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The Worldwide Emergence

White Paper of the Full-Time

INTERIM
The Worldwide Emergence
of the Full-Time
INTERIM EXECUTIVE
EXECUTIVE

OVER THE LAST SEVERAL YEARS, a little-noticed but sig-

nificant number of C-level executives worldwide have emerged
in the workforce, taking on contract assignments for both small
and large companies in interim management roles. What’s driv-
ing this shift is the changing nature of the 21st century work-
place, with its on-demand dynamic for quick results, the end of
promises of life-time employment and the rise of executive “free
agents” to meet the increasing expectations of public and private
shareholders.

Companies can avoid, at least temporarily, the lengthy search

process and fixed costs associated with a full-time hire by using
interim talent, along with gaining speed-to-execution that can be
important in today’s marketplace.

Differing from consultants, these top interim executives share

certain traits, including a bias toward operational improve-
ments, a focus on deliverables and demonstrable results, and
sometimes the ability to see “the jewel in the mud” that others
have overlooked.
Page 3
TREND #1:
A Growing Scarcity of C-Level
Executive Talent
In the U.S., as in many other developed
countries, the looming talent shortage in the
skilled labor force—up to the top levels of
management--is well-publicized. Most experts
believe the current economic downturn is
simply postponing the demographic realities
at work here.
The National Bureau of Labor Statistics
(NBLS) says a shortfall of 10 million skilled
workers is projected by 2010, and that the
coming shortage of executive talent will ac-
celerate through 2030.
RHR International reports claims that Amer-
ica’s top 500 biggest companies will lose half
their senior managers within the next five years.
One probable impact of this demographic
shift is on U.S. economic performance. Ac-
cording to Aon Consulting’s 2008 Benefits &
Talent Survey of more than 1,100 organiza-
tions, 56 percent of employers nationwide
experience a leadership shortage that impedes
their organization’s performance, and 31 per-
cent expect to have a shortage of leaders that
will impede performance in the next one to
four years. Among the industries most affected
by this leadership shortage are healthcare (62
percent cite a leadership shortage); profes-
sional services (58 percent); and manufactur-
ing (57 percent).
Finding the time and resources to implement
a solution to address the leadership develop-
ment gap has been a major challenge for many
organizations, and awareness of the problem
isn’t limited to HR; as the studies cited above
suggest, C-level executives themselves are very
aware of the leadership gap. More alarming is
that some executives in the Aon survey said
the problem is severely acute and acknowl-
edged that it needs to be fixed as soon as the
next 1 or 2 years.
This looming problem can be traced to inter-
nal upheaval among organizations, causing
them to push talent acquisition and manage-
ment further down a growing list of priori-
ties. Within the HR department, constrained
resources have also hampered HR leaders to
address the problem.
The internal upheaval is often caused by
external factors—i.e., market upheaval which
plays havoc with company strategy and
requires greater and more sudden shifts in
direction.
Finally, although C-suite turnover had less-
ened—perhaps surprisingly—between 2005
and 2007, the current economic recession has
changed that. The Wall Street Journal recently
(January 13, 2009) headlined a piece, “CEO
Firings On the Rise As Downturn Gains
Steam.” The article cited Spencer Stuart’s
findings that 61 companies in the Standard &
Poor’s index changed CEOs in 2008, up from
56 the previous year.
“A storm is gathering. We’re going to see
the effects of current conditions within the
next 12 to 36 months as more baby boom-
ers begin to retire. One of the things those
people take with them is a huge knowledge
and experience base that most companies
have not replaced.”
–Dean Bare, managing director, Stanton
Chase International, Atlanta GA 1
TREND #2:
Emergence of Highly Skilled Inter-
im Practitioners Worldwide
Given the emerging talent gap at the top,
where will companies find the accomplished
professionals to fill those jobs? Contrary to
popular assumptions, much of the answer will
come not from foreign workers offshore but
from the growing group of both GenX and
Boomer executives who are choosing to work
on an interim basis.
As a recent report from Epoch Partners, a firm
specializing in interim executive placement,
suggests, second careers and flexible work
schedules are two elements of “the new way
to work,” along with three others: increasing
competition, more rapid cycles of innovation,
and the need for just-in-time executive talent.
Epoch also reports that less than one in five
companies is well positioned to attract and
retain top talent through traditional recruiting
methods. This need for non-traditional ways
of sourcing talent is perhaps the main driver
behind the emergence of a “high growth mar-
ketplace of accomplished professionals.”
Research by Redflash Inc. projects 60%
growth in the numbers of top-level interim
execs this year and next.
