In every company, emergencies occur when a temporary external manager would be of help, says Martin Schneider, the CEO of interim agency Brainforce Group in Germany and Switzerland.
Schneider explained that interim management is a management tool where a perfect experienced senior manager is hired to temporarily replace a middle- or top-level manager. ”For instance, next week a temporary CFO will take over the position of a company’s CFO for the next six months to finish the financial year, and then management will be passed on to the permanent CFO who can arrive at the company in six months’ time. One arrangement may be to plug a management gap, i.e. to take a position of a temporary manager between two managers,” Schneider said.
He added that a mobile manager can also be used during the period of building a factory, for instance, as a project manager who erects a plant in China or India, for example. ”Someone who has done it for several times before and is efficient in this role.” According to Schneider, this is a highly flexible model that can be effectively used in an increasingly flexible world. ”You don’t need the same know-how or the same type of know-how all the time. You can outsource the know-how you need just now.”
Interim managers or mobile managers are highly qualified executives with managerial experience who are hired to a company for a certain period to manage necessary change.
Recently, the term ‘interim manager’ appeared in the media when Danske Bank announced that until a new CEO was found, the current CEO was replaced by an interim manager, although coming internally. ”Under such circumstances, you must act fast. That’s the case in every company. You can’t stand watching what’s going to happen,” Schneider said, adding that if the situation is exceptional, you have to react as soon as possible. ”If you let the problem linger, it has a harmful impact on your reputation both in the media and in the market,” he said.
How long has interim management been used?
Interim management is 40 years old. Starting in 1979, Brainforce pioneered the business in West Europe. At that time, no-one else provided the service in the market.
Was interim management more in demand during the last economic crisis?
I can’t say the demand was higher. Different skills are required during different business cycles: when in a growth period, managers oriented to expansion and new markets are hired. When the market is shrinking or during economic crisis you have to focus on business transformation, shrinkage, and cost reduction.
During crisis, companies are unwilling to spend money, even if they have distinct need for appropriate skills. Business transformation may also result in failure and bankruptcy, which is the most expensive option; however, sometimes companies choose that option.
All transformations we have carried out show that a strong interim manager can save the company and reverse the situation. If a decision is made not to do it, the risk of going bankrupt is very high.
If a manager comes from outside the company, it may be looked upon as a situation where someone from outside comes to make difficult decisions, to sack people. Are interim managers used to make and carry out difficult decisions so that the company’s own executives don’t have to do it?
Interim managers are there to take decisions. They are there to make honest, fair decisions. Their huge advantage is that they are objective. They have no history with the company and they are not there to make career. They can make decisions based only on facts and assessments.
If internal managers have to make complicated decisions, they will be more cautious on firing people who they are on more friendly terms with. Thus, from an employee’s perspective, an interim manager is actually fairer. An interim manager aims at retaining good people and developing those who have the potential to grow and stay in the company, and lay off employees whose contribution is not as big as that of the others.
In companies you can often see that decisions are not made like that. This leads to psychologically disastrous effects. People within the company know who is efficient and who isn’t. If the management decides to sack a good employee, others know that the guy actually worked well and that lousy employees remain in the company thanks to relations. This is harmful to the company.
Hiring interim management has shown that people appreciate having someone who is neutral and objective and who does not play games because there’s a lot of internal politics in companies. An interim manager keeps out of all this.
Interim management is used during mergers and acquisitions, in major projects and while launching such projects, at times of crisis, or under circumstances where the company needs change or solution that cannot be managed internally.
How do interim managers get the picture of the company they are going to and the staff there?
The agency that places interim managers is responsible for finding the best fit – a person with appropriate experience, ideally in the same line of business. He knows the industry or area, knows this type of sector from the inside. People are different, but management is a skill that can be transferred. Someone who has been an interim manager for several years and has performed this role in various companies learns how to be very quickly effective in a new environment. For such a person, it’s not difficult. On the contrary, people soon see that the person who has come to the company is highly experienced and a lot can be learned from him or her. Wise people work closely together with an interim manager, because they know that at some point he or she will leave, but in the meanwhile, a lot can be learned from him or her.
