How Companies Can Assess Fit with an Interim Executive
Bringing on an interim executive is not the same thing as making a permanent hire. Usually, companies can easily get out of a contract with interims – they are not tied to long employment contracts with severance or benefits guarantees. The focus is on finding an executive who is skilled at providing a unique perspective and ability to execute to help a company ramp up, grow, turnaround, or pivot, ultimately setting it up for future success.
The interview process is an opportunity for the interim to assess a company just as much as the company is assessing the executive. An interim will gauge the excitement factor of an assignment – is it a challenging situation, and do they believe they will be able to provide value. Meanwhile, companies should evaluate the fit between the organization and the interim executive by measuring a number of important dynamics, ranked by increasing importance: (1) Industry (2) Location (3) Skills (4) Stage (5) Wins (6) Behavior (7) Values (8) Mindset (9) Chemistry.
All of this may seem obvious to the seasoned company owner or investor. However, because an overwhelming number of executives truly believe they can be effective in project, interim or fractional roles, an owner or board of directors could easily be led astray by an executive pretending to fit, while not actually being the best solution. Failures are at the expense of the owner, so at InterimExecs we employ a proprietary decision matrix to select only the top 2% of executives to join our team and to ensure that we are making the best match between company and executive.
When assessing fit between a company and interim we look at all 9 levels with varying importance, ultimately working our way up to the holy grail: chemistry.
BEST FIT LEVEL 1: WHAT
The first question many companies default to is whether or not an executive has experience in a given industry. Prior experience in your industry may be a positive – or negative – when considering who best to put in a leadership role or in charge of a vital project.
Industry-specific experience is a positive when the vast accumulation of knowledge from prior roles instantly becomes relevant in a new situation, crisis or opportunity. It also can come into play in navigating through highly regulated industries such as healthcare, insurance, finance and banking.
Sometimes, however, all the accumulated wisdom can backfire, especially in industries facing significant transformation. In those instances, fresh thinking is mandatory. Often times when someone has spent their entire life in any one given industry, they can get stuck in the way things have historically been done. The advantage the interim executive brings to the client is fresh thinking and third party objectivity. In most cases, all of the industry expertise that is needed is already within the company. A good interim is not going to stomp in and tell the engineering department how to build a better widget – they are going to apply their expertise and bring best practices from working with many different types of companies to help improve operations, finance, sales or any other area of the company that needs improvement.
The job of an interim is to ask the right questions and actively listen to everyone within the company to create a plan moving forward. If they run into a roadblock and specialized experience is needed, the interim will find the right people for the job. When InterimExecs RED Team member Dick Lindenmuth stepped into Styrotek, a family owned manufacturing company in California, the plant was completely shut down and he drew on expertise within the company to solve a massive water issue and get the boilers back up and running. “You don’t walk in knowing all the answers,” Lindenmuth said. “The people who are doing this for years may not have the perfect answer, but they have been watching it and see what is successful.”
Many company owners and investors considering an interim executive are doing so for the first time. With limited knowledge of the differences between a permanent search and an interim search, they may easily default to thinking that an interim executive must be located close to the office or plant, or must relocate. This is a flawed approach, and in securing a great interim executive, location should be at the bottom of the list. Interims travel the world to take on great challenges and have the frequent flier miles to prove it. Because of the short-term nature of assignments, they rarely, if ever, permanently relocate. Instead they go to the problem, challenge or opportunity which could mean commuting to the company headquarters, finding temporary housing, or working virtually. Each situation is unique and is dependent on the needs of the company, but the key is looking for best-fit talent.
Never eat sushi at the airport. Proximity is not a stand in for expertise.
Seth Godin, author of Tribes, admonishes to never eat sushi at the airport. Just because you get off the plane and have a taste for sushi does not mean that you should stop ten feet from the gate to buy the sushi that is closest at hand. Close doesn’t guarantee highest quality. The same thinking applies to interims: quality counts for much more than random geography.
Smaller companies with severe budget constraints may not see travel costs as feasible. Since the pool of high quality interim executive talent worldwide is limited, it may take longer to find the right executive, or they may opt for more creative forms of working together (i.e. video conferencing) to get the most bang for the buck.
Skills refers both to the executive’s experience across various functions within organizations, including sales, operations, marketing, finance, and accounting, as well as the accumulated wisdom, methodologies and track record the executive brings to bear in a given engagement.
One of the biggest stumbling blocks for company owners is recognizing the difference between skills and industry experience. It is easy for a fund manager or company owner to believe that an executive who has spent considerable time in a particular industry will be better equipped to enter another company in the same industry. Sometimes that is true – but not necessarily. Industry is not the same thing as skill building and track record.
Consider a hypothetical example: executive A spent his entire career in the automotive industry. Executive B had increasing levels of authority in automotive and two other industries before becoming an interim executive. In general, executive B could prove over time to be the better interim executive, because cross-pollination from various industries serves to do two things: 1) the executive is more likely to be well-rounded from learning different operating systems at different companies in different industries; and 2) varied experience will mirror the executive’s range of capability in performing interim engagements.
We usually gain very little from standard resumes, and instead dive into bigger questions around where the company is at and where it wants to go in determining best fit. Companies should therefore focus on transferable skills – taking a company public, bringing about operational and supply chain improvements, expanding into international markets, setting up B2B or B2C sales teams. What needs to get done and does the executive have an ability to learn quickly to accomplish your set goals?
BEST FIT LEVEL 2: HOW
Have you ever met someone who specializes in turnarounds? This is a very different mindset from, say, an executive or entrepreneur who thrives on startups. The turnaround executive is fix oriented: how do we save assets? What can we trim? The startup executive has a completely different outlook: how do we turn this acorn into a mighty oak tree? How do we go from zero to $1 billion revenue?
