New research shows that businesses are dangerously exposed to sudden departures by their senior team. Paul Barron explains why so many companies, when faced with this threat, are turning to interim management.
In Executives Online’s ‘Business Exposure Report’, 38% of the 102 major companies studied said their business had been left vulnerable in the past year either because a member of the senior management team had left unexpectedly, or their usual recruitment method failed to find them a senior executive fast enough. What’s more, a further 29% said they expect to be facing such a problem shortly.
With traditional recruitment taking up to six months to deliver suitable senior candidates, it is easy to see how such problems arise. What’s less easy to understand is why more companies don’t do something about it.
For instance, while companies have plans in place to cope with the breakdown of a piece of production equipment or the crashing of their computer system, few take the same care with their ‘people asset’. Just one in four businesses have some contingency plans in place to cover sudden departure of a senior team member.
This lack of preparation is all the more shocking given that the impact of such a gap in the senior team can be catastrophic. Two-thirds of the companies reported that it causes instability in the team, 63% said their organisation loses momentum and 47% said projects get stalled. Plus, one in five who most recently experienced this exposure said competitors took advantage and poached staff and customers.
The interim management approach
To address this problem, and to combat the general shortcomings of traditional recruitment, many companies are reviewing their approach to recruitment, and are building interim management into their plans. For instance, 12% of contingency plans to guard against recruitment crises involve interim management.
It’s easy to see why interim management presents a real solution. Good interim agencies can, within a day of receiving a panic call, find four or more perfectly matched senior managers and directors who are more than qualified to plug any recruitment gap. All will have relevant experience in terms of the business sectors they have operated in or the types of projects they have handled, and all will be available to start work in days.
Such speed means the business avoids the inertia and uncertainty which may be hard to quantify, but which competitors will be quick to capitalise on. However interim management’s speed also delivers a tangible financial gain.
For example, a senior manager is on average worth at least three times their annual salary in terms of their contribution to a company. If we apply this to a £60,000 per annum manager, and it takes four months to find the right person using traditional recruitment techniques, the delay costs the business £60,000 in terms of lost contribution. By eliminating this gap, interim management avoids this loss.
Hit the ground running
Not content with simply reducing the number of days companies need to operate with a senior team at less than full strength, interims bring with them other benefits.
For instance, unlike a permanent employee who can take several months to settle in, get to know their way around an organisation, meet people and so forth; interim managers hit the ground running. They are recruited with a clear set of deliverables and a fixed, often incredibly short, time scale in which to deliver. So they know how to quickly fit in and get things moving.
Interim managers add value as an impartial sounding board. Their candour can save a business a fortune. They also offer instant experience and a capability, which is almost always one rank higher than the job requires.
Lastly, interims are not just a stopgap measure. An increasing number are happy to make the transition to permanent roles. For instance, of the 325 interim candidates studied for the Business Exposure Report, 57% said they would take a permanent role if the right one presented itself.
Faced with this combination of benefits, and a traditional recruitment solution which still takes four to six months to deliver, it’s no wonder that a growing number of companies are turning to interim management.
Paul Barron is director of Executives Online. To find out more about Executives Online North’s interim management services, or to request a copy of the Business Exposure Report, visit www.executivesonline.co.uk