Business units forced to take on interim executives

• Some hiring freezes have been in place for two years
• Gap management appointments have trebled

Companies are increasingly having to appoint interim executives to deal with the extra workload created by hiring freezes says Interim Partners the leading the leading providers of interim executives.

Interim Partners says that some of these hiring freezes have been in place for almost two years. Unlike the less restrictive headcount freezes, adopted by a wider range of companies, hiring freezes do not allow business units to replace senior staff when they retire or move to another company.

Data from the IMA (Interim Management Association) shows that the percentage of all interim management positions that are for these temporary ‘gap management’ roles has increased to 27% of all interim executive placements in Q3 2009 from only 16% just over a year ago in Q2 08. That is a trebling to 184 of placements tracked by the IMA that were for gap management in Q3 09 from just 58 in Q2 08.

Says Doug Baird, Managing Director, of Interim Partners: “Although corporates are now much more confident about the future they still live in fear of a ‘W’ shaped recovery. They want to keep as much flexibility in their senior management ranks as possible. For many companies, that means using an interim executive and not hiring a full-time senior employee even to replace a departing director.”

“For an organisation to function properly senior jobs can’t just be spread amongst the remaining management team as modern companies don’t have that level of slack built into them. The alternative, which companies are increasingly turning to, is to hire an interim executive.”

“Traditionally gap management was to cover for maternity leave or whilst a company recruited to replace a departed senior executive. Increasingly gap management is about covering vital roles until that undetermined time when a company feels comfortable enough to suspend its hiring freeze.”

Doug Baird explains that it is not that money can’t be found to hire senior management but rather that companies want to see more of their fixed staffing costs change into floating costs.

Adds Doug Baird: “Interim executive gained popularity as they provide lot of flexibility - if you do need to pare back further than you just don’t renew the interim’s contract. There are no redundancy costs, no golden hellos and no golden parachute to fund. Using a self-employed executive also has some obvious national insurance savings.”

Doug Baird says that the use of interim executives to deal with the impact of hiring freezes is used at all levels within FTSE-350 companies below the boardroom and includes numerous executive directors of major business units.

Recent gap management placements that Interim Partners have made include:

• A finance director of a division of a FTSE-100 utility
• A HR Director of a FTSE-100 infrastructure company
• Group Marketing Director of a L500m turnover private equity owned consumer products business

Interim Partners says that the use of interim executives to solve the management challenge of hiring freezes is now spreading to the public sector.

Explains Doug Baird: “Public sector organisations expect that budgets will be cut but they don’t know where the axe will fall so inevitably they are using interims to build more flexibility into their overall costs.”

“The budgetary pressures created by the recession ironically mean there is more work for senior managers to do than ever before - through driving up efficiency and making sure cost cutting programmes are implemented effectively.”

Doug Baird says that although demand for interim executives has fallen for some roles within banking and through lower deal activity by private equity companies (traditional heavy users of interim executives) the use of interims for gap management is one area where growth has been spurred on by the credit crunch.