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OCTOBER 2023

Interim Executives & Leadership: What You Need To Know

Tom Wilson

Interim Leadership in the Evolving Talent Landscape

Organizations today are facing unprecedented challenges in securing suitable leadership amidst rapidly changing workplace dynamics, an uncertain global economy, swift technological advancements, and ongoing post-pandemic stressors. Recent insights from McKinsey show a profound talent scarcity across all levels, from managers on the front line to leaders in the C-suite. Corroborating this, the U.S. Bureau of Labor Statistics shows a ratio of 1.8 open jobs for every hire. Additionally, a study by the Workforce Institute at UKG, states that about 40% of C-level leaders said the stress from their work is so immense they’ll likely quit within the next 12 months.

These changes in the workplace — high turnover, more leaders choosing to work on an interim basis, and a talent shortage — require businesses to take a more adaptive approach to leadership recruiting that may include hiring interim executives.

  • Interim leadership roles allow experienced executives to balance professional ambition with personal wellbeing and job satisfaction.
  • For organizations, hiring interim executives is a strategy that can allow them to navigate transitional periods, crises, business surges, or other changes effectively by leveraging the expertise of temporary leaders.

The concept, though not new, is regaining prominence as companies hire interim leaders to address immediate challenges.

What is an Interim Executive?

A short-term or interim executive is a seasoned expert who steps in temporarily to provide stability, leadership, and direction during times of change or uncertainty. This role isn’t intended as a permanent solution, but a temporary measure to navigate challenges and effectively implement positive transformations. Interim leaders can offer fresh, unbiased insights, helping organizations to realign their strategies and activities swiftly and maintain resilience in a competitive market. If executed strategically, according to Harvard Business Review an interim leadership role can be a unique career opportunity, allowing these leaders eventually to move into a permanent role, but with the advantage of having a deep understanding of the organization before making that long-term commitment.

Interim leaders can contribute to any organization’s success in a number of different scenarios such as:

  • filling a vacancy temporarily until a full-time hire is made, often when there is an unexpected departure of someone in a mission-critical role;
  • serving as a leader in a time of transformation for a company or organization where the requirements of the current role are not the same as the eventual permanent role; or
  • bridging a leadership gap as the organization prepares for a significant event like a sale or merger where there is no long-term need for the role after a certain date.

Interim HR Consulting: An Example of the Interim’s Essential Role

Interim HR consulting is more than a temporary replacement. As a strategic contributor, an interim Chief Human Resources Officer (CHRO) or Chief People Officer (CPO) search will deliver an executive who can maintain and advance ongoing projects and initiatives immediately, while also serving the critical role of advisor and coach to the leadership team. His or her interim HR consulting role is especially vital when a business is between permanent HR leaders.

Interim HR consulting leaders  bridge the gap effectively, allowing the company to continue its operations unhindered, preventing potential loss of momentum on key initiatives or organizational knowledge. In times of sudden departures or unexpected absences of key HR personnel, the Iinterim HR leader provides the stability and continuity needed to keep organizational processes running smoothly.

The Need for Interim Executives

The adoption of interim roles is gaining momentum as organizations seek to maintain operational continuity, for example when a role becomes open or the organization hasn’t yet hired or budgeted for a full-time employee. These roles are pivotal in scenarios such as when a company has had recent resignations or when a full-time employee is on leave.

Drivers for Hiring Interim Executives

The shift towards interim leadership is not arbitrary, rather it is fueled by a variety of factors including:

  • Economic uncertainty and concerns about business vitality (which may encourage organizations to delay a full-time hire)
  • The importance of uninterrupted operation
  • The need for time to fill efficiency in not leaving a leadership role open too long

From our own observations of the market, business drivers for the increased interest in interim executives include the fact that businesses are acknowledging the growing importance of interim hiring strategies and recognizing that leading a thorough process to find the right leader may be time-consuming. To ensure smooth business operations, many are prioritizing interim searches at the same time that they are conducting a search for full-time placements.

Benefits of Interim Executives

Interim leaders can deliver numerous benefits. They introduce fresh perspectives and enhance organizational efficacy with their clear, external view of operations. Their specialized skills offer targeted support, and their fresh energy invigorates teams, playing a vital role in reducing burnout and maintaining workforce engagement and inspiration. Interim leaders often bring a refreshing level of objectivity, having encountered multiple related situations before, without being influenced by existing organizational dynamics.

