Introduction – what is interim management?

Interim management is the temporary assumption of management tasks by an external manager. The terms ‘interim management’ or ‘temporary management’ are used synonymously.

In many respects, the role of an interim manager is similar to that of a salaried manager, i.e. they both lead and play an active role in the company with exceptional strengths in implementation. In order to put this in a clear legal framework, special conditions are required for the work of interim managers in companies.

What are typical areas of operation for interim managers?

The areas in which interim managers are deployed have changed increasingly in recent years. In the early years, it was mainly turnaround and crisis managers who led companies through crises as interim managers in the context of turnarounds or restructurings. In the following years, the interim managers increasingly took on roles bridging vacancies for classic line functions. In bridging vacancies, interim managers are deployed in positions that are only to be filled for a limited period of time, e.g. due to illness, an anticipated lengthy hiring process or the planned elimination of the position due to corporate restructuring.

The short-term availability combined with a strong professional background made interim managers attractive for companies for these types of positions.

In recent years, interim managers have increasingly been deployed as change managers for specific projects or tasks, operating in parallel with existing management. They enter the company with a specialised implementation competence, can familiarise themselves with the specific company situation very quickly due to their practical experience and are therefore immediately effective.

Deployed in this way, interim managers can be seen as a temporary extension of an existing management team. They can provide missing know-how, take over important management tasks and lead the team until implementation is complete.

This is particularly useful for companies that require changes in order to remain viable for the future, but which lack the time or specific competence to effect these changes on their own accord.

All three areas of operation still exist in the interim management market today, but the focus is increasingly shifting towards the latter role. For example, according to a representative survey in 2019, 35% of interim managers already work as change managers, while 12% provide support in crisis situations and 21% fill temporary vacancies (1).

The market for interim managers in Germany

Between 9500 (2) and 15000 (3) interim managers were counted in Germany in 2018. These numbers only include interim managers with skills and references at upper levels of management (CEO, managing director, division manager, CFO, HR manager etc). We define interim managers as experienced executives at the first or second management levels within a company.

There is no clear-cut line distinguishing interim managers from interim middle management tasks or specialists such as controllers, IT experts, tax experts, personnel officers, etc. These types of positions are often filled via temporary employment agencies. Some are also self-employed. This large group of specialists are not the topic of this article.

Traditional management consultants or coaches do not belong to the group of interim managers either.

Interim managers in Germany either market their services directly or via service providers.

Interim management providers are placement companies that specialise in filling the company’s requirements with the best and most suitable interim management profile. They often maintain large databases with several thousand interim manager profiles.

For providing a suitable IM profile, providers charge between 20 and 40% of the agreed daily rates as a commission. Direct commissioning of the interim manager by the client company is contractually protected by service providers.

Good providers know ‘their’ interim managers well and can assess the actual demand in companies. However, as in any market, not all of them are good at their jobs. And computers are increasingly taking over the ‘matching’ of requests and profiles.

It is estimated that around 38% of interim mandates are concluded via providers – and this number is rising (4). And this despite the fact that nowadays companies could easily find an interim manager themselves via the Internet.

As an alternative to direct searches on the Internet, an increasing number of online platforms offer cost-effective placement (matching) of interim managers. And associations and vocational training institutes create contact opportunities to enable the direct placement of qualified interim managers.

 

What distinguishes interim managers from management consultants?

Interim managers offer many years of practical professional experience from line functions or interim mandates. This practical management experience distinguishes them significantly from management consultants, who have often predominantly pursued a consulting career.

Both professions serve a purpose and offer distinct advantages depending on the situation.

For instance, management consultants are highly specialised in strategic questions, analyses and evaluations. Consultants also often offer the application of modern tools and management methods.

By contrast, consultants often have deficits in the implementation of strategies because they lack practical experience. Some management consultancies meet the desire to implement concepts through so-called implementation consultants. If their business consulting background includes years of practical line experience, such profiles are comparable to those of interim managers.

Interim managers are more involved with implementing measures. They are aware of the difficulties in critical management situations such as implementing reorganisations or changes and prepare them as thoroughly as possible. They have extensive real-life experience and have a well-founded understanding of the situation of line managers. In addition, the average interim manager in Germany is already in the second half of their professional career (80% are over 50 years old, (5)) and therefore they can draw on their extensive professional and life experience.

What are the advantages of using interim managers for companies?

