Readers of European CEO will have noticed that, according to certain economic indicators, Europe could be creeping out of recession. Throughout the continent the media have become more confident and entrepreneurs speak more bullishly about investment. More importantly, such investment is beginning to crawl its way towards economically worthwhile projects from the vaults of lenders where it has festered for years. Things are still slow compared to the good old days, but we are comforted by the knowledge that, although crashes come overnight, recovery creeps back slowly. It’s a matter of confidence. If recovery isn’t officially here yet, we are now talking ourselves into it, and it will be here soon.
At the outset of the crisis I offered my thoughts in this publication, as a professional in corporate troubleshooting and interim management, to companies facing the onset of a world economic slowdown. These thoughts focused on the critical and difficult actions companies needed to take: selling off or closing down low margin businesses, slimming the profit and loss account to hack out those ‘nice to have’ expenses that had built up and were easily ignored during the good times, and concentrating on core activities in which the company had a comparative advantage over others.
In the end, the key differentiator of many of the companies that successfully rode out the recession was the ability to re-engineer their strategic outlook with the key purpose of surviving, and, if possible, protecting profitability. For many it was a distant philosophy from the one of perpetually enriching shareholder value through growth and improved profitability, which had formed the conventional wisdom before the crisis.
Starting blocks
As companies now consider the prospect of an improving economic environment, that drive for increasing shareholder value is back on the agenda. If it never left the agenda, at least now it seems an achievable goal. Managers are looking at strategic adjustments, acquisitions and entering new markets with existing and new products.
The ‘in limbo’ years of survival are over and the return of focus on enhancing shareholder value is back. Management is being challenged to make the most of the new order in the knowledge that the first mover will often gain the advantage. There are, however, three key problems many companies will encounter in getting to the starting blocks to manage these complex new challenges.
Interim in practice
David Pillinger gives us his experience of a recent assignment:
Cross-border acquisitions and mergers are always complex. Unfamiliarity with a foreign business environment, the potential for misunderstandings, and simply missing culturally different nuances, explain why so many internationally negotiated deals are never as attractive as first envisaged.
I was recently appointed by a group to work, initially, alongside an overstretched CFO in the process of assessing an overseas company for acquisition. The work culminated in my taking full responsibility for managing the business case analysis, the financial, commercial and legal due diligence, and negotiating the purchase price and key contractual terms and conditions.
The acquisition went ahead successfully at a price and with prospects that were generally considered to be beneficial to the buyer. My client’s knowledge that I had successfully managed such projects previously, that I had international negotiation experience and spoke the language of the vendors, allowed them to entrust the project largely to me. The overstretched CFO ended up being less stretched. I am now being asked to assist in certain aspects of the integration process into the mother group. One thing often leads to another.
Firstly, companies may have people who are competent at the tasks required, but they are usually busy in their day-to-day jobs and are not able to apply themselves diligently to tasks that require undivided attention. The second problem is that companies may have people who know what needs to be done, but have not had prior experience in that area. This makes implementation slower, riskier and a successful outcome less certain.
Finally, over time, companies may have developed accepted wisdoms whose justification is dubious and whose authority is rarely challenged. It is difficult to dispel these from within.
A new dimension
This is where the interim manager can come in and add a new dimension. The interim manager is not an ordinary temporary worker used to fill a casual vacancy. It is someone who can become central to a company’s push for innovation, growth and investment; someone who provides management, for a limited period, with the oxygen needed to cope with major new projects and change, while allowing them to carry on running the business. They are professionals who dedicate their career to the provision of relevant services to business and normally come in at middle to senior management level. Interim managers are widely available nowadays, and can be located through networks as well as through executive search agencies with dedicated departments.
Before a company decides to hire an interim manager it will have assessed the value of the additional expense of bringing such an individual onto the team. Interim managers will tend to cost more than an equivalent level employee, although the cost will be much more flexible. The company will also need to overcome the risk of a bad cultural fit, so that the manager can integrate and carry existing employees with him or her to a successful completion of the project. This will require a series of meetings or interviews with different candidates, rather as in the hire of a full-time employee.
So what are the key traits of an interim manager and how can he or she help companies avert the problems referred to above? These are summarised as follows:
Key traits of a good interim manager
Strong leadership skills
The interim manager is a business leader, usually with considerable experience in corporate environments, who appreciates the goals of top management and is often able to work alongside them and manage large and complex projects.
Management expertise
They have expertise, can be left to their own devices and do not need to be supervised closely. This frees up management to get on with running the company, and may avoid the
need to hire an eventually more expensive long-term employee.
On-the-job proficiency
They are usually asked to carry out tasks they have dealt with before, with no requirement for on-the-job learning, and have experience of navigating the pitfalls which disrupt or delay so many projects taken on by inexperienced teams.
Independence and integrity
They are independent and come to the job with an open disposition. The absence of pre-conceptions, history, allegiances and favours owed or owing, allows the interim manager to avoid the politics and treading on eggshells that often mire organisations and prevent the right decisions being taken for fear of going against a fashion or long-standing wisdoms.
In addition to these traits, there is an aspect of using an interim manager that many overlook and which transcends all others in the quest for effectiveness. It permits a level of fluidity to decision-making and action that is often difficult to achieve. An interim manager is usually hired with one particular objective or task in mind and he or she will be utterly focused on ensuring its successful completion.
It is this last aspect, when combined with the wealth of experience and independence offered, that will make the use of interim managers so effective in tackling strategically important projects when economic recovery arrives. That the recovery will come is a certainty, just as, proverbially, death and taxation are certainties. Hiring an interim manager will help manage the ensuing challenges, possibly even those related to such taxation certainties. It’s worth giving one a try.