Short-term solutions

The value of the interim management market has risen sharply over the past decade: estimates placed the industry's worth at £500m in 1996, so at £1bn in 2006, this figure has doubled in 10 years.

The rise in interim management has mirrored the rise of recruitment itself, with it being considered as a career rather than something which people just "fall into", as the common slang has it.

"It's no longer something people do because they have been made redundant somewhere else or their companies have merged," points out Nick Robeson, (left) chief executive of Boyden Interim Management.

This presents opportunities for recruiters. Interim managers can be highly paid, but they are also happy in the knowledge that assignments tend to be for a fixed period of time.

As James Hunt, (right) managing director of Penna Interim, suggests, this helps to focus the mind of the candidate and make them keen to do a good job.

"They know that if they do well for say, six months, there is another job for them around the corner," adds Hunt.

"This differs from a traditional consultancy role in that if you work for a consultancy, even if you don't do a good job, you are taken off that client and assigned another one straightaway.

"Interims tend to feel more a part of the client company and therefore tend to be more successful as a result. We've had companies come to us and say, 'We had a consultancy in and they didn't tell us anything we didn't already know and the problem is still there'."

The flexibility of interim placements, plus a change in mindset of the part of the employee, has led to an increase in interim recruiters in the marketplace.

"It's a lot to do with the dynamic change in the way people feel about their jobs," adds Robeson. "People are more loyal to themselves and their families now. Twenty or so years ago people would have died for the company they work for, but it's different now."

Hence, the rise of the interim. It is a mistake, however, to assume that interim managers thrive in organisations which, up until the stop-gap solution came on the scene, had been failing.

Indeed, Robeson points out that crisis management, something which interims are traditionally associated with, makes up only 10% of the market.

"[The use of an interim manager] is absolutely not a sign that companies are failing," he says. "Why employ somebody permanently when you know a job is only going to take nine months?"

Interims, say those who recruit them, can be used to cover a number of eventualities: maternity leave, company restructuring after merger and acquisitions (M&A) activity and cover for secondments among them.

Variety is the spice of life, they say, and this is one of the key positives for an interim manager. Recruiters have been quick to recognise this and the number of interim specialists has grown significantly over the last few years.

Research conducted by MORI for the Interim Managers Association (IMA) showed that the cumulative turnover for agencies, based on 352 assignments across the private and public sectors in the second quarter of 2006, was £26m.

Which goes to show, there is money to be made. But which sectors are the most lucrative?

According to Robeson, it depends on whether the work is in the public or private sector as to what type of work is done.

"The health service takes up a lot of our public sector work," Robeson told Recruiter, adding that cost-efficiency drives and the meeting of government targets had required a large number of interim project managers.

Whereas in the private sector, the heavily project-orientated pharmaceutical sector and the manufacturing sector, which is traditionally an area of high turmoil, were the most dominant.

However, pharmaceutical interim specialist RSA Interims says it thinks that companies in the sector have been slow to use interim managers.

Perry Evans, (left) manager of RSA Interims, says: "The pharmaceutical and biotech industries have taken longer than some other sectors to realise the benefits of interim management. But hiring managers are now embracing flexible resourcing to add value to their businesses and there are now interim opportunities in almost every area, from drug discovery through to sales and marketing."

Evans also suggests that interim management is no longer the preserve of executives approaching retirement.

"We've also noticed the 'typical' profile of interim managers is changing. The age range has dropped significantly and we're seeing more successful professionals in their 30s and 40s making a career out of short-term interim assignments.

"Better understanding of what interim management is and how it works has made the hiring of readily available hands-on experts a more appealing, cost-effective option."

A further glance at the IMA MORI statistics reveals another interesting trend. Of 130 assignments placed in the public sector in the second quarter of 2006, 45% were in the local government market. Chris Behan, managing director of OdgersInterim and a man who claims to have "invented" the interim management recruitment market as a founder member of Albermarle in the late 1980s, says that a lack of experience from the client is the reason for this.

"Local government is going through a lot of change and it doesn't have the in-house experience to manage change," he says. "It's inevitable that local government would be a target for interims because they are so project-based."

So, the market seems to be on the up and up. Unsurprisingly, this has helped to fuel a rise in M&A activity in the interim recruitment sector, with Hexagon Human Capital buying BIE Interim Executive in December 2006.

Gordon Whyte, (left) a director of HR Interims, a division of Digby Morgan which was bought by Vedior in November last year, says that high profits make interim firms an ideal target for takeovers.

"We can move our candidates from one contract to another, employing them again and again and again, which means there's a solid revenue stream," he told Recruiter.

However, Behan offers a different view. He contends that, with a market-leader such as Odgers taking only about 10% of the market, it is harder to mount takeover bids. Interim firms differ, he suggests, from the wider business world, where market leaders tend to have between 25% and 40% of the market and so have more clout when looking to consolidate.

In fact, Behan says that he thinks only about 50% of all UK firms have seen the benefit of using interim managers, which means there are plenty of avenues for recruiters to explore.

So, with this in mind, what challenges remain for interims? The picture painted so far seems to be a unremittingly positive one, but the threat of increased competition could make things harder for recruiters in this sector.

Whyte believes that this will make clients more fussy as to what they want. "Clients will be looking for a guarantee that the candidate can deliver; they'll want to be able to see results at the outset of the assignment.

"This will happen more and more as organisations look at rationalising their processes and doing things which add value to the bottom line."

The recruitment industry is a fragmented beast indeed, but if anything, the interim sector is still more fragmented. Behan estimates that, of about 100 companies in the UK which deal with interims, only about half a dozen could be considered 'big' players.

"I actually have a theory that the market could mature a lot more," says Behan. "Really, the executive search market hasn't yet fully explored the interim sector, so there's plenty of scope for more companies to tap into it."

What cannot be denied, however, is that the market is growing. As more organisations seek to go down the ninterim route, this figure is set to rise.


CASE STUDY
A Japanese pharmaceutical company wanted to set up in the UK to register products in the UK and Europe but they felt they couldn't justify taking on a permanent, experienced local general manager. A former medical director with considerable experience in multinational pharmaceutical companies was appointed as general manager on a one-year assignment.

Smooth and early registration of its first product in the UK followed. The interim also significantly contributed to the organisation, processes and structure of the UK company, and helped it attract talented new staff.

TRENDS IN THE INTERIM MANAGEMENT
With the first Ipsos MORI annual survey of the interim management market to be published later this month, a couple of trends have emerged as the data has been collected over the last year, explained Nick Robeson, chairman of the Interim Managers Association (IMA).

"The first is the increasing focus of interim managers on strategic roles — to deliver essential projects and improve business. Change and transition management is the major reason organisations hire an interim manager, followed by programme and project management and then business improvement."

Robeson added that the second key trend was the continued rise of interim management in the public sector, with local government the biggest user, followed by health.

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