Rising Demand for Interim Executives: A 2023 Perspective

According to the Association of Executive Search Consultants (AESC), recent years have seen a rise both in demand for interim leaders, and in the availability of highly experienced interim talent. The 2023 Independent Talent Report by the Business Talent Group uncovers a significant surge in the demand for interim executives, underlining their crucial role in the contemporary corporate ecosystem. This surge is particularly noticeable in finance roles, such as interim Chief Financial Officers (CFOs).

Key Insights from the report include:

  • Overall rise in demand for interim executives: There is a 116% year-over-year (YOY) increase in requests for interim leadership, a doubling in demand from the 2022 report.
  • Growing need for interim CFOs: Interim CFO search has experienced a notable increase of 103% YOY, reflecting a strong demand for professionals skilled in financial controls, accounting, and audit.
  • Substantial demand across various executive roles, including:
    • CEOs: +220% YOY
    • Chief Human Resource Officers (CHROs): +100% YOY
    • Chief Transformation Officers: +100% YOY
    • Controllers: 233% YOY

The Controller role is experiencing the most rapid growth among interim c-suite roles. It accounts for 43% of interim requests at all levels (+71% YOY).

These statistics signify the evolving needs of today’s corporate landscape, and emphasize the pivotal role of interim executives, especially those specializing in finance, in addressing organizational challenges and transformational needs.

Navigating the Path: Options for Employers Seeking to Hire a Leader

Navigating the complex landscape of senior leader or c-suite executive search can be challenging, with different possible strategies that depend on an organization’s needs. It’s crucial for organizations to consider their unique situation and select the best approach.

Below, we outline four main strategies that businesses have adopted to address their need for new leadership effectively. These strategies encompass both full-time and interim hiring. It’s noteworthy that interims can often be placed into roles much more swiftly than when conducting a full retained search.

Approach #1: Direct Plunge into Hiring a Full-Time Executive in the Role

The first approach is a conventional pathway, in which organizations opt to hire an executive who will immediately accept a full-time role.

This traditional route remains appealing for its simplicity and decisiveness, enabling organizations to secure leadership swiftly, and fostering stability and continuity. This direct approach necessitates a comprehensive understanding of the role’s requirements, and a meticulous executive search process to ensure that there will be seamless alignment between organizational goals and the selected executive’s competencies and leadership acumen. However, even the quickest executive search will take many weeks, often leaving a key role open in the company.

Approach #2: Interim Executive Roles with an Eye to Converting to Permanent Positions

The second approach embodies flexibility and prudence, with organizations leveraging interim roles as a transitional phase with the prospect of conversion to permanent positions.

Once an interim leader is onboard, this methodology allows organizations to assess the compatibility and efficacy of leaders in real-time, offering a balance between immediacy and long-term strategic alignment. It serves as a testing ground to ascertain mutual compatibility and strategic congruence before bringing the interim leader into the permanent role.

Approach #3: Simultaneous Hunt for Both Interim and Permanent Leaders

This approach involves a synchronized search for both interim and permanent leaders. The interim leader, generally with a wide-ranging leadership background, steps in to navigate the organization through transitional times. As this leader steadies the ship, a comprehensive search for a permanent leader unfolds in parallel. Notably, if there’s a mutual interest, the interim leader might transition into the permanent leadership role. This strategy ensures:

  • Continuity in leadership during transition phases
  • Time for a thorough vetting process for the permanent leader
  • An option to evaluate the interim leader for long-term suitability

Approach #4: Immediate Onboarding of Consultants While the Permanent Search is on

This strategy emphasizes onboarding specialized consultants to address particular challenges or projects that the organization faces during its leadership transition. These consultants provide targeted insights and solutions based on their expertise, ensuring specific organizational needs are met in the absence of a permanent leader. This approach:

  • offers specific expertise tailored to immediate organizational needs;
  • ensures uninterrupted progress on critical projects or challenges; and
  • provides an external perspective, often beneficial in strategic decision-making.

Choosing the right approach necessitates a detailed understanding of a firm’s needs, strategic goals, and the current talent landscape. Organizations need to employ strategic discernment and adaptability in selecting a pathway that aligns with both immediate needs and long-term visions and objectives.

Pitfalls and Misconceptions of an Interim Leader Strategy: Avoiding Common Mistakes

In the realm of interim leadership, every decision holds substantial weight. Navigating common pitfalls and misconceptions becomes a journey of its own. Understanding the realities of hiring an interim leader can mean the difference between transient success and enduring organizational excellence.

