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Interim managers are no longer viewed as providers of stop-gap cover; they are increasing being used to drive change and acquisitions. Daniel Parton reports.

When novelty and party products manufacturer and distributor Smiffy’s chief financial officer left unexpectedly in 2006, the business was left with a large void at a crucial time.

Gainsborough-based Smiffy’s had grown quickly to a turnover of some £25 million – employing more than 200 - but it had stretched resources and the company was planning a re-financing following a strategic review.

But without someone to head up the finance function, the plans could have stalled. With no suitable financial expertise in the business, Smiffy’s chairman, Ray Peckett, moved quickly to appoint an interim manager to handle the project.

Peckett said the interim manager, Peter Dundas, was given a detailed brief to implement the recommendations suggested in the review and also to take over the financial control of the company and the day to day running of the accounts department.

In the three months he was given, Dundas proved to be a success. “Everything in the brief was implemented/actioned including some suggested recruitment,” Peckett said. “At the end of the three months, [Dundas] was offered the position of chief operations officer/finance director as it was felt that it would be beneficial to the business to continue the positive changes.”

Interims in M&A

This shows how an interim manager can be used to help a growing business to implement changes, but they can be just as effective during the M&A process for vendors and acquirers.

For example, vendors can install an interim CEO into an under-performing business or division to manage a disposal, which can be difficult with existing management in place.

For acquirers, moving into new sectors or markets can go beyond the incumbent managers’ experience or skills set, so an interim can be useful in providing relevant expertise and advice to ensure a deal is completed successfully.

Interim managers can also play a role post-deal, such as handling the integration of the acquired business, providing expertise in this process that may not be present among the incumbent management, especially in smaller companies. This can also leave managers free to focus on the day to day operation of the business, which can be neglected during an integration process.

Changing role

Indeed, the ability of interim managers to help a business through a period of change is now accepted. Where once interim managers were viewed more as providing stop-gap cover, often while recruiting a permanent replacement for a member of the team that has left, they are now more likely to undertake strategic projects.

A survey by interim management provider Chiumento found that half of interim assignments are strategic and of that, 81% are employed to undertake special projects. But this is partly down to staffing culture - Chiumento found that 82% of organisations have become so lean that they have lost key talent and buy in the expertise only when it is needed.

Change and transition management is now the most common form of assignment for a manager, accounting for 26% of projects, followed by specialist project and programme management (22%). Gap management now only makes up 16% of assignments.

With the nature of interim management projects changing, so is the length of time jobs last for. Projects lasting seven to nine months now account for about a quarter of all assignments, up 7% year on year. Jobs lasting three months or less now only make up 17% of the market, a fall of 6%.

Despite this, only 41% of interim management assignments finish at the time agreed at the outset, with half extended by clients. Chiumento reported that this is usually because a successful project results in requests for the interim to stay on longer. Although it could equally mean that the client underestimated the scale of the job.

Indeed, companies across all sectors are now making use of interim expertise. Banking and finance leads the way with 28% of all interim assignments undertaken in the sector, followed by petrochemicals and pharmaceuticals at 15%.

“The market for interim support is growing, as is the need for organisations to ensure they have a clear business case before resourcing external talent,” said Graham Bird, director of interim management at Chiumento.

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