%

Different agendas 2%

“I have interims’ skills” 2%

Consultants aren’t in head-count 2%

“Interim managers are a natural alternativeto management consultants”

THE INTERIM MANAGER 4

i n t e rim manage rs (67%) we re working on assignment,most of them in a full-time capacity. The remaining33% were not working. (See Chart 2 below.)

Table 3 below records the percentage of interimm a n a ge rs who re p o rted that they we re on assignmentat the time of our various surveys. The application ofi n t e rim management re s o u rce appears to be becomingmore flexible, with more interim managers workingpart-time or structuring their work as a “portfolio”serving multiple clients each less than full-time.

Although the re p o rted utilisation of interim manage rshas dropped from May 2006 when fully 76% were onassignment, it has not reverted to the levels reportedin 2004 and earlier when likelihood of being in workstood at roughly 50/50.

In this section we estimate how many interimmanagers are on assignment in the UK at any onetime and report on how many days a year they workand where that work comes from. We also providedata on their daily rates.

How many interim managers are onassignment in the UK?This is not an easy question to answer but at thetime of our 2000 survey it was estimated that therewere some 2,400 interim managers active at any onetime in the UK. This was based on responses given byleading suppliers of interim management services andby interim managers themselves.

Today, that figure is undoubtedly higher. ExecutivesOnline’s own candidate roster has grown by a factorof 7 between 2000 and 2008, and we are seeing aconstant stream of new interim managers who havecompleted at least one successful assignment. Weestimate today that there are more than 15,000interim managers operating in the UK.

Work patterns of interim managersAn analysis of responses to our latest onlinequestionnaire reveals that at the time of the survey(September 2007) more than two-thirds of the

The interim manager

CHART 2 Base: 327 interim managers (Sept 2007)

How are you working at themoment?

full time

not on asssignment

part time

a combination of severalpart-time assignments

33%

4 0 %1 6 %

1 1 %

TABLE 3

Full-time assignment 32% 38% 56% 40%

Working in part-time assignment 51% 12% 13% 13% 16%

Working in multiple part-time assignments 4% 5% 6% 11%

Not on assignment 49% 51% 44% 24% 33%

March 2002 June 2003 Jan 2004 May 2006 Sept 2007

THE INTERIM MANAGER5

Interim management practitioners are taking thisincrease in utilisation in stride. Despite the proportionof candidates working on assignment at the time ofour survey increasing (to 67% in assignment from onlya round 50% compared to 2004 and earlier), t h eyre p o rt , on ave ra ge , a similar workload ve rsus thep revious ye a r. In the September 2007 survey :

45% reported that their work level was the sameas in the previous year

31% reported being less busy than in theprevious year

24% reported being more busy than in theprevious year

Days on assignment in last yearTurning to the actual number of days worked by thei n t e rim manage rs in the 12 months prior to September2 0 0 7, the average was 151 days. However, as Table 4below shows, there was considerable variation fromfunction to function, with those enga ged as prog ra m m em a n a ge rs and project dire c t o rs ave ra ging 189 days ayear and those working in marketing re p o rting only122 days on ave ra ge .

The above average of 151 days worked in the yearpreceding September 2007 compares with averagesof 165 in the year before May 2006, and 156 in theyear before September 2003. Most functions now showl ower utilisation, with days wo r ked by opera t i o n sm a n a ge rs and ch a n ge managers showing 25-30%fewer days worked in the year. This underscores thesense of a cooler market than in 2006, which wasevident in the snapshot fi g u res (p revious page) onwhat perc e n t a ge of interi m s were on assignment atthe time of the survey. Nevertheless, some functionalareas show increases with IT and sales interimslogging many more days in the past year – increasesof 50% or more – than previously.

As Table 5 below shows, the length of time that theindividual had been working as an interim managerhad a bearing on the number of days that he or shehad worked in the previous 12 months, the leastexperienced recording significantly fewer days.

The relative strength in utilisation of the more-experienced interims shows that the possible marketcooling indicated by the drop in days billed andlikelihood of being in assignment is being borne muchmore strongly by interim managers just entering thefield.

