Corporations, non-profit organizations, public and private entities worldwide are beginning to explore the idea of the interim executive, and they are turning to AESC members for counsel and candidates.
“The view of the interim role was once just about filling in a line role until the permanent person was hired, or helping clients cover a business-critical gap in their infrastructure. Now, it is very much about enabling transformation.”
Tom Forrest, Managing Director, SH Consulting, Sheffield Haworth
Executive search and leadership consulting firms register growing interest in interim executive leadership from their clients and from candidates. Susan O’Hare, based in Chattanooga, Tennessee, is National Practice Leader at Gallagher Executive Search and Leadership Advisors, a US-based firm where she focuses on the healthcare sector. “We have already placed more interims in 2020 through the 1st of May than we did in all of 2019. So anecdotally, absolutely we see growth in the interim role. I participated in an AESC Boutique and Independent Firm Forum about a month ago, and there was interest among more firms in offering interim services because they have clients who are asking about it.”
Research by executive search firm Ccentric Group confirms growing candidate interest. Sydney-based Managing Director Wayne Bruce says, “We’re seeing increasing interest in interim roles from candidates, pre-COVID; it happened naturally. When we did a recent survey, we found a significant percentage of respondents did interim because that was their choice—they would always choose interim over a permanent role. Others would still consider a permanent role or would accept a permanent position that came from an interim role.”
The Interim as a Solution
Why are interim executives brought into an organization? Sam Burt, Global Head of Executive Interim at Leathwaite and based in London, identifies the main reasons. “It varies considerably. One of the most frequent requests we receive at Leathwaite is to provide a senior, experienced, immediately-available individual whilst we are engaged with a retained search for the role to eliminate any form of business disruption. Another regular request is when a company is going through considerable change and they require the experience of an Managing Director-level executive who has executed this type of transformation before. On a similar basis, new legislation or regulatory requirements stimulate a number of our client requests. Succession planning and even mentoring are other requests, and of course gap cover is an essential part of our solution.”
Burt also identifies roles that by their nature are not permanent. “You could have the scenario whereby there's a shelf life associated to the role. Consider mergers and acquisitions. Firm’s may need to conduct a major technology transformation to merge the two firms’ systems together; this is a prime example where they can take the opportunity to engage a senior and experienced hire, on a non-permanent basis, who has done this job before and has a track record of delivery. They will frequently come on board for a year to 18 months and seamlessly bring these two firms together.”
An organization may want to test-drive an idea before fully committing. For example, Burt says, “Executive Interims can be an ideal solution where firms are experimenting with different structures and roles. It could be they are looking to digitize their business and require a ‘chief digital officer’ type role, or around data with a ‘chief data officer,’ but they are not fully sure on the remit or positioning of said role. It could be anything where it's a concept the firm hasn’t necessarily looked at in-depth before.”
Any kind of sustained upset is a signal that an organization really should consider an interim executive, according to Jim Zaniello, President and Founder of Washington, DC-based, association and non-profit-focused executive search firm Vetted Solutions. “If there's a lot of turmoil in the organization, putting an outside interim in place makes a lot of sense because they can have some of the hard conversations inside the organization. And if there's a big culture change needed, for example brought on by a traumatic event, it may be wise to have an interim CEO start that process and then hand it over to a newly recruited CEO.”
For O’Hare, “Anytime someone leaves an organization, a hiring leader is wise to look at the position, look at the gap that the person left, whatever that was, and decide, what do we need, going forward? If we've had a maintainer, do we need a disruptor? If we've had a disruptor, do we need somebody who's going to come in and nurture the staff? An interim executive gives organizational leadership an opportunity to figure that out before they make a permanent hire mistake that isn't in the best interest of the organization.”
Zaniello agrees. “Anytime you have a leadership opening, everybody wants to get right to recruiting the next executive, and that's not always the right answer.” Thinking of a client, he says, “Every time a new spot opens up the CEO intentionally puts an interim in place for a period of six months to keep the work of the department going, and also to help the CEO think through what, if anything, they should do differently; somebody to keep the work going, but who doesn't have strong ownership on what we should do going forward; part of whose job is to advise us on what the right future is for this role, this team and where it fits into the organization.”
Bruce sees how interims are effectively leveraged by his clients, as well. He says, “We often see among health services clients, rather than hire someone, the board might bring in an experienced CEO and do a diagnostic, do the ground-work for a new plant, or lead some change management that might be required before they hire the permanent person.”
