Is It Time for Board Members to Re-Think Leadership Continuity?
Private companies have been buffeted by upheaval on many fronts in the past 2-3 years: pandemic, inflation, stimulus programs distorting employment markets, supply chain disruptions, war, and other issues. These pressures have caused financial distress by some, acceleration of generational transfer by many, and sparked the decision to sell out by others. The use of well-qualified senior interim management professionals acting under the guidance of the Board may help bridge gaps that occur with rapid change, and this article explores the reasons why and how that may be done.
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The great post-pandemic job migration/resignation is an unprecedented challenge confronting most businesses. Prudential Financials’ Pulse of the American Worker survey shows that 25% of employees are preparing to look for opportunities with a new employer. More than 40% of people who responded to Microsoft’s Work Trend Index said they are considering leaving their employer this year. This problem is particularly acute for small and midsized businesses where this challenge is affecting key operational and leadership positions. Exacerbating this problem is the rapid growth of the economy, supply chain disruptions, and the acceleration of mega trends due to the pandemic’s impact on work, buying preferences, inflation and technology. Even absent leadership turnover, small and midsized businesses are frequently finding a mismatch between urgent business needs and the right talent to solve them.
Action is the key to success and time is the precious commodity. Ensuring effective C-Suite leadership continuity is today’s most critical challenge for Boards and CEO’s. When a C-Suite vacancy occurs, or a talent gap is identified, the typical search period of 3—6 months is now untenable. Utilizing an interim executive is a smart, though often overlooked, option to ensure continuity with the right talent.
An interim executive is an experienced, unbiased business leader who would have deep industry and a “been there, done that” background. Interim executives have years of experience conquering a myriad of common business roadblocks; time is on their side, and politics are rarely in their way.
Situational experience and objectivity drive an interim executive to success. Whether they may be called on to replace an unexpected vacancy, shore up a weak/inexperienced management team, solve a problem where internal expertise is lacking, mentor an inexperienced leader, manage a major acquisition, or even shut down an ailing business, they have seen it all.
Interim executives do not require time to transition into their temporary role as leader but rather hit the ground running implementing appropriate strategy and moving the company forward. Case in point, a diversified telecommunications, real estate, and transportation company required a management team to address its troubled telecommunications subsidiary. The team’s job was to step in and solve problems quickly, without mistakes. In a matter of days, with the hiring of two interim executives, an experienced CEO and CFO were in place to refocus the business and reduce capital spending and operating losses, enabling renewed focus on regional top-line growth.
In another situation, a company had earned more than 50 industry awards, yet like hundreds of other Internet companies, it was burning through its funding. The interim executive who was brought in as a CEO to rescue the business, and who had taken over and turned around at least 10 companies prior, got results right away. He rewrote the business plan, refocused the product from a one-size-fits-all commodity to a strictly custom model, cut staff and refocused the sales effort. With that done, he re-energized the board, negotiated new critical partnerships and raised $9.5 million in new funding.
Because an interim executive has no interest in morphing into a full-time leadership role, they are able to observe and, therefore act, objectively. This objectivity ensures that their mentorship and guidance is genuine. Their leadership comes from the best interest of the company, not the best interest of any one individual. Likewise, a team atmosphere is better developed from the leadership of an interim executive, as he or she poses no threat to the careers of existing management.
While an interim executive forges through crisis management, the company can simultaneously extend its efforts to recruit a permanent leader. This leader, thanks to the use of an interim executive, will not have to sacrifice any relationships with new employees due to hard, but inevitable, decisions required during transitions. He/ she will provide resourceful background information to the new executive as well. He/she will instead be received in a positive light, ready to move his or her new company into a full-fledged phase of growth.
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The vetting and selection of an “overqualified” interim executive to fill a key short term operating vacancy is an art in and of itself, and one that should not be left to the exigencies of “staffing” firms eager to place the next candidate on their work list. Instead, when searching for a top interim management professional, consider using those firms that have the selection expertise as well as an extensive cadre of senior execs who will be specifically matched to the desired deliverables and the cultural/ societal mores of the company. The most successful of these firms also routinely assign a senior member of their firm to oversee and closely review the activities of the interim executive to ensure that client expectations are fully realized. Interim assignments are often quite fluid in nature, and it is common for the initial set of deliverables to be revised later in the course of the assignment as objectives are refashioned. This is when it will be critical to have a senior member of the interim management firm on board, and fully up to speed, to ensure that the interim executive can shift gears as required.
This article expands on a comment Mr. Sweeney previously published in Smart Business Chicago.
ABOUT ROGER SWEENEY
Roger Sweeney, Managing Partner of SMB Interim Management, has spent the last decade of his career providing interim CEO’s and leadership to companies undergoing significant change and transition. He has operating experience as President and CEO of several manufacturing companies and served in various roles at Procter & Gamble, Avon Products, General Electric and McKinsey & Company