TABLE 4 Base: 327 interim managers (Sept 2007)

Call Centre Management 167

Change Management 141

Finance 137

HR 154

IT Director 180

Marketing 122

MD/CEO 139

Operations 152

Project Manager/Project Director 189

Sales & Marketing 181

Supply Chain 145

Average 151

TABLE 5 Base: 327 interim managers (Sept 2007)

Days worked in last 12months (to Sept 2007)

109

164

172

Years as an interimmanager

Less than 1 year

1 – 3 years

More than 3 years

Days worked in last 12months (to Sept 2007)Function

THE INTERIM MANAGER 6

£200-299 34 7 2 2 3 2 7 2£300-399 65 14 14 13 15 10 32 10£400-499 92 20 22 21 26 17 55 17£500-599 82 18 26 24 32 20 63 20£600-699 66 14 17 16 36 23 66 20£700-799 50 11 8 7 14 9 32 10£800-899 20 4 5 5 15 10 21 7£900-999 15 3 8 7 3 2 10 3£1,000-1,099 15 3 4 3 4 3 18 6£1,100-1,199 4 1 0 0 2 1 5 2£1,200-1,299 4 1 1 1 2 1 8 2£1,300+ 13 3 1 1 3 2 6 2Total 189 460 100 102 108 100 155 100 323 100Average £587 £590 £571 £604 £597 £648

Average length of assignmentsTh e re is significant va riation in the duration of interi mmanagement assignments but typically they last forseveral months (as opposed to lasting for weeks orextending into years). Between 2006 and 2007, theassignments worked by Executives Online candidateslasted between two and 24 months, the averageassignment lasting 6 months.

Sources of workIn our May 2006 online survey we asked interimmanagers what percentage of their work was self-generated and what came from agencies. We foundthat on ave ra ge 60% of their work arose through their

own personal contacts and 38% came through age n c i e s .Personal recommendation is one fertile source of newwork for interim managers. In our January 2004research among 127 interim managers, we found thaton average they are asked to recommend anotherinterim manager or agency 4.4 times a year. One-fifth of them (21%) reported making seven or mores u ch recommendations every ye a r. (See Chart 3 below. )

Daily rates of interim managersIn all of our surveys we asked interim managers toindicate their daily rate on their last assignment. AsTable 6 below shows, a very wide range of rates wasreported, reflecting the fact that certain areas ofexpertise are more highly valued in the marketplacethan others. (These variations from sector to sectorare examined in more detail in the next section.) Some interim managers said they were earning lessthan £300 a day, wh e reas at the top end of the marke tothers were able to command daily fees of more than£1,000.

The reported average of £648 per day is well abovethat reported in any prior year, an indication that,despite a fall-off in utilisation, prices have not fallen,or at least not yet. The interim managers in work are

CHART 3 Base: 127 interim managers (Feb 2004)

If ever, and on average, howmany times are you asked torecommend either an interimmanagement a ge n cy or anotheri n t e rim manage r ?

never

1 to 3

4 to 6

7 to 10

11 or more

1 0 %

3 7 %

3 2 %

1 0 %

1 1 %

TABLE 6

Re s p o n d e n t s Re s p o n d e n t s % Re s p o n d e n t s Re s p o n d e n t s % Re s p o n d e n t s % Re s p o n d e n t s %

Mar 02 Jun 03 Nov 03 Jan 04 May 06 Sept 07

THE INTERIM MANAGER7

supporting their daily rates in client engagements andin many cases increasing them. The data stating themost experienced interims are the ones being utilisedalign with this view, because generally, the moreexperience, the higher the daily rate.

On the basis of the average daily rates mentioneda b ove , what can we say about the annual gross incomebeing earned by the average interim manager today?Taking a daily fee of £650 and applying it to the 151days a year that interim managers, on average, spendon assignment (see earlier section), we arrive at atotal of £98,000 a year, which is virtually unchangedfrom the income levels we found in 2006.

Differences in daily rates between sectorsOur research has revealed considerable variationsbetween the average daily rates interim managerscommand, depending on the job functions they areengaged in.

In the September 2007 survey (see Table 7 below) theaverage rates by job function ranged from a low of£472 for interim managers specialising in Call Centre

Management to a high of £868 for those acting as anMD or CEO. H oweve r the re s e a rch also highlightedsome ex t remes of earning capability within the interi mm a n a ger commu n i t y. For instance, 12% re p o rted thattheir day rate was less than £400 while 12% said thatit exceeded £1,000.

