Right moves
The interim management landscape is dramatically different from 18 months ago. But this is a sector that thrives on change, so opportunities are still out there. Joy Persaud takes the long view
Date:
10 September 2009
Source:
Guide to interim management
Page:
6
The Chinese curse that heaps “interesting times” upon the recipient seems rather apt for UK business at the moment. As budgets are slashed and jobs culled, the market has, naturally, changed. Russam GMS’s survey of 10,000 interim professionals has revealed that 66 per cent of interim managers are struggling as a result of the recession. The report, Recession and the Interim Manager, also showed that 11 per cent complained that the market was flooded with people made redundant from their permanent jobs and that half of all interims said there were fewer assignments available.
But it’s not all bad news, as 61 per cent of the respondents felt that interim management was a good career to be in right now and that opportunities exist in the public sector – in local and central government – and also in the third sector, which is being looked on increasingly by the government to provide public services.
Charles Russam, chairman of Russam GMS, says: “For many businesses, this is the first recession they have experienced and many CEOs and senior managers are acknowledging they need high-level support for a given period of time from someone who can lead them through these testing times.”
Andrew Pope, director at interim provider Kingsley Search, adds that the market for interims has remained relatively active throughout the downturn, apart from a distinct dip between November 2008 and February 2009.
So, where are the interim jobs to be had? One major provider, which asked not to be named, said some organisations simply use interims as an opportunity to “outsource the dirty work”. But dirty or not, the word that recurs when examining areas of demand is “specialist”. Predictably, for instance, there’s demand for HR interims who have significant restructuring and downsizing experience, says Ian Gooden, director of resourcing solutions at Chiumento. Kate Mansfield, managing consultant at Alium, adds: “HR interim skills are in demand in both good and bad times. But in these recessionary times, there is even greater pressure on HR professionals to support the business through often painful transition.”
However, not all areas of specialism have been affected to the same degree, says Gooden. “For example, this is proving a really tough period – perhaps not surprisingly – for those interims seeking learning and development or resourcing assignments. Whereas 18 months ago recruitment expertise was at a premium, the demand has undoubtedly switched towards generalists and employee relations experts.”
Paul Duffield, partner at Frazer Jones, reports “a good number” of interims are being commissioned to work in banks and general financial services – mainly to help with significant restructures. Catriona Drysdale, head of interim at FreshMinds, cites the example of Lloyds Banking Group, which expects to take three years to complete its organisational changes. And Gordon Whyte, director at Digby Morgan, believes there is still a recognition within sophisticated hiring environments that bringing in specialist resources on an interim basis provides a cost-effective, short-term solution – without the ongoing costs and risks of permanent employment.
“The decisions to hire, however, are made only after internal resources, or the chance to delay a project, have been exhausted in the first instance – hence reducing the volume of assignments in the market,” he explains.
Indeed, short-term specialists, whose salaries may come from different budgets, are seen as more attractive than permanent staff, and their use over management consultants is on the up, according to Jason Atkinson, deputy chairman of the Interim Management Association (IMA).
He says: “Within the interim market, many of the providers are small- to medium-sized ‘boutique agencies’, while management consultant teams are often large blue-chip players – which inevitably come with a hefty price tag. In these circumstances, many companies are finding that, in addition to being three times less expensive, a seasoned interim typically offers cross-sector experience, which is invaluable.”
In the public sector, which is under pressure because of tough efficiency demands and budget cuts, Simon Law, partner at Morgan Law, has noted that the areas where demand for interims is outstripping supply are employee relations, medical staffing, business partnering, workforce planning, commissioning and project or change management, among others.
So, competition among interims has heated up, with new interims targeting jobs prized by career interims as the freshly redundant try to secure employment. The result of this is a market saturated by interims – old and new – some of whom are simply not up to the job, and a growing mismatch between supply and demand.
Atkinson is seeing four to six times more CVs than a year ago, when 200 a week was the norm. “Most applications are from those who have been working in the financial services sector and have been made redundant,” he says. “While it’s clear many of them are looking for a stopgap, their experience and backgrounds don’t necessarily mean they’ll make good interim managers.”
Another problem identified by the IMA is that recruitment agencies with no real knowledge of the interim market are offering candidates as “interims” when in fact they’re supplying temporary workers to cover a gap period before a permanent candidate is placed. Atkinson warns: “Consequently, companies are paying very low rates for these workers, expecting the full interim proposition, and not getting it.”
Law adds: “When hiring an interim, organisations need to be aware that experienced candidates have specific skills. A person who has spent their career working on the permanent side, who has found themselves open to interim roles because of redundancy or the lack of current permanent opportunities, may not have these skills. Clients need to be a little more aware that interim managers have specific skills that allow them to assimilate into organisations quickly and bring themselves up to speed. They will usually also know not to get involved in the politics of an organisation and will often sit back and act as an external catalyst to change. These skills will probably not have been developed by a permanent employee embarking on an interim role for the first time.”
Jo Blissett, director of Interim Performers, says clients are not looking for interims who want to learn on the job. Rather, interim managers are “typically senior business professionals, over-qualified and experienced at delivering assignments. Consequently, they are experts in their specialist fields and they have the necessary skills and experience to immediately make a difference.” She has found that organisations are still keen to take on interims to deliver key projects where their value can be directly measured alongside the outcomes.
