Managing the Transition

05 Jul 2016

Managing the Transition

When should you hire an interim manager?

There are a number of reasons for why a firm should consider using an interim manager and one of the most common is when a large company finds itself without a leader, such as a CEO. It can be tempting to leave the position vacant while the hunt starts for the ideal candidate but this can be a mistake. Having a large organisation without an effective leader during the search for a new executive can lead to jitters among stakeholders. The solution? Appointing an acting or interim manager immediately to ensure a smooth transition.

Succession planning also plays a vital role in a business. The top three layers of leadership should be planned three to five years in advance. But best practice recommends that – even if leaders are identified and groomed through a succession plan – you should go out to market to benchmark your choice of successor against the best in class globally. If nothing else, an external search for alternative successors will provide the assurance that the talent you’ve been prepping is in fact the best leadership for you.

Since this process could take months, an acting or interim manager should be appointed to keep the ship on course, address stakeholder concerns and prevent unnecessary business disruption. Critically, we believe interim manager should be brought in from outside the company – since they won’t have years of organisational relationships informing their decision-making and will be able to rise above the tendency towards ‘group think’.

In South Africa, we have a deep talent pool which companies can dip into – a generation of former leaders with a wealth of experience, who may be only too happy to assist organisations, navigate a transition and even coach and mentor younger leaders. Some of our now retired former CEOs have led more than one listed company over their long careers, providing a background invaluable for an organisation going through a leadership change.

One big advantage of appointing an acting manager for a few months to ensure business continuity is that the relevant employment contracts are far less onerous than those of permanent appointments. Yes, an interim helmsman is likely to be paid a high daily rate, but he or she can be given as little as five days’ notice – it is therefore a very low-risk strategy for an organisation. In our experience, many companies want their interim leaders to stay on after the contracted period, and often appoint them in a consultancy or coaching and mentoring role.

Other circumstances, in which the appointment of an interim manager is advisable, include:

  • During a time of crisis: An interim manager can be used to turn around a failing service or business. They may offer expertise to a challenged management team. This could mean bringing sound financial management or wise counsel to an organisation that has lost its way as well as the ability to tackle issues such as grievances, poorly managed commercial relationships, broken procurement contracts or problems with internal relationships.
  • During a time of change: Start ups, new business development, mergers or acquisitions or restructuring within a company are all productive areas for a skilled interim manager.
  • During a time for innovation: Firms who seek to improve or innovate could take advantage of the specialist cross-sector skills interim managers offer to develop new products and services. The most effective use of interim management is when it is deployed in a focused and controlled way with outcomes and timescales clearly defined and managed.

Having a good understanding of a firm’s business culture is critical to placing the right type of interim managers who will fit in well into the company and begin making a difference from the first day.  This requires a tried and tested methodology for matching the right executive to each assignment. An external search for this interim manager also helps to identifying the best of class in the market.

What is crucial during this whole undertaking is that corporates should consider involving an external party to assist with managing what could be a highly complex task. A leading executive search company or an advisory team from a major consulting house will ensure that the proper due diligence takes place as the process evolves, and that the requirements of good governance are met within the organization.