Our September 2007 online survey of interim manage rsalso found a difference between the average dailyrate earned by male and female interim managers –the men averaging £660 and the women £569,against an overall average daily rate of £648. Weex p l o re the subject of women in interim manage m e n tin more detail later in this report, from page 15.

TABLE 7 Base: 324 interim managers (September 2007)

Function Average daily rate £s

Call Centre Management 472

Change Management 773

Finance 669

HR 584

IT Directors 656

Marketing 574

MD/CEO 868

Operations 519

Programme management 756

Sales & Marketing 521

Supply Chain 662

THE BENEFITS OF INTERIM MANAGEMENT 8

In our September 2007 online re s e a rch , we asked our102 client respondents to tell us wh i ch up to thre easpects they felt are the most important qualities inan interim manage r.

It is clear from their responses (see table 8) that usersof interim management place a high value on thetask- and re s u l t s - o rientation interim manage rs bri n g,as well as the fact that they can be re c ruited withh i g h ly specific skills, ex p e rience and tra ck re c o rd . Th e i robjectivity – willingness to speak their mind,independence and the fact that they manage to notbe side-tra cked by company politics – also re c e i ve dm a ny mentions.

It is interesting to compare the responses gi ven byi n t e rim management clients with the views ex p re s s e dby interim manage rs themselve s . In the interi mm a n a ger ve rsion of the September 2007 online survey,we asked them too to nominate up to three aspectst h ey felt we re their most important qualities.

The client and practitioner views are very mu ch ina l i g n m e n t , with some interesting ex c e p t i o n s . By andl a rge , a t t ributes such as the ability to think stra t e gi c a l lybut also implement, results fo c u s , and the ability to

q u i ck ly get people on side re c e i ved many mentionsf rom both the interim manage rs and their clients.H oweve r, the clients are far more like ly to rate thei n t e rim manage rs ’ skills and ex p e rience for thep a rticular job at hand than the interim manage rst h e m s e l ve s , who pri ze their “wide ra n ge ” of ex p e ri e n c eand distance from corp o rate politics re l a t i ve ly mores t ro n g ly. See Table 8 for details.

This disparity may re flect the reality that, wh i l ei n t e rim manage rs are often hired specifi c a l ly for theirt ra ck re c o rd in a particular are a , it can be fru s t rating asthe practitioner to be “ p i ge o n h o l e d ” , a s ked to delive rthe same sort of assignment over aga i n .

By contra s t , most of the clients who enga ge ani n t e rim manager are doing so in order to reduce ri s k ,by employing someone wh o ’s “done it befo re ” , a n da re not so interested in tra n s fe rable skills.

How and why interim managers are deployedOur September 2007 online research asked theinterim management clients to describe the nature ofthe last situation wh e re they used an interim manage r,and the interims themselves to indicate the two mainreasons for their clients' engaging them.

The benefits of interim management

TABLE 8 102 clients and prospects, and 327 interim managers, September 2007

Main benefits of interim manage rs Interim Mentions Client Mentions

Ability to mentor 84 7% 9 3%

Quickly get people on side 145 11% 34 12%

Strategic but also implement 224 18% 55 19%

Independence 37 3% 13 5%

Not side-tracked by politics 141 11% 18 6%

Resilience 55 4% 11 4%

Results focused 196 15% 50 18%

Skills/experience for job 73 6% 54 19%

Wide range of experience 203 16% 22 8%

Speak mind where req'd 110 9% 19 7%

Total mentions 1,268 285

THE BENEFITS OF INTERIM MANAGEMENT9

The answers fall out into eight broad categoriessummarised in table 9. While both the interimmanagers and clients say that access to skills is a veryimportant reason they engage, their answerselsewhere – and the fact that they don’t agree – tellan interesting story. See table 13 for more detail.

In contrast with our earlier question about the mostimportant qualities of an interim manager, where theinterim managers mentioned the breadth of theirskills over the “focus” which the clients held in higheresteem, here the strongest reason for the lastengagement is acknowledged to be access to specificskills. Not surprisingly, the clients rate this stronglytoo. Elsewhere however, the answers diverge. Theclients were far more likely to mention a sudden gapin the management team and – interestingly – apermanent vacancy they couldn’t fill fast enough asreasons they engaged an interim. This compares tothe interim managers themselves who morefrequently mentioned change management and theimplementation of a major initiative as the stimuli fortheir last assignment.

