Tenon interim management

Interim Management ‘Bear Traps’

In our experience, successful interim management assignments happen when the client is made fully aware of potential issues on both sides of the fence. With this in mind we asked Paul Hughes, one of our more experienced Interim Managers, to write an article on this topic to offer some insights for our clients.

The reason we selected Paul is not only does he have a number of interim assignments under his belt, but also as a permanent CEO he engaged a number of Interim Managers so is certainly qualified to do this. Also included below is a short summary of his background.

Professional summary

Paul is a Senior Executive with over 20 years management experience, including new business development, company acquisition, start-ups and corporate recovery in the global technology industry. He has considerable general management and business development experience in Europe, Africa, Middle East, the Americas and Australia.

A view from both sides

Buy-in

The first priority for a company engaging an Interim Manager is to obtain the appropriate Executive Sponsorship prior to commencing the assignment. The Executive Sponsor can be any one of the following:

  • Chairman of the Board
  • Company owner (including equity or debt based stakeholders)
  • CEO / COO / CFO
  • General manager

Once identified, the Executive Sponsor and Interim Manager should agree the goals and objectives of the assignment. These goals and objectives should be clearly defined in an Interim Assignment Charter that details exactly what the assignment covers and more importantly what the assignment does not cover. Typically the Charter should contain the following as a minimum:

  • Company strategy
  • Strategy priorities and order of their deployment/implementation
  • Roles and responsibilities of the Interim Manager
  • Assignment success criteria
  • Short and medium terms objectives
  • Company wide KPIs
  • Commercial and financial consideration
  • Agree AOP including investment schedule
  • Report(s) content and frequency

Once the Charter is established it can be revisited at any time to verify assignment direction and achievement of goals and objectives. When appropriate it should be adjusted in order to accommodate changes in market and business conditions.

Finally, the Charter should detail the process to follow should the assignment encounter a conflict either with those employees that report to the Interim or with any member of the company executive team. If resolution to the conflict cannot be achieved at the appropriate level then the Charter should detail the escalation procedure to follow in order to arrive at conflict resolution that is in the best interest of the company.

Communication

Company wide communications are essential to the success of interim assignments as the appointment of an Interim can often lead to the rumour mill going in to overdrive. Frequent and meaningful communications become even more important in an enterprise that is deploying the skills of an Interim Manager. Elements of the Charter may be used to communicate the nature of the assignment to the employees. As much information as possible should be communicated, providing the information is not of a confidential nature. For example, it may not be appropriate to communicate that the ultimate objective of the assignment is to support the Executive Sponsor in divesting himself/herself of the company. Communicating this may lead to attrition of key resource and reduce the eventual value of the asset.

Adding value

Companies that deploy the services of an Interim Manager do so in order to buy skills and/or experiences that do not currently reside within the enterprise. The dissemination and transfer of these skills and experiences is an important responsibility of the Interim. Once this knowledge transfer has taken place then responsibilities can be comfortably re-assigned and/or redefined to members of the management team and other key employees.

Employees tend to appreciate this transfer of knowledge especially if it is accompanied by a new or increased responsibility. Failure to achieve this knowledge transfer can lead to the role of the Interim being questioned and therefore undervalued. This presents a real danger for the Interim and their Executive Sponsor.

The Executive Sponsor of the Interim should consider the effectiveness of the Interim in terms of a return on investment, that is to say what information will reside in the enterprise post-assignment and how this information and acquired experience can be further built upon to ensure the agreed goals and objectives of the assignment are met. For example:

  • Increase in company revenue
  • More cost effective operations
  • Better use of IT systems
  • Increased profitability
  • Maximise asset value for divestment
  • Develop a more professional management team
  • Recruitment of appropriate staff more in tune with current and future markets, technology etc.
  • If appropriate recruit a full time replacement for the Interim thus breaking the old mould

Once again the effectiveness of the Interim’s assignment can be verified against the Interim Assignment Charter.

Politics

Perhaps the most contentious area for an Interim is their relationship with the previous incumbent, be that the MD, GM, VP, COO, etc. This person may well continue to sit on the board in a different capacity and have influence over other senior managers. It is not uncommon for such an individual to present the Interim with ongoing challenges, particularly if they have built the incumbent management team and company strategy in their own ‘image’ and don’t have the skills or knowledge necessary to take the company to the next level of its development.

The Interim therefore needs to establish their own relationships with the board and the incumbent management team as soon as possible and steer clear of any criticism of the previous regime, business practices and procedures.

The Interim has to be a hands-on individual that can sell their personality and knowledge to the incumbent team in order to gain its respect and cooperation. A clear distinction should also be made between the role of an Interim who manages the enterprise and that of a Management Consultant who does not. This lack of understanding of the roles and responsibilities of the Interim versus the Management Consultant is often a source of confusion and requires early clarification.

A clear advantage of using Interim Managers is that it allows maximum flexibility of choice to the Executive Sponsor and/or board. The duration of the assignment can be fixed and terminated after the initial term; extended subject to review; or even result in the Interim being offered a permanent position with the company. At all stages of the assignment the cost associated with the intervention of an Interim can be monitored and modified according to the enterprise’s needs. This is of particular importance if the assignment is in a company with cash flow difficulties.

Finally

One final point is that it is important for the Interim and the Executive Sponsor to know when to end the interim assignment. It can be counter productive to hang on to an Interim for convenience sake when what may be needed is a fresh approach in the enterprise. Should either the Executive Sponsor or Interim become too comfortable with the interim solution then this can lead to assignment creep and complacency. Once again, if possible, the end phase of the assignment should be addressed at the beginning and/or listed in the Charter.

Paul Hughes, April 2006

I hope this has been of interest and as always I’m happy to discuss in more detail.

Kind regards

Martin Austin
Director
Tenon Interim Management
020 7935 5566 or mobile 07710 077747