It is precisely at times like these, as we cope with the turmoil and change created by COVID-19, that interim executives come into their own as a strategic resourcing option.
We know that many businesses and their stakeholders face an uncertain future, and some may not survive. Many organizations were unlikely to be holding sufficient cash reserves to see COVID-19 out, and any cost reduction must be well judged to avoid draining the lifeblood from the business. Engaging a management consultancy can be a daunting prospect for many small and medium-sized enterprises, so where can they turn?
In times where existing management are stretched or lack certain skills, interim executives can be a valuable addition, and importantly can complement or even extend the existing organizational resources with specific specialisms. For organizations seeking to restructure and reorganize, it can be beneficial to turn to an external expert with an outside view to lead on some of the most difficult strategic decisions. An experienced interim executive can help scope the way forward, lead change and bring expertise in areas that are challenged due to COVID-19.
The question is “What skills and experience are vital?” The answers are likely to include financial restructuring, turnaround, human resources, digital transformation and supply chain risk management.
The concept of interim executives is commonplace. They are an established alternative to a management consultancy, providing a flexible and strategic resource that can be cost-effective and low risk, turned on and off to meet exact business requirements.
Furthermore, they do not add to senior employee headcount at a time when many organizations have staff on furlough or have announced redundancies.
So, who are they, and why should organizations utilize them to get value and return?
Who are Interim Executives?
Traditionally, they are senior/board level independent business leaders or project managers who can deliver solutions across a range of disciplines and sectors. They are experts in their field and high-level performers with a track record of achievement.
Many operate as an independent resource and it is common for many to be associated with the well-known turnaround organizations covering the UK and Europe.
Why Utilize Them?
In our experience, businesses hire interim executives to drive transformation, solve problems and deliver expedited outcomes. Typical scenarios include:
- Parachuting in highly experienced senior management or niche technical skills for a limited period to solve a specific issue or drive performance improvement
- Managing a complex project or situation that is in crisis
- Developing new products and ventures
- Hands-on management of restructuring or turnaround situations
- Leading business and digital transformation
- Managing M&A transactions from bid/tender through to completion and post-transaction integration
- Managing business disposals and closures
- Filling management gaps during unexpected absences or sudden departures
And lead to the following outcomes:
- Revenue growth, improved profitability and liquidity
- Significant cost reduction
- Improved product quality and customer satisfaction
- Implementation of target operating model
- Technology, system and process transformation
- Entry into new markets/withdrawal from existing markets
- Revised product/service offering
- Improved cyber security and data protection infrastructure
- Improved stakeholder relationships (i.e., lenders, PE sponsors, regulators, major suppliers, etc.)
What are the Advantages?
In the current environment, speed and the ability to immediately apply resource to a given task can, in our view, help deliver competitive advantage. Interim executives offer short- or medium-term resourcing and can bring much needed objectivity to situations where existing skills or experience are in short supply.
Interim executives are not afraid to question the status quo, and their fresh perspective often delivers optimal results.
Importantly, there needs to be the right chemistry between current management and the interim executive. Interim executives are accustomed to a short “honeymoon” period. They are outcome-focused and will build relationships rapidly.
We know that experienced interim executives regularly give free advice to business owners, boards and PE sponsors as part of their go-to-market strategy. In some occasions this can result in a formal assignment, but even when there is no formal engagement the advice is always welcome.
Looking ahead, we expect to see demand for interim executive assignments accelerating, with stakeholders realizing the impact of the chaos of the last eight months.
We can see this materializing in finance, with operational roles coming thereafter as organizations pivot and change their operating models, look to the future and position themselves for success in the “new normal.”
Furthermore, PE funds are looking to add to their portfolio and “bolt-on” to existing businesses. They will likely seek to take advantage of distressed M&A opportunities, attractive valuations and seize scalable opportunities resulting in operational and financial due diligence placements, with integration and turnaround roles following post-transaction.
Duff & Phelps can help facilitate the introduction of interim executives. We often partner with established interim executive providers to match immediately available and vetted specialists with the right expertise and deep sector knowledge. We cover every sector and location and offer great pace and agility.