The difference in perspective may be representativeof an issue we have explored in prior years’ editionsof this report, namely, whether clients view interimmanagement as a strategic resource. The last time weasked the question, the clients were mixed onwhether interims were looked upon as a strategicresource, with 56% saying not, and 42% yes. Itappears from the answers given about the mostimportant reasons for engaging interim managers –to fill a gap, to bridge a slow permanent search – thatmany clients’ motivations are still quite tactical.

Noting the motivations for engaging an interimmanager as tactical, however, should not be read astrivialising them. The cost of an unfilled executive roleexceeds £100,000 even for just a few months' gap atmiddle management level, and into the £millions fora chief executive in a major enterprise. See next pagefor a further discussion of business exposure causedby key executive vacancies.

TABLE 9 102 clients and prospects, and 327 interim managers, September 2007

Reasons for most recent interim engagement Client Mentions Interim Mentions

Business turnaround 6 6% 40 7%

Implementing a major initiative 7 7% 83 14%

Strengthening a project team 9 9% 22 4%

Sudden gap 16 16% 42 7%

Needed skills 16 16% 183 32%

Change management 9 9% 127 22%

Mgt capacity / bandwidth 10 10% 30 5%

Couldn't hire permanently fast enough 22 22% 47 8%

No answer 7 7%

Total mentions 102 574

BUSINESS EXPOSURE 10

A sudden gap in the management team and slowpermanent recruitment rank strongly among reasonsclients engage an interim manager. How exposed dothese vacant executive roles leave companies? In ourresearch, we explored this question with both ourinterim managers and corporate hiring managers.

Despite ex p e riencing unexpected senior team depart u re s,companies appear to be generally unprepared for thisrisk. Just one in four companies surveyed said theircompany had plans in place to cover the suddendeparture of a member of the senior team:

Those one in four companies who say they have aplan in place outline a mix of procedures. Somedescribe quite robust systems involving successionplans, interim management, consultants or othermethods. There is a small minority whose idea of aplan is to simply work within the departingexecutive’s notice period, but this ignores the seniormanagers who leave because of illness or otherreasons necessitating an immediate departure.

Furthermore, even if a senior manager hands in theirnotice in the usual way, traditional recruitmenttypically takes around four months to find thereplacement, with additional months to settle themin and make sure they are right for the job, whereas atypical notice period may be only three months.

This general lack of contingency planning and riskmanagement is surprising given the wide scale impacta sudden departure can have on a company.Companies, and our interim managers, cite a host of

major problems they encounter when a senior teammember leaves unexpectedly.

A critical determinant of this form of business ex p o s u reis the difficulty in filling a senior role. The businessesand executives surveyed report that MDs and CEOsare the toughest roles to fill at short notice, withthese roles receiving the most votes from companiesand 42% of votes from the interim managers. (seeTable 11.)

There is also a financial implication of an unexpectedrecruitment gap which those who do not contingencyplan are failing to recognise, particularly when it’s theMD or CEO in question.

A director or senior manager is on average worth atleast three times their annual salary in terms of theircontribution to a company. If it takes four months tofind the right person, the recruitment gap is costingthe business an equivalent of a full year’s salary inlost contribution to the organisation. This isn’tallowing for the two months it takes to get the seniormanager fully contributing in the role. According tothe Directors’ Pay Report 2007 from IDS, the pay andbenefits consultancy, during the last twelve months,the average FTSE 100 chief executive earned £3.17mper year, with FTSE mid-250 chief executives earningan average of £1.43m.

Business exposure

CHART 4 Base: 102 clients and prospects September 2007

Plans in place to cover suddendeparture of senior team member

no

yes

dont know6 3 %2 4 %

1 3 %

TABLE 10 Base: 102 clients and prospects September 2007

Instability within the team 66%

Loss of organisational momentum 63%

Knowledge lost 61%

Projects get stalled 47%

Decisions delayed 45%

Senior team distracted 35%

Uncertainty among customers 29%

Poaching of staff 25%

Competitors take advantage 14%

Impact of sudden departure - company view

BUSINESS EXPOSURE11

Applying this contribution multiplier to candidates atthis level, the financial cost of such a gap runs to £4million – £10 million. Even if this multiplier is appliedto a senior manager or director role outside the FTSE350, it is clear that the four months delay while thebusiness finds the right person, has a huge bottomline impact on UK businesses.

