Does Interim Management Ever Make Sense for Tech Companies?

Is there ever a time when hiring an outside senior executive for a short-term assignment in a software or hardware company is the right thing to do? If you’re based in the US, the most typical response from tech company boards and senior leadership to using Interim Management seems to be NO.

Obviously, there are many exceptions to this statement. But in the vast majority of cases, when an executive position opens up, the next person in that role is another permanent executive hire. Little consideration is given to any other potential solution.

In the small minority of cases where someone is designated in the role with an “Interim” tag, it’s usually someone from inside the company. In the case of Interim CEOs, it’s often a current board member. You seldom see someone from outside the company brought in on an Interim basis.

This is very much a US phenomenon, however. In Europe (and in the UK in particular), Interim Executives are a much more common occurrence. Why is there such a different view of this function between the two main areas of the Western business world? The use of Interim Senior Managers is increasing in the US. But it is still a tiny segment of the executive marketplace. The obvious difference in labor laws makes it much harder to reduce the permanent labor force in Europe. But I’ve always assumed there is also a cultural reason for the European vs. US gap in Interim usage. But I’m not sure what other reasons there are for the differences in attitude.

So are US companies missing out on a practice that could benefit their business? Let’s look at a few circumstances where hiring a senior Interim Executive might make sense:

Covering gaps with Interim Management

This is probably the most common reason for utilizing C-Level Interim Management. An executive has left the company–whether willingly or not. The team left behind needs leadership. You can attempt to fill this gap temporarily.  Put the team under a manager of another functional area or a more junior executive. But of course, this isn’t optimal. This manager of the other functional area usually doesn’t have the right background to manage this now leaderless team. He probably has a full plate managing his functional area. This may be a more junior manager you are throwing into water deeper than he/she is used to (and maybe infested with sharks!).

These two are the solutions you most often see, but neither is generally a great solution. Assuming the time gap between the former executive leaving and the new permanent hire coming on is extremely short, it might be fine. But if the period the position is open is lengthy (or worse, you hurry into a very fast new hire) the performance of this functional area can suffer greatly. Bringing in an experienced Interim can often be a great alternative solution. It allows you to keep momentum moving in the right direction, in the area of concern. This allows the company to take its time and have a thoughtful hiring process for the next permanent executive.

Interim Management Change Agents

There are many different reasons that a company might benefit from utilizing a change agent. One of the more common scenarios is a company undergoing financial duress. It’s often very hard for incumbent management to make the painful decisions required to bring the company back into balance. Sometimes it’s even required to continue as a going concern. A new permanent hire can take the necessary steps. However, a transitory change agent like an Interim can be beneficial in taking these steps. An Interim is used to acting quickly, while the right permanent hire might take too long where timing is critical. Also, under this approach the new permanent hire, whether a CEO, CFO, etc. can come in with a clean slate and begin his or her tenure on a more positive note.

Another common scenario in the software and hardware business is rapid change. That may be a change in technology or some other massive change in market dynamics. In these instances, it can be helpful to bring in an Interim specialist in technology or marketing to guide the company through a challenging period.

More generally, most companies highly value their corporate cultures. But if care is not taken things tend to become stale over time. Worst-case, this produces an inbred, group-think approach to business. Sometimes a fresh, outside perspective can inject new energy and innovation into problem-solving. Additionally, this can benefit other aspects of the company culture, even if utilized only for a short time.

Lastly, sometimes situations arise in companies where conflict over policy or personality is tearing the company or department apart. This impacts the organization’s teamwork while working toward important common company goals. Sometimes this is a transitory issue. However, it can also be the result of a corporate culture that is becoming toxic. In these cases, bringing in an Interim Manager with no previous “dog in the hunt” can allow him or her to serve as an unbiased, Honest Arbiter. This helps to bridge the divide between the warring factions.

Manage a Special Project

The final common reason to retain Senior Interim Management Executives in a tech company is the ubiquitous “special project”. There are many good reasons to bring a temporary senior resource on for special projects. Sometimes a project is very challenging. In this instance, it helps to bring in the most skilled, experienced expertise possible to raise the odds of success. In other instances, you feel confident in the level of internal expertise to bring the project to a successful conclusion. However, the appropriate internal candidates simply don’t have the bandwidth to do justice to a leadership role for the project.

In certain circumstances such as an M&A project, a new market/technology investigation, or the startup of a new division, you may also wish to maintain a certain level of discretion or confidentiality in the early stages of the project.

In many of these special project cases, a more traditional consulting engagement could also serve the needed purpose. As opposed to a deeper Interim Management engagement. The proper engagement style depends upon long and how independent the engagement needs to be.

PJM Consulting provides C-Level Interim Executive Services to software and hardware companies, in addition to our core Management Consulting Services. Please contact us using the information below if you’d like to discuss a potential need for an Interim Executive.

These are just a few ideas on why and when you might want to consider hiring an Interim Senior Executive.  I’m sure there are many prime areas I left out. Post a comment with your own thoughts on the applicability of Interim Management in high-tech companies.

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