  • Replace the Quest for the “Perfect” Interim Leader with a Practical Perspective – The pursuit of the exact-fit interim leader, although noble, is often impractical. The quest for flawlessness might lead to a paradoxical stagnation, where organizations find themselves entangled in the intricacies of an ideal that may not exist and is unnecessary for an interim leader. The organization’s actual needs and dynamics are usually to have someone in the role now. The benefits of bringing someone on quickly (continuity, leadership, focus on work product) often outweigh the risks of bringing in an interim leader that may not be suitable as the long-term solution for the company.
  • Go for the 80% Fit: A Pragmatic Approach to Interim Positions – There’s a growing consensus that an 80% match is the pragmatic choice for interim positions. This proposition holds merit as it accentuates a balance between qualifications and adaptability. An 80% fit allows room for growth and adaptability, fostering an environment where leaders can tailor their approaches to meet the evolving needs of the organization.
  • Balance Idealism with Realism in Interim Leadership – Successfully leveraging interim roles isn’t about finding a perfect fit but about adopting an adaptive and realistic approach. Organizational stakeholders need to be discerning and practical, recognizing that the right blend of practicality and vision can lead to hiring effective leadership.

The Frederickson Partners Blueprint: Harnessing Interim Leadership for Strategic Advantage

At Frederickson Partners, we don’t just talk about the benefits of interim leadership at a theoretical level; we live and breathe them. Our experiences have consistently revealed nuances in how organizations approach an interim strategy that can make a significant difference when they are undergoing transformations or transitions.

We share below several lessons from our past interim placements:

  1. Seniority Overload: An interim placement can provide organizations access to a depth of experience that might be challenging to attain with a regular hire. Companies, during transformative phases, might find themselves in situations where they benefit from having someone with extensive experience as an interim, similar to having two CPOs’ expertise while investing in just one and a half. This kind of ‘over qualification’ isn’t redundancy; it’s about leveraging heightened experience to drive impactful change.
  2. A Fresh Lens: Interim leaders often bring an unclouded, objective perspective to the table. Not being enmeshed in the long-term dynamics of the company, they can evaluate situations with clarity, providing insights that someone more deeply embedded might overlook.
  3. Tackling the Difficult Things: There are certain challenges that, though essential, could be politically sensitive or potentially damaging for a permanent leader to undertake, be it a large-scale reorganization, addressing a persistently problematic area, or acting as a bridge between a less-effective leader and an eventual beneficial one. Interim leaders can take on these tasks without the same long-term repercussions, ensuring the organization continues to move forward without unnecessary hiccups.

The Value of Specialized Firms in Providing Interim Leadership

At Frederickson Partners, we pride ourselves on our deep industry knowledge and access to an expansive network of candidates. We recognize the technical proficiencies needed and understand the cultural nuances that can make or break an executive’s fit within an organization–whether as a full-time or interim leader. Our database is filled with potential leaders, each bringing their distinct skills and perspectives.

It’s important to highlight that our team is continuously in touch with candidates. We have our fingers on the pulse, connecting with executives who, between permanent roles, are eager and primed for interim opportunities. At Frederickson, we don’t believe in one-size-fits-all solutions. We deliver strategies that are truly tailored to the distinct objectives of each organization we partner with.

Conclusion

Interim Leadership is becoming increasingly important in today’s ever-changing business world, as a model of flexibility and strength for leadership recruitment. It’s essential for organizations to think outside the box when it comes to hiring, using innovative strategies that include interim leaders who can handle the challenges of transitional periods.

We at Frederickson Partners invite organizations that are looking to the future to get in touch with us. Let’s explore a partnership that offers customized solutions and strategic alignments, specifically designed to meet your unique needs and goals. Together, we can pave the way for ongoing success and forward-thinking leadership in this rapidly evolving business landscape.

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Tom Wilson , President at Frederickson Partners, a Gallagher Company, is an internationally recognized thought leader in HR management and retained executive search with 30 years of experience. A Fulbright Scholar, Tom started his professional career with Sullivan & Company, now part of Heidrick & Struggles, and held executive roles in global Talent Acquisition and HR for top financial institutions. (See Tom's LinkedIn)

Read Tom Wilson’s Full Biography.

Frederickson Partners, a Gallagher company is a market leader in retained executive search since 1995. As one of the top-rated HR executive search and C-suite recruiting firms, we have expertise in placing Chief People Officers, Chief Human Resources Officers, Chief Diversity Officers, Chief Financial Officers, Chief Legal Officers and many other senior leaders. We draw on a broad network of rising and established executives and leaders, and a 28-year reputation as a talent acquisition and HR Advisory provider.

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