TABLE 11 Base: 102 clients and prospects September 2007

MD/CEO 1

FD 2

Chairman 3

Sales Director 4

Marketing Director 5

Production/Operations Director 6

IT Director 7

HR Director 8

Procurement Head 9

Toughest to replace - company’s view Rank

MD/CEO 42%

Production/Operations Director 17%

Sales Director 10%

FD 6%

Marketing Director 6%

Chairman 5%

IT Director 5%

HR Director 2%

Procurement Head 2%

Not stated 3%

Toughest to replace – interim’s view

INTERIM MANAGEMENT AND PROJECT MANAGEMENT 12

As we saw earlier in this report, one area whichappears to be driving much of the growth in themarket for interim management is the demand forproject management skills and experience. Interimmanagers with specialist project and programmemanagement skills are being deployed by more andmore companies in order to drive through or supportmajor initiative s . (See Table 9 on page 9 for thereasons given by clients for using interim managers.)

At Executives Online, over 10% of our clientinstructions are specifically for project managers orprogramme directors, and project managementenquiries have more than doubled in the past year.

Reflecting this increased demand for the short-terminjection of skills and experience, Executives Online’scandidate roster today includes more than 4,000project managers and programme directors.

There are a number of reasons why interim manage-ment is gaining such a foothold in the managementand delivery of projects. Firstly, all projects, whetherlarge or small, high-tech or heavy industry, have abeginning, a middle and an end.

This makes them ideal assignments for an interimmanager, who can be brought in to see the projectthrough to completion but whose services can theneasily and painlessly be concluded.

S e c o n d , m a ny projects are “ o n e - o ff s ” , demanding one-o ff skills and know l e d ge that quite possibly do notexist within the company but are alre a dy possessed bya specialist interim manage r.

Interim managers are also becoming an importantresourcing option. One in five of the 84 companieswe spoke to in our February 2004 survey specificallysaid that they needed to keep their permanentheadcount to an absolute minimum; also they saidthey needed to stay in a maximum state of readinessto handle new projects.

A gainst this back d ro p, the demand for project manage -ment skills deep in the organisation is growing. OurMarch 2002 study of 100 companies found that 34%of corporate change projects were managed at boardlevel, with a further 22% being directed by the MD. InJuly 2006, customers surveyed reported a lowerp ro p o rtion directed from above (only 10% led by MD),with project or functional heads (31%) and othermanagers (29%) leading the drive. In the intervening4 years, organisations appear to have “internalised”the project and change management skills required,running projects from within rather than top-down.Request Executives Online’s Challenge of Changereport for a deeper discussion of how major corporatetransformation projects are resourced.

Interim management and project management

INTERIM MANAGERS AS AGENTS OF CHANGE13

Interim managers as agents of change

Organisations which need to transform themselves insome way are logical candidates for the temporaryaddition of additional senior management talent.Whether the challenge at hand is the integration ofan acquisition, a plant closure or relocation, a culturaltransformation to produce a more service-orientedethos, de-layering and streamlining of theorganisational structure, or the reorganisation of rolesto align with a new business process or IT system, anexperienced change management professional canoften be of great help.

Indeed, we find that a huge proportion of interimassignments conducted via Executives Online and itscandidates have some element of ch a n ge manage m e ntabout them. More than 3,000 of Executives Online’sregistered candidates are independent changemanagers. When we asked our candidates whatproportion of their work as interim managers hasbeen part of a larger corporate change program, the average answer was a resounding majority at 64%.The whole set of results are in table 12.

We further asked our interim managers how well theythought UK companies managed change. Fully two-thirds of respondents felt that UK organisations copewith change “very poorly” or “quite poorly”, with afurther 28% feeling they are just “average” at it. Only5% believe UK companies and organisations managechange “quite well”, and, tellingly, none believedchange is managed “very well”:

The clients’ view is slightly more rosy, but still only10% feel change is managed “quite well”:

TABLE 12 Source: Interim and change managerssurveyed (May 2006)

% of work as part ofchange programme

10%

15%

20%

25%

30%

40%

50%

60%

70%

75%

80%

85%

90%

95%

100%

64%

No of respondents

4

2

8

8

3

5

28

8

6

10

13

4

8

1

43

Average

TABLE 13 Source: Interim and change managers surveyed(May 2006)

Very Poorly 40 24%

Quite poorly 71 43%

Average 47 28%

Quite Well 9 5%

Very Well 0 0%

How well isch a n ge manage d ?

