by Mike Travis
Interim and part-time executives are excellent solutions for companies that face specific management challenges. When does it make sense to use them? Following is an overview, along several real world examples.
Interim executives serve on a temporary basis. Sometimes they act as caretakers while a permanent person is recruited; other times they are hired to address specific issues, after which a permanent manager can take over.
Javier Jimenez is a partner at Tatum, the financial consulting and management firm. He recently completed an engagement during which he served as interim CFO at a Vermont not-for-profit with global operations. He kept financial operations running during the search for a new CFO and helped the new hire make a smooth transition.
“There are three main advantages to having an interim CFO” says Jimenez. “First is risk mitigation. A lot can go wrong if no one is in charge, so it’s useful to have an interim person looking after things like audit, loan covenants and cash flow. Second is providing day-to-day leadership, which keeps things moving and helps mid-level managers who might otherwise become overwhelmed. Running the group enables the interim CFO to make an objective assessment of the finance group for management. Third, an interim CFO can help smooth the path for the permanent CFO and ensure a successful transition.”
There is a need for interim CEOs, too. At established companies, interim CEOs can steer the ship after an unexpected departure. When Avid Technology (NSDQ:AVID) lost its CEO in 2005, a board member stepped in while the company recruited a replacement.
Start-ups have more varied reasons for using interim CEOs. Desmond Pieri has been interim CEO at many start-ups in industries ranging from medical devices to software. He writes on his experiences as an interim CEO at his blog, ChangeAgent.
Pieri says start-ups face four types of situations where interim CEOs make sense:
- Helping establish very young start-ups. Very early-stage start-ups can often use a seasoned entrepreneur to grow the company to a stage where a permanent CEO can be recruited.
- Cleaning up a mess. At start-ups with serious problems, an interim CEO can fix things so they can recruit top management talent.
- Due diligence. Investors can use an interim CEO to help them decide if a portfolio company is worthy of follow up investment.
- Founder coaching. An interim CEO can coach a struggling founder — or make the determination that he is not up for the job.
When does it make sense to hire a permanent CEO? “When you find the right guy,” says Pieri. Usually that happens after the interim CEO has achieved his objectives and the company launches a search for a permanent replacement.
Part-time executives serve one or two days a week and are common at start-ups. Start-ups need to conserve cash, so they put off hiring full-time executives in functions like finance and human resources until they’re absolutely needed. Part-time executives are usually seasoned veterans who have left the corporate world to set up small or solo practices.
In finance, many start-ups employ a controller to handle day-to-day financial administration and a part-time CFO to provide strategic direction and to help with complex issues like setting up financial systems and controls, financing and contracts. Their guidance helps companies avoid costly mistakes.
“I help my clients set up the HR infrastructure and then get things done,” Walsh says.
He helps set up compensation structures, equity plans and benefits. He leads the company’s recruiting efforts. And he spends a great deal of time training executive management and helping the CEO develop the organization.
When is it time to make a full-time hire? When the work load is high and there is a need to have a full-time expert as an integral part of the team, it’s time to pull the trigger. Often the part-time executive will help recruit his or her full-time replacement.
Is there a trend here?
Some claim that the use of interim and part-time executives is part of a wider trend towards the use of independent contractors. Contract executives, they say, will become common in positions that today use permanent employees.
That is unlikely to happen. Interim and part-time executives are very effective tools for special situations, but they are not an alternative to full-time executives. Great companies have strong cultures and it’s impossible to build or sustain an organization on a foundation of short-term hires.
Mike Travis has been an executive search consultant for 15 years. His accomplishments have been recognized by BusinessWeek, which selected him for its list of "The World’s Most Influential Headhunters." Mike’s practice focuses on recruiting general management, function heads and board members for medical device and biopharmaceutical companies. He can be can be reached at (978) 878-3232, ext. 112, or by email at firstname.lastname@example.org.