Interim executives are in!
When you set yourself up in the holy orders of the advice-giving business, there are usually three types of engagements:
- A client says they have a problem. Can you help analyze the complexities and present a conclusion suitably backed up with data?
- The client says they’ve analyzed the problem. Now they wonder, are you available to help implement the solution?
- The executive who was supposed to lead the implementation has quit! Are you available as an interim executive?
Traditionally, these engagements came in a sort of progression. After all, no one would ask you to solve a problem that hadn’t been analyzed yet. So the logic pretty much flowed from analysis, to helping out, to an occasional stint in the executive ranks.
But no longer. Now, middle-market companies are going directly to the interim solution when there is a gap in their executive ranks. Some of my recent experiences:
- A private equity firm hires an interim CFO for an industrial manufacturer. The company desperately needs a budget, a new banking relationship is being negotiated, and a big four audit is due in April. The headhunters are looking for the perfect fit, but the PE firm doesn’t have time for that. Solution? An interim.
- An Inc. 500 company’s growth has outstripped its financial resources. Again, a budget is obviously required. At the same time, hard choices are needed in capital allocation and financing. The company has a competent controller. Could an interim CFO get them through the crisis period and then leave them better off than before?
- A late-stage start-up has caught the interest of a venture investor. Can the books and records be set up, and a business plan published, in record time while other executives work on a product launch? Hire a professional temp.
So this has been a welcome addition to my professional toolkit — especially since my prior experience as a CFO would otherwise have gone relatively unused. I haven’t been marketing as an interim, but the demand has been coming my way. And as far as I can tell, that demand seems to be enabled by technology, where companies are using LinkedIn or other tools to find specialized experts.
It seems that, for CFOs anyway, there is a stratification process going on here. Need merger integration and controls expertise? There’s a guy for that. Pre-IPO financial expertise? Here’s a gal for you. Turnaround, cash management, international, you name it — there’s a demand for narrow skill sets.
But what motivates the professionals, some of whom are not steeped in the allure of consulting, to give up full-time jobs in order to join the ranks of professional service providers?
Anecdotal evidence, from CFOs anyway, says that full-time jobs are no longer so full-time. One interim CFO, who has immaculate qualifications, told me he had lost three full-time jobs after an average of two years on the job with each. Why? Did he do a bad job?
The answer is more prosaic in this hyper-competitive middle market: company sold, company sold, company sold.
He then spent an average of a year after losing each job before he found another one.
So, the math for a so-called full-time CFO is difficult: work for six years to feed a family for nine years. Suddenly the prospect of making oneself available for up to a year or so at a time is attractive, if it makes it easier to stay employed over the long haul.
Interims are so in right now that a new ecosystem is developing in the care and feeding of the interim manager, and not just for CFOs. There’s even a new association dedicated to the care and feeding of these professionals — The Association of Interim Executives. CEO Bob Jordan says, “There are many companies that are facing challenges or struggling to capture opportunities, because they don’t have the right people on board. We formed the Association of Interim Executives to give companies access to veteran executive talent who can instantly be infused into situations and be held accountable for results.”
In addition, more staffing agencies are dedicated to not only part-time accountants but also full-time professionals. This was the norm for programmers, copywriters, and project managers. But now C-suite executives are also finding that taking short-term hops can lead to long-term career growth.
In a future post, I’ll talk about keys to success as an interim manager.
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