Number ofrespondents

% ofrespondents

TABLE 14 B a s e : 200 customers and prospects (Ju ly 2006)

Average 51%

Quite well 10%

Poorly* 39%

* breaks down as 35% quite poorly, 3% very poorly and 1% poorly

How well do UK companiesmanage change?

% of respondents

INTERIM MANAGERS AS AGENTS OF CHANGE 14

The perceived poor track record of UK companies atmanaging change is somewhat frightening, given thelarge amount of change businesses intend toaccomplish:

G i ven that a majority of respondents in all our ch a n gemanagement research felt that UK businesses in factmanage change rather poorly, yet lots of change willbe required, it’s surely a priority to develop ways ofdoing it better. We asked our interim managers andclients about their participation in corporate changeprograms, and how corporate change programs aremost successfully resourced:

Internal re s o u rcing tops the ch a rt , with more than halfof respondents using internal ch a n ge teams, and fi n d i n gthem effe c t i ve . But there is a minority who use ex t e r n a lresources, although there are significant variations inh ow effe c t i ve clients rated them. The disparity betwe e nu s a ge and satisfaction when it comes to consultancies(whether boutique or global) and interim or contractwo r ke rs is stri k i n g. Consultancies (boutique and global)we re mentioned by 20% of respondents, even morethan those mentioning dedicated internal teams, b u tvery few rated them the most effective way to deliverchange. By contrast, although they only comprise only9% of the mentions, independent change managersengaged to lead and support a company throughchange are rated the most effective resource by fully22% of respondents.

We conclude from this that although the concept ofindependent change managers is not well-understoodby the market – there being low awareness andadoption of them – they deliver excellent value andresults for the few organisations who employ them.Given contract workers fared more poorly in clients’ratings, it appears the independent change managers’effectiveness is a result of their focused expertise andability, rather than simply due to their “separateness”from the organisation. It appears there is a substantialo p p o rtunity for UK businesses and organisations wh i chneed to successfully tra n s form themselves to enhancetheir success by enga ging independent ch a n ge manage rs .

TABLE 15 B a s e : 200 customers and prospects (Ju ly 2006)

C h a n ge initiatives planned in the next 12 months %

Business restructure 19

Introduce a major business improvement initiative 18

Major cost reduction 14

Introduce new technology 13

Merger or acquisition 13

Downsize workforce 12

Move into a major new market 6

Relocate any operations overseas 4

Divestment 1

TABLE 16 B a s e : 200 customers and prospects (Ju ly 2006)

What management structures and resources has your

company employed to deliver a change programme? % used % who rank it most effective

Internal team: change programme added to usual responsibilities 36 27

Internal team: members 100% applied to the change programme 18 35

Contract workers brought in to deliver aspects of change programme 15 2

External boutique or niche change management consultancy 12 5

Independent change managers engaged to lead and support

company through change 9 22

External global consultancy e.g. McKinsey, Accenture etc 8 3

WOMEN AND INTERIM MANAGEMENT15

Women and Interim Management

In our September 2007 online candidate survey, 46women and 279 men responded and indicated theirgender when asked. The fact that there are so manymore men than women came as no surprise. AmongExecutives Online’s talent bank at large, we have longobserved that interim management is quite a male-dominated profession. There are certainly womeninterims, and like their male peers they achieve greatthings for our clients, but they are rather small innumber compared to the men.

A re there enough female interims? Last ye a r, we aske dour candidates, two-thirds of whom thought not.

Could or should there be more women interims?

Survey respondents were in agreement about the factthat women inherently possess many of the skillsthat make excellent interim managers. When weasked respondents to give reasons why women inparticular would make good interims, 13% of theiranswers named being good communicators, 15% saidwomen are sensitive to the nuances of differentcorporate cultures, 14% said because they are goodrelationship builders and 12% because of being goodnetworkers. Additional reasons cited includedfl ex i b i l i t y, multi-tasking and adaptability in adversity.

