Thursday, 8 December 2011

Interim management: cost or investment?

There is no denying that we find ourselves in increasingly challenging times and according to various sources, with no obvious let up in the economy any time soon.  This begs a question as to why some businesses are still reluctant to engage with Interim Executives to help them drive their businesses forward.  After all, it remains more than ever, a flexible resourcing solution and one that represents excellent value when measured against the positive impact the Executive Interim will have on the organisation.

There are two mindsets for those that need to engage the help of an interim executive for driving change, turnaround, restructuring, project/programme management or for a shortfall in the leadership team.  Firstly they recognise they have a problem, meet some interims and are frightened off by the "cost" as they are trying to compare this to a permanent equivalent salary.   The second view is of those that recognise they will see a significant return of 10-20% on their investment, that it provides a no strings flexible solution and is seen as a service offered by a business rather than a soon to be employee.

Pre-recession when given a client mandate price was very rarely talked about.  There was a problem and they did not possess the internal capability to resolve themselves and therefore understood they needed to engage an external resource in the guise of an interim executive to help them.  The difference now though is that I am constantly hearing stories of assignments not going ahead with cost as the barrier because comparisons are being made with equivalent permanent salaries.  This is like comparing apples to oranges.  You can’t.

Any businesses when making a decision on a purchase whether it is for capital equipment or services needs to examine the ROI.  Calculations will be made on risk vs. reward and generally a decision made on whether there is a benefit to the business from making the investment.  This decision making process is no different to that of engaging (not hiring) an Executive Interim.  It is an investment for the business that will produce a return. 

The financial benefits of engaging an executive interim can be extraordinarily high.  Accountancy Age carried out a study of 400 Business Change and Improvement assignments.  The study found that on average each executive interim delivered a return on investment of 1400%.  When this is analysed with the relatively low cost in interim management fees the savings / benefits to the business are really quite staggering.

Everybody moans that the economy is in poor shape, opportunities are thin on the ground, business is tight, customers won’t spend etc.  Surely it is time for us all to start driving programmes that will improve businesses that might just go some way to kick starting the economy and therefore get back to the days where we can all benefit from the cycle that ensues when businesses invest in their future.

By Steven Wynne

Monday, 5 December 2011

Growth in new assignments shows continuing demand for interim managers

The latest Ipsos MORI survey conducted by The Interim Management Association’s (IMA) of the UK’s leading interim management providers has shown a clear rise in the number of new assignments started  in quarter 3 2011, compared to the previous three months. The survey covering July to September 2011 reveals a 22% increase in new assignments, despite the challenging economic conditions.

The survey indicates that the private sector now accounts for 65% of all completed interim management assignments, up from 61% in Q2.  This share of private sector assignments completed by IMA members is at its highest level since Q4 2007 and appears to have returned to pre-recession figures.   

The number of enquiries received also grew in Q3, continuing an upward trend which sees enquiries rising by 68% from a low which occurred in the fourth quarter of 2010.  This is clearly encouraging news and confirms that activity levels have been increasing.

27% of requested assignment functions are from Special Projects (down from 29% in Q1 2011) followed by Finance (20%) for which the proportion is constant from the previous quarter. C-suite executives represent 8% of the IMA business in this survey.

The most common reason for an assignment is Programme/Project Management, with 36% of all interim executives hired for this purpose (up three percentage points from the previous quarter of 33%). Perhaps because this is a convenient label to give it?

Business Improvement and Change or Transition Management represents 15% and 14% of completed assignments respectively. These levels are relatively unchanged from the previous quarter, with the former unchanged and Change or Transition Management decreasing by one percentage point.  These figures are notably higher than the next most cited reasons. Interestingly Turnaround is surprisingly low but this has been a busy area for us with many assignments needing Turnaround expertise.
By Steven Wynne