If there's a lot of turmoil in the organization, putting an outside interim in place makes a lot of sense because they can have some of the hard conversations inside the organization.
An interim executive could also provide a level of experience and expertise beyond the organization’s FTE budget. Managing Director of Fisher Leadership and based in Melbourne, Michelle Loader specializes in the professional services sector in Australia. “Imagine bringing in an experienced CEO who has run 5, 6, 7 companies and you're bringing them in as a strategist. Their ability to communicate, to cut through, to understand systems and integration, and remove the noise, making their ability and speed to impact much greater. In the ideal interim, you get someone one skill set above what you would likely attract in a permanent role.”
“You can bring heavy-hitting, amazing, best-of-breed people in their field to the table for a short period of time that you could never afford to have in a in a permanent capacity,” she adds.
There is value in an advisor with first-hand experience. Burt says, “There are times when clients are seeking advice or even a small team of people to deliver a key program of work, but they do not possess the budget to engage one of the large consulting firms. They need practitioners, individuals who ‘have the scars’ and experience to make an immediate impact. They want people who can roll their sleeves up and focus on delivery.”
Someone who understands it is New York-based Mike Lorelli, a career CEO/interim CEO with over 35 years in leadership roles at Fortune 50 consumer, B2B and private equity-backed companies. His advice to organizations hiring an interim: “The biggest mistake is to try to hire on the cheap, or even be as frivolous as to interview three or four people and go for the lowest cost person.” To illustrate, Lorelli says, “Think about Lasik surgery. The doctor who runs a TV ad saying it’s $599 an eyeball is probably the last person I want to go to.” Lorelli recalls a time he was being asked to step in for an unsuccessful CEO. “One board member asked me what my fee was, and when I told him, he said,‘that's more than the present CEO is making!’ I said, well, I guess you got what you paid for.’”
ADVICE FROM A CAREER INTERIM CEO
- You won’t be bored, from the night before you start. And it’s pretty neat to find yourself at the bottom of a (new company) learning curve
- You are, in effect, an Independent Entrepreneur.
- The compensation can be excellent. They’re reaching out to you, because they haven’t figured it out. And that commands a premium price. Don’t be shy. Once you state your price you can never raise it. If they balk, you can always counter with a performance bonus for results.
- The risk for you is that there will be people in the organization who feel threatened and will actually want to see you fail. Be sure to negotiate a 90-Day Notice period. You’re taking on a greater risk than they are.
Mike Lorelli, CEO, Interim CEO and Independent Director Accent Food Service
The Profile of an Interim Executive
What is an ideal profile of an interim executive—what type of background and experience and personality-type makes for the most successful and satisfied interim?
While every assignment is unique, the typical interim executive has to be nimble.
According to Bruce, “A lot of people who are interim executives like change projects. They like going in and turning the organization around, and once it’s in good shape they get bored.” He adds, “With any executive role there’s a technical skill component, but the thing that makes them effective is EQ, relationships with stakeholders. Usually, executives will say the hardest things to manage are performance. For executives who have those long-term relationships, they find managing the performance of people with whom they have those relationships difficult, whereas the interim person can come in with a more objective viewpoint.”
For Zaniello, “I think the ideal profile of an interim exec is someone who is first and foremost a very positive yet also a patient leader, and someone who also has strong management experience. In change or transformations, which many of these situations are, the interim needs an ability to be flexible, to be patient, to be diplomatic. A lot of soft skills are critically important in an interim role, and then complete transparency is an absolute must, sharing openly with the board and the staff about what the interim is experiencing, how they're progressing on the goals that were agreed upon at the start of the engagement.”
For O’Hare, experience is key. “Most interims, you will find, have a little gray hair. In order to walk into an unknown situation and quickly make yourself useful, you have to have had some experience. That's the first thing. You have to have confidence and be comfortable in your own skin. And you have to be flexible enough to walk into different situations with enough political savvy to read the situation and size the situation up quickly. The other thing is the ability to lead through change, which I think is vital right now.”
O’Hare cautions, “Another characteristic that interims need to have is a level of humility. I think that allows you to go in and handle a situation, inform your boss, maybe even fix some problems without having to have the credit given back to you, because you're not a permanent part of the organization.
Often, we see people doing one gig executive role & they are hooked! ... It's terrific work, and it’s a really agile way to contribute your lifetime of skills & experience.