If the potential for their success is evident, why do sofew women choose interim management as a careeroption? Surely the reason it’s attractive to so manytalented executives apply to women too: the freedomfrom corporate politics, the opportunity to deliverresults fast, the variety in task and environment, theattractive day rates and favourable tax treatment oflimited-company earnings, and the flexibility itaffords to balance a professional career with otherinterests and obligations.

Taken as a whole, the respondents’ answers indicatet h ey believe that few women choose interim manage -ment for reasons having more to do with personal

TABLE 17 Source: Interim and change managers surveyed (May 2006)

Reasons Women Good Interims Number of mentions Percent

Determined 28 6

Good communicators 64 13

Good networkers 61 12

Good relationship builders 70 14

Other 13 3

Persuasive 31 6

Quickly fit in 43 9

Resourceful 42 9

Ruthless 9 2

Sensitive to the nuances of different corporate cultures' 74 15

Very organised 52 11

Total Mentions 487

CHART 5 Source: Interim and change managerssurveyed (May 2006)

Are there enoughfemale interims?

yes

no6 6 . 5 %

3 3 . 5 %

WOMEN AND INTERIM MANAGEMENT 16

choice and priorities – not liking the uncertainty,preferring not to compromise on “quality of life”,simply preferring being part of an organisation – andby the traditional structure of many women’s andmen’s careers and family roles. Comparatively fewerrespondents thought that women weren’t choosinginterim because of personal attributes or behaviourswhich would make them unsuccessful as interims –reasons like not being good networkers, or not beingcompetitive or tough were only mentioned by a tinyhandful of respondents.

The lifestyle benefits to an interim career should notbe underestimated. Interim management can offer acertain level of flexibility to people seeking to balancep ro fessional and personal live s , although that fl ex i b i l i t ycomes at a price. An interim career typically shows awork pattern ch a ra c t e rised by periods of full-on, h i g h lypaid work inters p e rsed with dow n t i m e . ( Wi t n e s s thefact that 33% of the candidates we surveyed werenot in assignment at the time of our survey.) Deliverone significant interim assignment in a year, and aninterim perhaps need not do another the rest of theyear, leaving full months at a stretch for personalendeavours and responsibilities.

TABLE 18 Source: Interim and change managers surveyed (May 2006)

Reasons Women Don’t Become Interims Number of Mentions Percent

Don't get the executive experience necessary to launch an interim career 18 7

Don't like the uncertainty of an interim career 44 17

Don't value themselves highly enough 15 6

Lack of awareness of it as an option 46 18

Lack of confidence 25 10

Lack the flexibility in their domestic lives 35 14

Not competitive enough 2 1

Not good networkers 3 1

Not so prepared to compromise on quality of life 23 9

Not tough enough 3 1

Other 13 5

Prefers being a permanent part of an organisation 26 10

Total mentions 253

Perhaps interim manage m e n toffers women a way to breakthrough the glass ceiling, whichstill has women under-represented in UK Boards

“

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WOMEN AND INTERIM MANAGEMENT17

Paradoxically, part-time work is also a possibility.Classically, interim management is difficult to do ona part-time basis, as the reasons companies bring ini n t e rims are often so urgent that full-time attentionis re q u i red (and then some!). S t i l l , 27% of interi m ss u r veyed are working in part-time assignments.

Assuming Executives Online’s registered interimcandidates are a representative sample of theprofession, it appears that although there are fewerwomen than men, there are nonetheless a slightlyhigher proportion of women than there are inpermanent executive roles. Nearly 14% of our res-pondents were female, yet the Female FTSE Report2005 shows that in 2005 women held only 10.5% ofd i re c t o rships in FTSE100 companies, whilst the Pro fe s s -ional Wo m e n ’s Network detailed that women occupiedjust 11.4% of board room roles in the UK in 2005.

Perhaps interim management offers women a way tobreak through the glass ceiling, which still has womenunder-represented in UK boards.

INTERIMS IN PERMANENT RECRUITMENT 18

Interims in Permanent Recruitment

From time to time, we at Executives Online ask ourinterim management candidates whether, if a verysuitable permanent job came along, they could beinterested. The answers were always quite similar.About one-third of practicing interim managers saidthey would return to permanent employment for theright job, and the remaining two-thirds staunchly saidthey were entirely committed to interim and wouldnever go back to a permanent role. The actual ratiowould vary slightly from year to year, seeminglycorrelating to the economic environment, with morei n t e rims open to a permanent role when the economywas difficult.