What kinds of assignments are typical for
these “hired guns,” as they are sometimes
termed?
Examples might include:
• Opening a new division, region or country
• Launching a product or service
• Guiding a startup business through initial
hurdles
• Managing operations through a merger,
acquisition or succession
• Turnaround and restructuring for trou-
bled companies or divisions
Another way to look at the roles of interim
executives is in terms of three stages of the
business cycle:
Start-up:
• New ventures
• Product development
• Rapid expansion
Growth and Consolidation:
• Integration
• Introduction of best practice
• Management of subsidiaries
• Mergers and Acquisitions
Change/Turnaround:
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• Transition
• Divestitures
• Restructuring
• Crisis
For an interim CEO, any one of four different
but common scenarios might occur:
• An assignment from a private company’s
owner or board of directors for an indi-
vidual or team that will bring significant
skills and experience for a set period of
time.
• An assignment from a public company’s
board of directors as a temporary replace-
ment with fixed deliverables, usually
including directing a permanent hire
process.
• An assignment from a private equity fund
to assist with or run a portfolio company;
many private equity firms have deep
benches of talented executives who have
already had considerable success on their
own, or with larger public companies, or
with other portfolio companies from the
same fund.
• An assignment from a bankruptcy court
or trustee acting on behalf of an estate,
shareholders or creditors for an indi-
vidual or team to act as good stewards
in growth, maintenance, asset sale or
dissolution.
In the “new engagement marketplace,” as it’s
been called, the key values are relevance, cost-
effectiveness and business agility. In place of
traditional employment security, a new kind
of security is the norm, one based on provid-
ing value to a variety of companies in different
industries.
The economic benefits of variable personnel
costs play an important role here: interim
executives are simply able to operate more
cost effectively than their full-time, fixed-cost
counterparts.
Productivity also matters in a business land-
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The Worldwide Emergence of the Full-Time
INTERIM EXECUTIVE
scape where, according to EPOCH
Partners LLC, over 60 percent of new
C-level executives fail within 16 months,
after a search process that averages nine
months.
One approach is for companies to forego
traditional search firms in favor of servic-
es that represent interim executives. These
services must have previously performed
all the vetting and due diligence func-
tions of traditional search firms – before
the client company calls up. The larger
part of the interim market is represented
by an approach directly between the
client company and interim executive
or interim team. Either approach makes
for a much faster track for a company in
need of leadership.
“Companies looking for talented ex-
ecutives to drive creativity and innova-
tion may soon find them in interim
packages. When hunting down this
kind of leadership talent, it’s not about
the tenure—it’s all about the match.”
–Juli Ann Reynolds, president and
CEO, The Tom Peters Company
2
“A new approach to talent
management is needed for
two key reasons. On the
public policy side, com-
panies are not developing
the talent the U.S. needs
to stay competitive. On
the employer side, most
of the companies aren’t
doing talent planning, or
their planning is wrong,
even as their ability to hire on
a just-in-time basis is eroding.
Employers can’t easily find people out
there to poach; it’s an expensive and
time-consuming process to even look.”
–Peter Cappelli, Wharton Business
School, author of Talent on Demand:
Managing Talent in an Age of
Uncertainty 3
TREND #3:
Emergence of Best Practices/
Skillsets Identified with
Effective Interim Executives
[This section is based on interviews with
practicing interim executives: see below for
sources.]
Thus interim executives are participat-
ing in the larger workplace shift which
might be described as from Employ-
ment to Engagement, or, to use the
more appropriate term, Assignment.
(The term “engagement” comes from
the consulting universe and interim
execs are quick to point out the key dif-
ference between their work and that of
consultants: unlike the latter, interims
take on a fiduciary role and stay to effect
the necessary changes or complete the
task.)
Given the limited timeframes for inter-
im assignments, it’s not surprising that
perhaps the first key trait for a successful
interim executive is to be a quick study.
A recent study by Boyden Interim on
what makes or breaks an interim exec
reveals that he or she typically has only
five days to do the things most newly
appointed execs take 100 days to tackle.
These include: quick fixes, establishing
credibility, and building relationships
across the organization.
This point raises the question of how
someone comes to be an interim execu-
tive. Some interims suggest that turn-
around work—with its highly structured
financial and legal requirements—is help-
ful for that sub-specialty of interim work.
But not all interim work is turnaround