She adds, “I’ve seen two interims fail because they suddenly started to take ownership for things, and it's not theirs to own. It's theirs to rent.”
“It definitely is not boring, doing what I do for a living,” Lorelli says. “It may take 20 years off your life, but it's definitely not boring. Last week I was in Austin Sunday and Monday; Tuesday I was in Phoenix, Wednesday I was in San Antonio, Thursday I was in Dallas, Friday I was back in Connecticut. You’ve got to be committed to a 24/7 life out of a suitcase, or you're not cut for this.
And for candidates considering an interim executive career, Zaniello sees great opportunities for professional growth. “I think the benefit is that the interim executive gets to have a very solid impact on an organization, leaving it stronger than they found it, and having an impact on the customers, the members, or the staff in what should be a very positive way.”
Loader adds, “Often, we see people doing one gig executive role and they are hooked! They just roll from one project to another. It is terrific work, and it's a really agile way to contribute your lifetime of skills and experience.”
Interim executives are serious, as well. “An interim’s legacy and reputation are so important to them,” Burt says. “Many run their own limited companies and are their own brand. Therefore it's imperative that they protect that brand and constantly find ways to elevate that brand, because their next role is likely to come off the back of their previous good work that they’ve done.”
An Environment for Interim
“As a consequence of the global financial crisis, you had organizations that had a lot of management issues; the cracks were there, but they didn't recognize them.”
Grant Speed, Interim Practice Managing Director, Odgers Berndtson
In the current health and economic environment created by the COVID-19 outbreak, some organizations look to interims to prepare for worst-case scenarios. Loader explains, “In the context of COVID, we are working with a number of clients during this period who, particularly early on, worried, ‘if my chief medical officer goes down, our business risks would be unacceptable. So, I need to know that you have a standby ready.’ People will look at their talent risk matrix and say, I've got key dependence on these priority individuals, i.e. if they were out of the business for a week, we would be in trouble.”
“What COVID has done is shone a light on every vulnerability in every system, process and individual,” Loader says. “And what do I mean when I say that? Anything that was a hairline crack, as soon as COVID happened, became a crevice. It highlighted where leadership, process and systems are lacking, and I don't know if there will be a business in the world that won't undergo some type of transformation as a result of this environmental shift. Therefore, short term decisions need to allow people and organizations to stay a lot more agile. What the interim executive does is give companies access immediately deployable talent that they need for now in a really outcome-focused way.”
O’Hare recognizes that employers are sensitive to the possible impression made by hiring a senior executive at a time when others are losing their jobs. “What's trending right now seems to be that as organizations are looking at their total workforce and unfortunately having to lay off or furlough employees. They may have a need at the executive level, but the optics of bringing somebody in full time are just not good right now. Plus, they get a chance to have somebody potentially come in and maybe do something that would be disruptive that someone else on a full time basis would not be able to live past in the organization.”
“COVID-19 has scared the daylights out of many people in many ways,” Lorelli says.“ One consequence is a reluctance to make serious, big-bucks hires. It’s a lot easier for them to fill the vacancy on a less-than-permanent commitment, while the world finds its ‘New Normal,’” he says.
“Probably 90% of companies are negatively affected by this COVID situation.” Lorelli cites his current company as an example. “We are a very large food service company. We operate in 11 States, and we've got 700 employees. Our business is running cafeterias, break rooms, micro markets, or vending machines for businesses where there are 50 to 5,000 employees. With COVID-19 there's been a shift to work from home, which means those people aren't going to the offices anymore, so they're not using the cafeteria. In this environment, I’ve got my belt in real tight, I'm watching every nickel that goes out the door. I've got two openings that we are not filling right now, and I'm using interim people. So COVID-19 has a major impact.
Between recessionary budget constraints, the PR risk of a high-dollar hire, and the leadership weaknesses revealed during the COVID crisis, now may be a key time for organizations to look at interim executives. The search and leadership consulting profession is uniquely positioned to help discern the precise skills an organization needs to deploy, and connect with the executives who have them.
Interim Executives and the Search Profession
Executive search consultants spend their careers understanding their markets and building deep networks that they can leverage for clients looking for interim as well as permanent executive talent. O’Harem says, “For a client who's considering an interim, that consultant with a network is priceless, because the client doesn't necessarily have those relationships.”