In September 2007 we asked this question again, andthe answers were resoundingly different. The ratios infact were nearly reversed, with 57% of our practicinginterim managers saying that if a suitable permanentjob came along, they could be interested, and the restclaiming to be 100% committed to interim, neverreturning to employment.

With the UK economy chugging along more-or-lesspositively, what has motivated this about-face? Wechalk it up to the notion, explored elsewhere in thisreport, that the world is no longer so black and whitewhen it comes to executive resourcing. There may nolonger be such clear distinctions between so-called“career interim managers” and “ideal corporateemployees” as there were in the past – there aremerely great people, with outstanding track recordswh i ch can be leve ra ged in all sorts of dynamic contex t s ,whom organisations are engaging to deliver greatresults. With slowness of permanent recruitmentranking the #1 reason companies engage an interimmanager, surely permanent recruitment and interimmanagement are closely related.

I n d e e d , the very same ch a ra c t e ristics that make interi m sso valuable are useful in permanent employees too:objectivity, the focus on delivery of results, beingover-qualified for the task at hand, and skill transfer

to the internal team. What’s more, an interim can behired into a permanent role far more quickly thanheadhunting an executive for the same role, often inweeks or even days versus the months that executivesearch can take. (See Executives Online’s ExecutiveTa l e nt re p o rt for a thorough discussion of these issues.)

E xe c u t i ves Online has been accomplishing an incre a s i n gnumber of permanent placements from our talentbank of interim executives. Although we’re stillprimarily an interim business, permanent executiverecruitment is now a faster-growing part of ourbusiness than interim and may soon rival it in scale.

It seems that not only are interim managers great ininterim situations, but that a growing number ofcompanies and organisations are turning to this richresource of talent when what they really need isspeed and effectiveness in hiring: to find someonewith extremely relevant experience, who can be hiredin weeks rather than months, and who begins makinga big difference to the organisation right away.

CHART 6

Open to the rightpermanent role

Strongly intends toremain interim

3 3 %

6 7 %

Open to the rightpermanent role

Strongly intends toremain interim

4 3 %

5 7 %

2004 Base: 127 interim managers (January 2004)

2007 Base: 327 interim managers (September 2007)

CONCLUSION19

In this report we have sought to uncover the latesttrends in the fast-growing interim managementbusiness. At Executives Online we know that businesswell – which means of course that this independentre s e a rch has not yielded major surp rises for us. R a t h e r,it has served to confirm us in our conviction that thepotential for further growth in this sector isconsiderable.

Driving this growth has been the need for companiesto respond rapidly and flexibly to the increasing paceof ch a n ge without adding to their long-term ove r h e a d s– something interim manage m e n t is ideally placed tod o. Co n t ributing too has been the dow n wa rd pre s s u remost companies have been trying to exert on theirpermanent staff numbers, coupled with rising pro-fessional standards within the interim managementsector itself and a better understanding in industry ofthe benefits the sector can offer.

The most recent survey data in this report tell a newstory about flexibility - not just the general flexibilitythat interim managers have always provided theirclients, in keeping headcount down and getting skillsin quickly, but also an increasing flexibility in theways interims are being deployed. The data say thatinterim managers are now engaged in more part-timeassignments, often work for more than one client at atime, and can be willing and suitable candidates forpermanent executive roles. We predict a paradigmshift from the traditional view of interim manage m e n t ,with its full-time contracts having fixed start and enddates, to a model in which talented executives withspecific experience and track records are engagedquickly to deliver a result, via whatever structurestheir clients prefer. We call this Fast-Track ExecutiveResourcing.

Those who have already experienced the benefits ofinterim management will need little persuading whenthe time next comes to engage high-quality butshort-term professional support. For those who havenot yet tried using this modern management tool, weat Executives Online would be delighted to tell youmore about how it might help solve your particularproblems.

L i kew i s e , if you are an interim manager on assignmentand your client needs additional resources, call us todiscuss the benefits of recommending ExecutivesOnline.

Conclusion

Those who have alreadyexperienced the benefits ofinterim management will needlittle persuading when the timenext comes to engage high-quality but short-termprofessional support

“

”

www.ExecutivesOnline.co.uk enquiries@ExecutivesOnline.co.uk

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