Interim managers are available at short notice and, due to their experience, only need a very short period of training in a new environment. They are experts in quickly adapting to new environments, as they are always confronted with a completely new situation every time they accept a new mandate. ‘Rising to new tasks’ is therefore an essential part of their job description.

Clients frequently highlight the leadership competence gained by employing an interim manager as a major benefit. But the concentrated focus on results and the ability to lead and motivate teams are also highlighted as significant advantages (6).

Interim managers bring a neutral outside view into a company – and are able to quickly assess the respective company situation because that’s what they’re trained to do. Their outside point of view makes it easier for them to identify opportunities and risks than for people with a long history at a specific company. They can thus provide a shareholder or managing director with an invaluable assessment of the company and help implement changes.

In addition to experience in line functions, interim managers often have extensive knowledge of project management, experience in implementing change measures and in-depth knowledge of the industry.

Interim managers are deployed for a limited period of time until a defined target is reached, i.e. the effort and costs can be clearly determined and assigned to a project.

What general conditions apply to interim managers?

Interim managers are generally freelancers, i.e. they are not subject to any social security obligations by the company contracting their services.

For each assignment, measures must be taken to ensure the assignment is legally distinct from so-called ‘pseudo self-employment’. This is all even more important if the interim manager is contracted full-time and/or for longer periods of time.

For interim managers on a company’s payroll, the respective regulations for temp workers need to be consulted.

However, most interim managers are self-employed entrepreneurs. For both legal requirements, there are practicable and reasonable solutions to protect entrepreneurs and interim managers from unpleasant surprises. Associations and specialist lawyers provide regular information about the changing legal requirements.

A service contract is concluded for the interim service, covering the assignment, duration and intensity (number of days per week/month) of the task and the remuneration. Possible grounds for termination are also defined here, as are liability provisions.

In order to carry out his or her duties, the interim manager also requires certain managerial authorities within the company:

  • in order to carry out his or her mandate, the interim manager is granted the authority to give directives to the client’s employees who are to be managed within the scope of the assignment,
  • the interim manager is not bound by instructions from the client, i.e. he or she is not directly and hierarchically integrated into the company, but rather acts independently within the scope of the mandate assigned to him or her.

The work of the interim manager is remunerated on the basis of agreed-upon daily rates. Expenses are billable in addition to the daily rates. As the number of days is contractually fixed, the costs of contracting an interim manager are very transparent for companies.

Suitable selection criteria for companies looking for an interim manager?

It is not always easy to find the perfect interim manager, especially since the job title of ‘interim manager’ is not legally protected and there is no unified quality rating system for the industry.

Therefore, it is important for companies to first define their own needs for external support as precisely as possible. Even if this definition should change in the course of the interviews with different candidates, not giving the matter any thought ahead of time would certainly make it much difficult to find a suitable candidate.

What line, functional and industry experience should the ideal interim manager bring to the company? A financial profile, a sales profile or a broad-based management profile – this question should be cleared up in advance.

What knowledge of the industry does the interim manager need to bring to the table? – Sometimes it can make sense to take a look right and left and identify comparable industries with similar requirements. This extends the search options and, in the best case, brings new approaches and ideas to an industry that the interim manager has picked up from a different, comparable industry.

Which human and communicative skills should the interim manager have to be a good fit for the existing team and company? It should be noted that a deliberate diversity – a complementarity – in management teams often yields very good results. So don’t just hire someone who thinks and acts exactly like you or everyone else in your company!

With these considerations in mind, you can start your search, browse careers and profiles – but in the end, only one thing helps: entering into a direct dialogue with potential candidates. Give the interim manager a call and if all goes well, get to know one another personally and try to establish whether there is a solid basis for a good and trusting cooperation.

After an offer and an assignment, a trustworthy interim manager will always arrange a kind of probationary period. If things don’t go according to plan, the assignment can easily be cancelled during the first contract period.

Sources/ Literature: 1) cf. EO Executives, Interim Management Report, 2019, p. 6; 2) DDIM, Dachverband Deutscher Interim Manager, Pressemitteilung Feb 2018; 3) AIMP Provider Survey 2018, Market Volume Trends Project Structures, April 2018, p. 6; 4) cf. EO Executives, Interim Management Report, 2019, pp. 4, 19; 5) cf. EO Executives, Interim Management Report, 2019, pp. 4, 16; 6) cf. EO Executives, Interim Management Report, 2019, pp. 4, 7

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