People open up to an interim manager. In companies people often do not talk about things openly and honestly. They are cautious about what they communicate to anyone. Thanks to interim managers’ objectivity and neutrality, the staff open up and introduce new ideas. As a result, the truth surfaces much better than in the existing structure.
How can an interim manager solve the problems that current managers have not been able to solve?
Major problems in companies are related to management. Usually the issues are not technical but concern management mistakes: how you manage people and how you work together with them, how you release the potential in people. These are management skills. Not all managers in companies are very good at that. Maybe they had been promoted to manager not because of their managerial skills, but because of how long they had worked for the company, or they may be excellent at technical matters, but fail in managing people. This is not their strength. If you bring someone to the company who is very good at managing people and allocating appropriate tasks and roles to appropriate people, things will improve very quickly.
Under an interim manager the tables will turn. People start behaving in a different way and doing the right things. An interim manager directs it like a conductor directs a concert: when the conductor does the right things and organizes in a right way, the concert is a success, but when the conductor fails, the concert is also a failure. Since interim managers have done it over and over again, they can assess the situation very quickly and see what has to be done differently.
You said that managers are mostly not very good at managing people. What is the most important thing that an interim manager can do better?
Management is not something you can learn from a textbook or at school. Management is learned through years and years of experience in management and besides that, some talent is also important. Thanks to their nature, some people acquire the skill of managing people much more easily. In management, empathy is a very important trait as well as emotional intelligence. These are the characteristics not everyone possesses. Therefore, choosing an interim manager for a company means choosing the person. It also depends on the situation the company is in: whether the company needs a manager who expands or who transforms the company.
A manager who is very successful in expanding a company can fail when reorganizing the company because these situations require different skills. Therefore, a company can be very successful in the growth phase, but when the economic conditions change, it may get in trouble. Then people are surprised – that particular executive has always been so successful. That’s not a surprise, actually, since different situations require different managerial profile and skills. In that case someone else may be needed to manage the company.
For example, Nokia’s CEO entered the company when the company was on the verge of bankruptcy. It happened in early 2000s. He took the position of the CEO and in a couple of years turned the business around. In an extremely hopeless situation he multiplied the company’s value 20-fold in three years, because he was able to turn the company around. The company’s previous management had always been very successful, but when the market situation changed, they could not do anything. Different people are needed in different phases and different situations.
Who are efficient managers nowadays? What kind of managers do we now need?
I suppose that, in general, good managers must be people who can handle lots of vagaries. You do not know what’s going to happen in the market over the next three or five years. They must be able to do things differently from what they used to do, try out new things, and take risks. Such abilities are increasingly in demand. The times where you could say that we’ve acted in such a way for the last 20 years and the next 10 years we can carry on in the same way are definitely over. It’s definitely the past; it does not work anymore.
We need flexibility, flexible mind, taking risks, and doing things in a new way. That was just the case in Nokia: not a stone was left in its place; the things were done in a fundamentally different way.
Maybe it would be a great idea to have executives of start-ups lead old industries and vice versa. Would this be helpful?
There is some point in it. Successful start-ups are usually successful because there are also some more experienced executives involved. Usually young people in start-ups have no managerial experience and because of their young age they also do not have enough experiences gained from life. They have not developed their managerial skills yet. They are very good as concerns the content and technology; they are creative and full of new ideas. This is perfect but not sufficient. We do a lot of interim management in start-ups. Usually they need a more experienced executive or a human resource manager or someone like that. They need people who bring along lots of experience. A combination of young and old is a perfect case.
If you take a young guy from a start-up who has little managerial experience and have him or her manage a large corporation, it wouldn’t work. Usually, that would be a failure. However, young people can advise large corporations on introducing new issues.
So they can be advisers, can’t they?
They can be advisers or part of the so-called corporation start-ups. They can develop new services or technologies within large corporations like a start-up. In such cases the combination of experienced managers and young people with fresh ideas has also been successful.
Can you give some examples of using interim management in start-ups?
