The unknown executive

Here today, gone tomorrow. Temporary executives fill a short-term need and then move on, offering value without long-term commitment.

It’s a classic theme from literature and cinema — a group or community in trouble, a stranger helps overcome challenges, and when the work is done, rides off into the sunset. In the corporate world, life is imitating art, with the proliferation of temporary or interim executives who are used to solve problems and manage transitions.

The ranks of this particular breed of “hired gun” are growing rapidly as the concept achieves acceptance in the corporate world thanks to the convergence of demographics, economics and other factors like globalization, the emergence of the knowledge-based economy and the Internet.

Seven or eight years ago, as the last recession ended, executive search firm Caldwell Partners International began getting requests from Canada-based corporate search clients for people to serve as interim executives, says Martin Parker, managing director of the Caldwell Interim Executives business unit.

As Caldwell began executing these assignments, the requests became so commonplace that a dedicated group was created specifically to fill that niche. Caldwell research says interim or contract positions now account for as much as 10 per cent of Canadian management positions.

Caldwell’s rapidly growing familiarity with interim executive searches gave the company insights into the changing needs of its clients, as well as how and where to find appropriate candidates. Caldwell put some of that information together in a background paper entitled The Just-in-Time Executive, released in November, 2001.

Initially, the reasons clients gave for wanting an interim executive were that they didn’t want to add to their permanent head count and there was a crisis at hand so they didn’t have time for the normal 60- to 90-day search process. “Speed is a paramount concern, and our benchmark is to complete 80 per cent of these assignments within 10 days,” says Parker.

There are many dire circumstances where a temporary executive is the most appropriate short-term solution. Sometimes it’s a matter of taking care of business due to an unforeseen vacancy on a senior management team. Catastrophic events such as a plane crash or the Sept. 11 bombing of the World Trade Centre can create an urgent need.

New respect
One thing the recession of the late 1980s and early 1990s did was remove the stigma of not having a job. “Right-sizing” or downsizing resulted in an unprecedented pool of highly qualified people who were available. Before that, if someone with good credentials was between jobs, the assumption was that there must be some hidden weakness or flaw.

In Europe and the United Kingdom, where the aging workforce had an earlier impact because there is no baby boom population cohort, the use of interim executives is much more developed and has a longer history. Awareness of that due to globalization helped give North American organizations more confidence in the concept of temporary senior managers.

North American employers had to set aside preconceptions about temporary executives, who until the 1990s were often outsiders with no loyalties or affiliations, brought in to wield the corporate hatchet. The use of contract employees with specialized skills, such as computer programmers, contributed to the increased receptivity for interim executives. CEOs and boards of directors began to see it as a flexible management tool, says Parker.

By 1996 or 1997, in the growth economy, interim executives were seen as a way of accessing high levels of expertise while keeping costs such as severance packages down.

They were valuable to start-up businesses and circumstances where in six or 12 or 18 months, “they might need a different kind of leader or manager,” says Parker. Interim executives were also used to backfill positions where a CFO, for example, was focused on a merger or divestiture and someone was needed to oversee the daily corporate operations.

“Now, as the economy has started to turn down — it’s really been happening in the last 18 months or so, particularly the last 15 — what we’re seeing are less of those start-ups and backfills,” Parker says. Organizations have renewed concern about adding to their headcount or want to buy time to make decisions about the future of a division or business unit.

In some cases, the organization as a whole, with the exception of the board of directors, is not told that the executive is there on an interim basis, Parker says. That’s not uncommon in divestitures. It’s also prevalent in what he calls “mezzanine or second-level start-ups.” Those are young companies that have gone past the stage where they are controlled by the founder-owner-operator to the next level, where there’s interest from venture capital firms or investment banks that want to put management in place but don’t have a plan for the future mapped out.

Organizations often feel it’s not necessary to tell staff or even the senior management team that the temporary executive is only there on a short-term basis, because that might indicate a lack of confidence in the future and create instability, Parker says.

The pool of candidates
There’s a big difference between filling a routine executive placement and a finding someone for an interim placement, which in some ways is more like recruiting someone to fill a vacancy on a corporate board of directors. The urgent need for a candidate is one driving force, but the uniqueness of the role is also a factor.

The process involves scouring Caldwell’s database, as well as talking to industry leaders and board members to identify people with the required skills.

There are basically three pools of candidates for interim positions, says Parker. The first group is made up of people “who have been there and done that,” are most likely retired, probably in good financial shape, but may be bored, he says.

They’re not looking for work, but they like to solve problems and meet challenges in their particular area of expertise. “We call them the high-quality problem-solvers.”

The second group is known as “Tweeners,” referring to people who are between full-time jobs. Their preference is full-time employment, but they may take an interim position with the hope that it will become permanent, or if they believe it will make a significant addition to the resume, says Parker.

“If you look across the hundreds of assignments we’ve done now, over the years, anywhere between 30 and 40 per cent of those convert to full-time placements,” a phenomenon sometimes known as temp-to-hire.

The third group is made of specialists who may have obtained their degrees 10 to12 years ago. At that time, due to corporate mergers and consolidations, as well as closures, it was hard for them to find the full-time jobs that matched their expectations. They took internships and did contract project work, developing very specialized expertise in a specific niche, such as compensation and benefits. Those who remain free agents have made an active choice, becoming professional contract workers.

Interim executives in action
Mike Rodgers, vice-president of HR for Labatt-Interbrew, North America, has no problem using interim executives, having been one himself. One of his assignments was at Thomas Cooke through the divestiture of its travel business.

He says perhaps the most important trait for an interim executive to have is good people skills, because that makes the task at had, whatever it is, much smoother.

Rod Thorfinnson had been in retirement for a couple of years when Caldwell contacted him last fall about becoming the interim CEO at Sunnybrook and Women’s College Health Sciences Centre in Toronto. He was flattered by the invitation, and accepted, after being told that the hospital’s board anticipated a six- to eight-month search process for a permanent CEO.

While interim executives are sometime challenged because of their lack of specific knowledge of the organization, Thorfinnson had previous experience as CEO of Winnipeg’s Health Sciences Centre, a major teaching hospital, which made him familiar with the challenges of running Sunnybrook and Women’s College. Even so, “the first thing I indicated to the staff here was that I was going to require their full support, and they were going to have to bail me out at times when things came forward about which my knowledge was limited.” He says he believes that because he’s not a threat to anyone, he got that support.

“In discussions with the (board) chair, we agreed that I should assume the role here as if I was going to be here forever, not on a short-term basis. Because as soon as you put ‘acting’ or ‘interim’ in front of your title, then everyone assumes that you’re a lame duck, and that’s a caretaker role,” he says. But when you have only limited time, “you have an even greater responsibility to provide appropriate leadership.”

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