Manging Interim Managers and Advisers

Turnaround management consulting assignments often result in identifying situations where there are gaps in the management skill sets needed within the business, either on a temporary or a permanent basis, and this article looks at how these gaps can be covered.

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If you find that the business is missing a necessary functional role, such as a financial director or quality controller, then there are a number of straightforward questions to be answered about what is, in effect, a normal recruitment need, such as:

Do you really need a new person? Can you actually manage to cover the requirement from within your existing resources, or remove the requirement, perhaps by changing the way your business is organised?

If you do need someone, is it going to be for a full or part time post?

Is it a permanent or a temporary need?

If it is a short term requirement in a particular functional skill, such as finance, sales, IT or operations, you might consider using an interim manager. Interims are specialist self employed manager who will work on a project or temporary basis. Interims are usually sourced through specialist agencies and are highly experienced and often highly overqualified for the particular role sought.

Sometimes however the missing business skill is not a functional one, but the situational skill to deal with the circumstances of a crisis and the relevant specific legal environment and stakeholder management issues that this involves.

This type of specialist expertise and experience is unlikely to be available in-house within most businesses as it is only required on a temporary basis in extreme situations. Most businesses therefore that find they have this sort of requirement will have to hire these skills in from outside.

Help with situational skills comes from either:

Doers – turnaround professionals or company doctors, who are specialist, normally independent, interim managers who will work within your business in an executive capacity, normally taking on the role of Chief Restructuring Officer (CRO) or transition director with responsibility for driving through the turnaround; or

Advisers – which can include a range of consultants, mentors or coaches, as well as professional advisors such as accountants or insolvency practitioners, who are hired to help you to do what is needed by advising on the steps you need to take, but do not take a hands on role in making it happen.

In either case, you will need to consider a number of issues when engaging either an executive or an advisor, and ensure these are covered in any contract under which they are engaged, the four key issues being:

1 What is the brief?

The contract should set out what you expect the executive to do and where specific deliverables can be set these should be detailed, together with the expected timetable if appropriate. In many crisis and turnaround cases the brief will evolve and develop over time as the situation changes, and in these cases the brief may need to focus more on the authority that the executive will be expected to exercise.

2 What is the cost?

As with any contract for services, the agreement will have to set out the rates and the basis of charging, whether the assignment is for a fixed term or is to be more open ended. Again, in a turnaround assignment, these arrangements may need to evolve as the assignment progresses, for example work might be done initially on a time cost arrangement, but then once the business is stabilised might switch to an element of success or performance-related fees, the basis of which will need to be defined.

3 What degree of control do you want to exercise?

If you are hiring an expert to do something, then you will be expecting them to be able to get on and do it without needing micro management. However, since they will be working within your business they will need to be controlled by your business and report to someone, so you will need to set appropriate levels of reporting to, and authorisation and direction from, the business.

4 How do you get them out again afterwards?

Interim managers are not supposed to be permanent so both the term of and provisions for terminating the engagement, hopefully because it is complete rather than for any other reason, need to be clear from the outset. Will it be appropriate for example to include any form of notice period and/or handover process at end of the assignment or can it just be terminated with immediate effect?

When hiring any type of interim or executive, and some of these points will also apply to engaging advisors, there are a number of basic housekeeping elements that you need to ensure are dealt with:

What references are available? – You should take the same basic precautions in this as in any other type of hire so you should ask for and take up references
What are you paying for? – Again, like any other worker you are hiring you should ensure that you agree basic things like hours of work and sickness and holiday arrangements. In particular you need to establish what, if any, substitution provisions will apply for the person you are engaging.
What extras are you paying for? – A specialist interim may be based some distance from your business and so expenses in the form of travelling costs and hotels can soon mount up; you need to establish what will and won’t be chargeable, which leads on to…
Who agrees what is paid? – If you are to be billed on the basis of time spent, how is this to be calculated, by days or hours, including travelling time or not, and how is this to be authorised? Will the interim be keeping timesheets, if so, who will need to authorise these and the resulting invoices and payment.
What commitments do you need from the interim? – Again, as with any hire you will need to ensure that appropriate requirements with respect to confidentiality and intellectual property are in place to which the temporary employee can be held.
What else does the interim need to provide and who is taking the risk? – The interim’s terms of business will usually include some limitation of their liability and you will need to ensure that you are comfortable that this is reasonable. Against this, you would also expect most interim managers to carry appropriate levels of Professional Indemnity Insurance.

Of course the information contained in an article like this can never be a full statement of the legal position as the relevant laws are complex and liable to change. This article can only therefore be a general guide as to the issues involved and as these can have serious implications you should always seek appropriate professional advice on your own particular circumstances before taking any action.