Anne Beitel of headhunting firm Executives Online explains how interim management can provide an economical solution to firms’ staffing crises during the recession.

Remaining optimistic and committed is one of the greatest challenges facing employers right now. However, in a recent online survey* conducted among senior executives and experienced interim managers, Executives Online discovered a surprising amount of positive thinking, despite less than favourable economic conditions.

Respondents were asked a variety of questions, covering their activities and attitudes in shaping a response to the crisis; how companies were adjusting to their recruiting policies in light of the downturn and what respondents saw as the biggest challenges and opportunities.

The current economic situation has impacted on a number of functions to a greater extent than others, recruitment not surprisingly being one of the worst hit. As companies begin to realise the full extent of the situation, hasty decisions are being made in order to cut back on business costs.

Cost savings
The report discovered that many organisations are freezing recruitment, despite the fact that crucial leadership gaps exist which can often leave a business somewhat exposed. The natural option is to hire a permanent executive, yet there are certain situations that require someone with a specific skill set in order to work on a short term project. In these instances interim management would be the logical choice. The survey discovered that the use of interim managers is increasing, although many organisations still view this approach as an expensive option. 

What many firms don’t appreciate is that a permanent employee can actually cost the business much more once the recruitment costs, bonuses, holiday pay, employers' national insurance contributions and pension are taken into account. Another important aspect to remember is that it can take up to three months or more for a permanent employee to settle in, which can therefore lead to missed opportunities for the business during that time.

Interim managers are recruited with a clear set of deliverables and a fixed, often short time scale in which to fulfil them. Executives who choose this career will know how to quickly fit in and get things moving. Our report indicates that a remarkable 81% of organisations have either remained consistent or in fact increased their use of interim executives and managers, despite the tough economic climate that businesses are facing. This method allows firms to address staffing gaps quickly whilst reducing the risk involved with permanent recruitment. Other benefits cited by respondents included cost savings, greater value for money, and better matched candidates who can hit the ground running and deliver results quickly.

Becoming an interim manager can also be an attractive proposition for candidates. Although placements may only last up to nine months, interim managers can enjoy a lucrative daily rate of £500 upwards. Furthermore, if an interim executive operates through a limited company they can draw not just a salary but also dividends, which have a different tax treatment.

Strength during a crisis
Another area highlighted by respondents was that an executive’s experience during a previous economic downturn was considered critical. When asked whether working through similar business conditions in the past would have helped executives deal with the current recession, the majority responded with a confident ‘yes’, stating that experienced managers were less likely to ‘panic’ or ‘be paralysed by fear’.

A willingness to make the necessary changes to weather an economic downturn is certainly important, and as mistakes can be costly, previous experience is vital. It was also noted that experienced executives would ‘realise the importance of strengthening the business in such times’. The realisation that ‘all things pass’ is also something that more mature executives tend to possess, and this helps to avoid knee jerk reactions which could fundamentally damage the long term health of the business in the name of short term expediency.

Senior executives who had been through a previous recession in a management capacity were three times more likely to note the importance of longer term, strategic thinking than their junior, less experienced colleagues. Respondents outlined that previous experience was seen to bring knowledge of the dynamics of change in a slowing commercial environment, confidence to take the measures which would ultimately prove successful, and the vision to see beyond the immediate situation. Perhaps just as importantly in terms of organisational stability, experienced leaders were seen as being able to convey this confidence amidst a financial crisis to more junior staff members.

Interim management has been described as the rapid hands-on resolution of business problems by highly experienced senior executives hired on a short-term basis of typically three to nine months, yet they can create a significant impact on the long term strategy of the business. More and more of our clients are applying interim resource to facilitate a change management programme for example, in order to achieve the desired objectives. As a result, businesses are gaining much more velocity and ensuring they reach their goals quickly.

Remaining optimistic and committed to strategic initiatives which help support the long term health of the business is critical. The current economic downturn will certainly make trading conditions difficult well into 2009 and beyond. However, businesses that adopt innovative techniques such as interim management will continue to thrive and will be best placed to benefit when the green shoots of recovery begin to appear. 

*Bounceback: Survival Strategies in an Economic Downturn, Executives Online, March 2009. See www.executivesonline.com [1]