Companies go through many different stages in their lifecycle. Launch, scaling up into new markets, organic growth, expansion through acquisitions, turnaround, and ultimately exit whether sale, IPO or merger. Each stage requires a different cadence, mindset, and skillset. Companies should look for similarities between their current stage and experiences the interim had at other companies, which can be as varied as:
*An interim grew a company from scratch to hundreds of employees
*An interim broke through a revenue/sales ceiling at $50 million
*An interim grew a division from $500M to $1B
*An interim created systems, technology and process across an entire organization.
There are hundreds of use cases for interims. Looking at examples of where interims have had success in the past, you can see that each exec has a “sweet spot” – a stage that they love jumping into and ramping up fast.
There is a certain ineffable quality to a winner – think of any field of endeavor where you’re inspired by someone who has accomplished far more than average, and continues to demonstrate excellence time after time.
Muhammad Ali. John Glenn. Warren Buffett. Bill Gates. Steve Jobs.
Effective executives differ widely in their personalities, strengths, weaknesses, values, and beliefs. All they have in common is that they get the right things done.
Who is that winning leader for you? It is not that the person was flawless, simply that they had the quality over time of winning.
It has to be this way with the best interim executives, otherwise, they could not be entrusted to take on responsibility to lead a company, division or important project with highly favorable chances of success. Interims make their career by going into organizations for a short period of time, doing and delivering. If they cannot repeatedly produce, they are not cut out for a career in interim management. Permanent executives can stay in roles for many, many years, and ride on the success of an established company. Interims do not have that luxury, usually going into fast-paced environments where markets and technology are evolving, innovation is needed, or new thinking is essential for survival. It is simply too important to leave to chance. Owners need to see a winning track record to have confidence in their decision.
We each have an instinctive and intuitive way we perform work. One interim described himself as a sprinter rather than a marathon runner. Another focused much of their time on empowering everyone around them to take responsibility so the company wouldn’t even notice they were gone after the assignment wrapped up. With authentic interim executives you will see a predisposition for action. Gauging how an executive would approach an assignment is key in seeing if they are a good fit for a particular situation.
Questions like “when you begin an assignment, what do you do on day one?” or “what does your process to assess the company and our current situation look like?” tell a lot about how an executive ramps up quickly and performs work on site.
Often described as conative fit, companies can formally measure the mode in which executives approach their work through tests like the Kolbe Profile, which focuses on how to form teams with complementary strengths in various work modes.
Entrepreneurs, for example, tend to have a dominant Kolbe trait called Quick Start where they have an ability to make fast decisions with very little information. A financial analyst, on the other hand could have a dominant trait in fact finding and analytics, as opposed to rapid fire decision making.
An executive’s work mode can be instructive for the legacy team, but not necessarily conclusive.
BEST FIT LEVEL 3: WHY
It goes without saying that a leader must have integrity, and yet, this underlying core principle is not universal. We need look no further than today’s news to see examples of leaders betraying trust or undermining their own organizations. Integrity is a condition of wholeness, of honoring one’s word and being true to an organization’s highest principles. We value integrity above all else, because if integrity is lacking on the part of the leader, we cannot trust their motives, intentions, or ultimate ability to both do the right thing and produce the best result for the company.
It is the responsibility of the owner or investor to be sure upfront that principles are congruent between the company and the executive.
The best interims provide value up front (before any contract is signed), act with integrity, and are driven by making positive change in people, organizations, and even the surrounding community. Because many interims have gone into troubled environments at some point in their career, they have had to clean up the mess of companies bogged down with fraudulent situations, or dishonesty amongst the previous management team. While permanent employees can often get entangled in corporate politics, trying to please the powers that be and to keep their job secure, telling the truth – even if it is not what everyone wants to hear – is essential for an interim exec. When determining fit with an executive, make sure you have confidence that that executive will do the right thing, and advocate for what is in the best interest of the company. Even if it means hearing unpleasant truths.
The principle at InterimExecs is to train for competence and to fire or reject for lack of integrity. You simply cannot train values.
Why do you do what you do?
We all have a “why” that drives us. At InterimExecs, having a detailed process helps us get at the “why” behind the most successful interims in the world, and is vital in weeding out people who may be looking at interim as a way to a full-time job, or those who are more interested in a paycheck than having major impact.
In some ways the new specialty of interim management goes against every notion of traditional employment. HR managers seek consistency. If an interim exec flashed a traditional resume, showing project after project at company after company, a traditional HR recruiter could peg them as a job hopper or question their competence.
This couldn’t be further from the truth. Interim executives choose this career, and routinely are asked by client companies to stay long-term. When posed with that questions their answer is…no thanks.
Why would someone give up the stability of a full-time job for short assignments, which often are messy, require being on the road, and lead to constant change? It boils down to mindset.
Interim executives love challenge. There is a boredom factor associated with 99% of interim executives. They find they are really good at stepping into pivotal, turning points in a company, but not so great at running things smooth and steady for the long haul. It’s just not as fun. At the short end, an interim may go into a company for a few months, and on the long end it may be a few years, especially if it’s in a private equity portfolio or organization that they are growing to the point of exit. If an executive is saying that they want the interim assignment as a try-to-buy situation, or that they would be open to interim or full-time work, they are probably a permanent executive in disguise.
BEST FIT: CHEMISTRY
The nine aspects of fit: industry, location, skills, stage, wins, behavior, values, and mindset culminate in chemistry: is there a good connection formed between the interim executive and the company’s owners? This measure is really a gut feel that no test can perfectly measure. But when it works, magic happens.
If there is a meeting of the minds, the deployment process begins by creating a scope work for the assignment, negotiating fees, and drawing up a contract.