Clients, Blissett stresses, are making a clear distinction between individuals they view as “professional interims” and “stopgap” candidates. “The professional interim managers decide to enter the interim market as a specific career choice,” she says. “It is not an option to merely tide you over, and it is certainly seen as a career in its own right, as interim working offers a number of unique aspects and motivations.
“As we experienced during the last economic downturn, there will always be individuals who think that working in the interim field is an easy stopgap before going back into permanent work; for a true interim this is simply not the case.”
Interims do now seem to have to work harder than ever. Thom Staight, director of Michael Page Human Resources, has found that clients are pushing down interim salaries to manage their shortfalls in funding, while interims are reporting far heavier workloads that keep them in the office for longer. Echoing this, Bev Corrigan, partner at Oakleaf Partnership, notes that clients are negotiating hard on rates but still want the strongest of candidates to deliver their assignments at a reduced price.
That pay rates have taken a hit is probably no surprise as organisations tighten their purse strings. But Staight remarks that rates are holding up in niches where demand remains, while generalists are facing drops of at least 10 per cent; Digby Morgan’s Whyte has seen the rates of those earning £750-£1,000 a day fluctuate by 15-25 per cent. For lower operational candidates, falls of 10-15 per cent are anticipated.
Interestingly, Russam GMS’s latest snapshot shows that, in spite of the market slowdown, the average daily rate rose from £603 to £612 a day in the six months to December 2008 – an all-time high. But Russam anticipates that rates will almost certainly have dropped when its next results are published later this year.
Charles Russam comments: “Interims specialising in IT commanded the highest daily rates – an average of £697 a day, closely followed by general managers on £669, with interims working in HR and purchasing and distribution being paid on average £597 per day. Interims working in the financial sector saw their daily rate drop by four per cent from £607 in June 2008 to £583 in December 2008. However, for the first time, interim managers working overseas are earning considerably more than their UK counterparts – an average of £707 a day, though this is a small sample.”
So, what of the future? Russam says: “We see the current market as stable, varying between sectors, but we do think that it ought not to be getting any worse. As for green shoots, we don’t really know – except that the interim sector does best when a good economy turns into a bad economy and vice-versa. Change is what interims thrive on. We have seen the market start to pick up again in the past month. Projects that were put on hold for six months are starting to come through and, while demand is not as high as it was, we believe this might be the first signs of recovery.”
James Hunt, managing director of Penna Interim Executive, says when the economy picks up, demand will accelerate quickly. Pope agrees that hiring levels are expected to improve through autumn and into 2010.
As Law points out, in a climate as hostile as the current one, where restructure and uncertainty are dominant, good people are in demand – especially those with the skills to manage change.
He says: “Interims can be hired on flexible contracts and for the specific life cycle of projects and assignments. This means that they are a cost-effective alternative to recruiting permanently in a market where people might not know exactly what their business is going to look like in a year’s time.”
The international market
As the UK market contracts, some interims are looking overseas to secure assignments. But although the interim market abroad is generally picking up, labour laws can stand in the way of interims, explains Jason Atkinson, deputy chairman of the Interim Management Association . “Nowhere is this more evident than in Europe,” he says. “Although the EU government in Brussels continues to push for change to employment law directives and more flexible working, local uptake across the EU varies tremendously.
“For example, it’s very popular in Holland where interims have been used since the 1970s. In Germany, interim management has really taken off in the past five years – particularly in the engineering and automotive industries – but is only possible in the private sector. Owing to labour restrictions, interim management has only really come to light in France in the past year or so. The business model used is completely different – interim provider agencies employ their executives.
“Interims are popular in the US, Australia, and we’re also seeing a lot more opportunity in the Middle East – to the extent that many interim providers are opening offices in places such as Abu Dhabi, Doha and Manama.”
Gordon Whyte, a director in Digby Morgan’s interim team, reports that, as the market tightens in the UK, there has been an increased number of interims who have expressed interest in operating internationally to increase their opportunities to secure work.
“Certainly professional interim managers, particularly with international experience, are willing to travel, live and work away,” he told PM.
Opportunities in the public sector
Public-sector funding will be hit by the recession, predicts Charles Russam, chairman of Russam GMS, but a 10 per cent reduction, for example, on current spend levels will still leave around £550 billion a year available.
The latest figures from Buying Solutions, the national procurement partner for UK public services, anticipate £2.5 billion being spent on non-permanent staff, including interim managers, over the next four years, he adds. “Key areas include specialist project management leadership in coordinating key programmes of work, such as flu pandemic programmes and adult social care programmes, as well as expert procurement and commercial guidance in crucial areas such as shared services and category management,” Russam says.
Anna Bishell, head of interim at Rockpools, is also optimistic. “There are excellent assignment opportunities across the public sector,” she says. Lee Burman, public-sector consultant with Purple House HR, adds that there remains a demand for interim local government and NHS heavyweights, particularly with successful track records in public-sector projects such as commissioning in the NHS.
Michael Page Human Resources director Thom Staight has observed that, from a candidate perspective, the public sector is an attractive proposition – particularly for those with predominantly private-sector backgrounds looking to broaden their experience and employability.
However, Simon Law, partner at Morgan Law, sounds a warning note: “There is a lot of competition over rates, which are spiralling downwards. Clients’ expectations of what they can get for certain salaries and rates are higher than ever. We have experienced interims in extreme cases who are offering to work for free for a couple of weeks to gain the sector experience that they are lacking.”