We had a very successful example in Switzerland where three key persons of a start-up of 15 people involved in 3D metal printing suddenly left to start a competing company. The investor had serious concerns whether to write off the investment or re-start the company. He hired an interim manager through us to manage the company. The manager we suggested carried out several managerial tasks in the company, those of the CEO, Head of Production, Head of HR, and Head of Sales; basically, all the roles that these three executives leaving the company had previously performed. The interim manager had to ensure that their customers would not go over to the competing company; stabilize the company internally so that no more people would leave; ensure that the quality of production would improve; orders would be met; and that new customers could be found. He hired new people and trained them. After two and half years of part-time management of the company, the start-up was sold to a German group. The investor was truly satisfied because instead of writing off the investment he could turn it into money.
It was an example of successful interim management where an experienced manager who could handle the technology and difficult situations was able to reverse the situation.
Who needs interim management?
Each company has situations where an interim manager could be useful. Some companies have such situations every couple of years; some need 10 interim managers immediately to resolve an emergency or to expand into new markets and react quickly. Interim management is always very efficient in an extraordinary situation. In order not to lose time until you find a perfect person for a specific purpose, may be in half a year’s time, an interim manager can begin right away, next week. This is of great value for every business.
What would you recommend to the executives who have to make major changes in the company but do not want to bring an external manager to the company?
An interim manager does not always take the role of the CEO. Usually an interim manager takes the position of the CFO, Head of HR, Head of Factory, Head of Production, Head of Quality Management, etc. Also, a project manager can be hired externally.
Interim managers can also act as advisers to CEOs: they assist the executive and support him or her in a specific situation. They do not have to be in a managerial position and take decisions, but they are supportive partners to executives. It has a great value. This could also be done concealed from other people. The higher the position of the executive, the lonelier he or she is. CEOs are generally quite lonely people. They cannot discuss everything with the management and colleagues. Such CEOs are usually really happy when another CEO who understands their business is there for them as a peer. Truly efficient executives understand what they need help with. Good executives understand where they have either a weakness or where they have a situation where because of lack of time, for instance, they cannot carry something out themselves.
Efficient executives have to know that they cannot do everything themselves. They need help, either internal or external. To find such a person internally is a priority, but quite often that isn’t possible. There may be people who could be developed, but they are not ready for such a role yet. You may need an interim manager who develops people and helps to grow the potential at the same time. If you put persons into a managerial position who are not ready for that, they may burn out, fail, and their career may be broken. But a lot can be learned from an interim manager and then the next step can be taken.
Should an interim manager come from outside the company? Danske Bank recently announced that instead of the current CEO an internal interim manager previously managing the Danish entity of Danske will take on the position.
Large corporations often do it in this way. It makes me wonder that when he leaves, his current position will be left vacant. If the bank can easily fill the vacancy and does not leave vacuum in the Danish entity, it can be a fine solution. Of course, he knows the bank and its mechanism, which, on the one hand, is an advantage. But that might also be a minus in the sense that when you’ve been working in the same environment for a long time, you’re too focused on your own processes in the company. But an external person may introduce new ideas, fresh blood, a reference point how things can be done differently.
Now the situation is that the bank is in crisis, money has been laundered there, and the new temporary executive comes from the company.
I would not comment on it. This may be an issue, but I do not know the details of the situation, and therefore I am not able to comment on this particular case. But in general, it is good, especially in a crisis situation, to have someone from outside the company.
What does it tell you about when Danske Bank is in crisis and its executive is removed and replaced with an interim manager until a new executive is found?
Under such circumstances, you must act. That’s the case in every company. The faster you react, the better if the situation differs from normal. If you let the problem linger, it has an adverse effect on your reputation both in the media and in the market. It sends a wrong message to people inside the company and does not improve things. On the contrary, things can get worse. In such cases, it is necessary to act especially fast, within days.
Would you have suggested them to hire an external interim manager?
I should not comment on what the company should do. That’s their decision. In general, however, under such circumstances it is better to find someone from outside.
Written by Kristel Härma.
The interview was published in Estonian financial newspaper Äripäev on 12 October 2018.