Interim Management – Necessary Evil or Path to Greater ROI? | Know with Us

Do you consider interim management to be a necessary evil mandated by unplanned circumstances? If so, this is clearly a necessary evil with the required ROI. In particular, it is not usually found in your company’s business plan. When you are dreaming of the next gear, you do not expect long for the opportunity to intend to take over your business or investment. Rather, it is what you do when there is a skills gap in your core team, the sudden departure of a chief executive, an otherwise competent sitting executive who lacks all the necessary skills needed to execute a modified or expanded element of your strategic plan. Happen, a business obstacle stands in the way of achieving a performance KPI or price advantage, or a critical life cycle pivot in your company that a project CXO requires.

ROI - IEC LLC

Value Extends Well Beyond Cost Considerations:

With the stage set for this construct of necessity for Interim Services, it’s worth highlighting that the total price tag for interim management is less costly than buyers of the services might first believe. In fact, the all-in costs can be measurably lower than a full-time executive – given the incremental expenses of bonuses, stock incentives, options, and perks – none of which are typically required for Interim Professionals. The additional expenses of a full-time employee also include what are sometimes underestimated costs, such as executive-level healthcare benefits, car reimbursements and payroll burden (i.e. state, federal and social security taxes). With all that said, the services rendered and their related charges are circumstantial, and the actual cost comparison is heavily dependent on many factors, including company size, industry, employer profitability and the unique circumstances of the scenario in question. In contrast, the all-in costs of an interim manager, inclusive of travel and ancillary expenses is an estimated minimum of 20% less costly than that of a long-term hire.

Positive Outcomes of Hiring a Temporary Senior Professional:

  1. Preventing the loss of confidence in the financial management of the company by board members, bankers and investors,
  1. Assuring that the quality of earnings that drives critical decision-making does not deteriorate,
  1. Management of the entire fund-raising cycle from end to end, inclusive of minimizing gaps, mitigating funding costs and ensuring that timing lines up advantageously,
  1. Interim managers can preclude the cost of failure of key projects in the pipeline that cannot be delayed,
  1. Avoiding losses from a reduction in productivity and prioritization,
  2. Forestalling or reversing lost revenue absent a lead financial strategist (e.g. attending to pricing tactics, modeling key initiatives, capital budgeting, etc.).

All of these broad categories have a dramatic impact on the bottom line for the company.

The Truth of The Matter:

This is not to say that there aren’t other solutions that can be considered for resolving gaps in the senior ranks and with a lower outlay of capital. Although a “do nothing” approach is reminiscent of the “hope is not a strategy” cliché, sometimes companies can leverage existing team members for project work due to a vacated spot, promote from within on an interim basis or split duties among current executives. However, this approach should be weighed carefully.

Interim Management is not always the right solution, but given its impressive and longstanding track record of return on investment and the ability to validate its value with results in the form of completed project work, departmental efficiency, firm KPI’s and the direct cost comparison as outlined above, its utility as a key tool in the toolkit for owners, boards and investors is likely to be heavily (and happily) leveraged for many years to come.

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2 responses to “Interim Management – Necessary Evil or Path to Greater ROI? | Know with Us”

  1. An intriguing conversation is worth comment. I think that you must compose more on this topic, it might not be a taboo topic yet typically people are inadequate to speak on such topics. To the following. Cheers Dela Reggis Carrnan

  2. You made some good points there. I looked on the net for more info about the issue and found most people will go along with your views on this web site. Stormy Barret Lisetta

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