assignments.
Rather than a matter of training, some
practitioners might argue that effective
interims are simply born that way. One
exec interviewed here argues that emo-
tional intelligence is key, to allow an exec
to move into an undefined corporate
culture and change it: this personal quality
matters because “culture is the key,” this
exec put it.
A second key trait is what one interim
exec calls “a high fortitude for chaos.” It
is typical in interim assignments to find
surprises, even on top of the fact that,
as one interim commented, “You always
inherit what you didn’t create.”
In the case of interims doing turnaround
work, for example, there are various kinds
of risks that have to be managed. The
greatest of these, according to one exec
interviewed here, is simply taking on a
situation and finding “you can’t turn it
around.”
Thus a thick skin is often mentioned as
valuable in playing this kind of “out-
side” role. A change agent needs to have
a somewhat autocratic, assertive style,
some interims would argue, in order to
get the job done, to stay focused on the
deliverables, to produce quick results.
An interim CFO must exercise equal
caution in that role, especially in inter-
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acting with third-parties who need to
understand the interim CFO’s role of
analysis, consultation, various types of
process implementation—as opposed to
signing off on an audit or taking other
personal risks.
Interim execs actually take on a wide
range of assignments, aside from turn-
around work: these might include
leading a startup, managing a corporate
spinoff, and other special situations. On
the question of leadership skills versus
operational skills, an interesting debate
among interims could be held. In some
situations, the interim CEO might
perform some or all of the classic CEO
roles—communicating the company vi-
sion and strategy, dealing with the board
and shareholders, managing the annual
report. “You need good generalist quali-
ties,” as one interim CEO stated.
Often in interim CEO assignments,
however, the actual role can be closer to
that of a COO, with the focus on “fixing
things” and quickly. Typical COO tasks
might include managing areas like risk
mitigation, IT, sales, getting the com-
pany ready for sale, etc.
One executive interviewed here under-
lined that industry skills and operational
skills are quite different, with the latter
more important usually in interim work.
He noted that sometimes the company
may not have the luxury for a thorough
search in its own industry for an interim
exec and must bring in someone from
outside the industry.
While there can be disadvantages to
bringing in an “outsider,” one interim
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interviewed here noted that it’s often
the interim exec who is first to spot the
“jewel in the mud”—an asset or revenue
possibility that has gone overlooked.
In this increasingly collaborative style of
work, interim teams are formed quickly
for just-in-time assignments, typically of
three months, six months or one year.
As one experienced interim exec put it,
“Teams offer power in numbers”—espe-
cially between an interim CEO and the
interim CFO, for example.
Another advantage in teaming is in the
greater ability to make an impact, a
cultural shift within the hiring company.
Once the new processes and procedures
are in place, “You want other employees
to take ownership of the new culture: it
makes for a better transition to a per-
manent replacement,” another veteran
interim COO explained.
CONCLUSION
Market conditions and demographic
realities for the next several years and
beyond will make the use of on-demand
or interim executive talent a valuable
business strategy for companies of all
sizes and situations. The ranks of quali-
fied interim top executives will continue
to grow worldwide, with groups of these
execs forming teams in order to execute
their assignments quickly. The particular
dynamics of interim executive work will
become better understood, as contrasted
with both consulting and permanent
assignments.
Sources
Practicing interim executives inter-
iewed for this white paper:
Robert Jordan, Chicago, IL – Redflash
Anna Prata, JD, Houston TX
Brian Wygle, Pasadena CA
R.T. Burda, Columbus OH—B2BCFO
James Jones, San Jose CA—The Execu-
tive Partners
Paul Travis, Seattle WA—OneAccord
Partners
Footnotes:
1
Quoted in Human Resource Executive
Online: “Bridging the Gap” (May 16,
2008)
2
Quoted in Epoch White Paper: Bridging
the Coming Executive Talent Gap
(www.epochservices.net)
3
“Talent on Demand,” Knowledge@
Wharton--Human Resources (February
20, 2008)
About interimCEO/interimCFO
The interimCEO/interimCFO Network
(www.interimceo.com) is a free world-
wide network for interim CEOs, CFOs,
COOs, CROs, CIOs and CMOs.
Launching in spring 2009, the network
was founded by Robert Jordan and a
group of other practicing interim ex-
ecutives to offer a combination practice
platform and business network for this
emerging business specialty. The network
is free to firms searching for interim tal-
ent. It also allows member execs to easily
search for new team members needed to
take on their multiple and even concur-
rent assignments.
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