Loader explains, “We probably agitated for a move toward interim executive placements when we saw how big the supply of people willing to work flexibly was. We started to educate the market that they could access talent and skills on demand in a different way. And so for us, it then became solution building.”
Between recessionary budget constraints, the PR risk of a high-dollar hire, and the leadership weaknesses revealed during the COVID crisis, now may be a key time for organizations to look at interim executives.
When Leathwaite was building the marketing for their interim business, Burt says, “we asked ourselves ‘why do we think the industry might be needed?’ The answer is that market disruption requires pragmatic solutions. That market disruption could be a pandemic, it could be Brexit. It could be that unfortunately your head of technology has unexpectedly left the business. Depending on the location this individual could be on as little as a two-week notice, and at times there is no succession in place so the business requires options while they address the longer term situation. This is where Executive Interim is ideally positioned to support.”
For a search firm getting into the interim business, O’Hare offers some pointers. “First of all, stick with the industry you know best, where you have a wide network, because it's just going to make it easier for you to find people.”
Second, she says, “Determine your business model. Is the interim going to be an employee that you pay every month, and you bill a client for that pass-through revenue, or the client pays a flat fee for the placement of the interim?” She says, “Some of the big firms that do this as a substantial part of their business have interims that actually work for them. They have interims on a retainer and they place the same person with multiple clients over time. We have a different pricing model; the actual interim executive we place is a 1099 employee of the client organization, they don’t work for us.”
Though retained executive search consultants work for the hiring organization, they serve a purpose for candidates, as well. Bruce explains, “When going into interim, we found 70% of candidates surveyed preferred to go through a search process rather than the employer. If I had to hazard a guess it’s our role of being the honest broker. In an effective process the candidate and employer engage authentically and honestly, but sometimes candidates aren’t clear about what they really want. As consultants we can act as that buffer and mediate. We know what the issues are, we can counsel clients and candidates accordingly, draw on our experience and help them reflect on things they hadn’t thought about.”
Executive Interims can be an ideal solution where firms are experimenting with different structures and roles.
The rise of the interim role is good news for search firms, client organizations, and the executives themselves. “What we do is very high-touch,” Bruce says, with equally high consequences. “When you place an executive in a health system, that has a massive impact. Whether it’s an interim CEO or clinical leadership role, those people have direct impact on quality of care and patient safety. We want it to be the best outcome every time, because it could impact a life if you get it wrong.”
“It’s not just transactional,” he says.
According to Zaniello, there’s a lot of room in the market for executive search firms interested in interim. “I think it's still in its infancy, meaning that, as executive recruiters think about how to either grow their business or to provide increased value for their clients, there is a real opportunity here. I think there is a real need in all sectors. Interim is not the right business unit for everybody, but for those who really see a way that it fits into their business and their business practice, it can really increase the value to and the connection between the firm and its client.”
For Burt, “It's about your ability to truly source the best talent—not just the person who came to mind first or who you have worked with before. It's about having that ability to map a market quickly to ensure you are always unearthing new talent. This is done through a rigorous process, through our extensive network and using our market knowledge. We also want to give the candidate everything they need so they’re ready and excited to take the role.”
And about that talent, Burt says, “I genuinely believe that the talent within executive interim right now is the best it's ever been.”
An Addendum: Coming Research on the Interim Executive
Dr. Sharon Moss, based in Washington DC, is President and Chief Research Officer for the ASAE Research Foundation, which is conducting research on the subject of interim executives in association management. “The genesis of this research is our conversations with external audiences, including consultants with Vetted Solutions and The Ancora Group, about executive transitions and leadership needs, and how some of those needs are being filled through an interim role.”
She says, “We know interim leadership does occur in the corporate environment and in some religious and spiritual circles. The larger question was, are similar models for interim executive leadership applied in association management, and what are the levels of preparation for the individual who ultimately becomes an interim?”
Moss stresses, “We’re not probing in a vacuum.” While focusing on the perspective of the interim CEO, “we recognize that to get a full, comprehensive picture of the interim role, we have to go beyond interviews with that individual. And so this research includes not only the interim, but also a board member who was involved in identifying that interim and the executive transition strategy; senior staff, leaders who work closely with the interim, and are involved in making decisions about executive transitions; and the permanent successor CEO.”
Using qualitative and quantitative methods the ASAE research will include case studies and survey data. The research is US-based including organizations with a global component, and is expected to be completed in Summer 2020.