Interim senior management work represents a far different paradigm than traditional, long-term leadership. Decision making, operating plans, and strategy are all dictated by a different set of norms. From the perspective of an experienced full time and interim CEO, the following are the principal challenges confronting interim CEO work as they dive into an assignment:
IS THERE A CLEAR BUSINESS STRATEGY IN PLACE?
All parties know the long-term strategy but are those the best strategies during an interim period? Not always. For interim roles, there are several strategies that might be mandated. “Hold the fort” – stay the course, just take care of what is happening, until we bring a permanent CEO on board. “Assess” – we need an interim set of eyes to examine the company because what we had in place wasn’t working and we need an objective perspective. “Develop a long-term plan to be implemented by someone else” – self-explanatory. There are any number of strategies that an interim executive would be required to implement. It is essential that an interim be in direct and complete alignment with the private equity firm from the outset in terms of what the dimensions of the assignment are and how they fit into the longer-term strategy of ownership.
WHAT AUTHORITY DOES THE INTERIM CEO HAVE TO MAKE DECISIONS?
An interim CEO needs to work with ownership to determine whether strategic decisions should occur during the interim management assignment or left to permanent management. Should we hire a senior officer? Conversely, should we relieve a senior officer of his/her responsibilities? Would it be appropriate to embark on a long-term capital project or wait? Is there key market research that needs to occur in order to embark on a go-to-market strategy? Should broad-based expense control begin?
Taking major actions in a shorter window is less attractive than doing so over a 9-month to 12-month interim period unless said actions are what the ownership team – and interim CEO – believe are the correct actions to take over that period. Clarity on the decision-making authority of an interim CEO is essential as is the requirement to communicate on a systematic, regular basis with ownership.
IS THE ASSIGNMENT DURATION CLEAR TO ALL?
When my nephew was getting on the bus for first grade, he asked his parents “how long did you sign me up for this place?” For interim assignments, clarity up front in terms of the length of tenure is valuable as it sets the boundaries for what can be accomplished and what the management team’s expectations should be. There is inevitable flexibility in terms of the duration of an assignment but establishing up-front expectations – recognizing that they might change – is important not only for the interim CEO and ownership, but for the executive management team reporting to the interim CEO.
ARE THE NUMBERS REAL?
As an interim CEO, I have walked into situations where the lack of authenticity of the numbers made the working environment much more challenging than anticipated. Best practices suggest taking a close examination of the financials as the assignment is being considered – reviewing monthly management reports, prior year financial statements, and any other available financial and KPI data. This information is not always accurate or relevant, however, which is learned after the interim work starts. At the risk of generalization, I am less concerned with future projections – as we will figure those out shortly after stepping in – than ensuring that the past financials are accurate and reflect reality.
WHAT IS THE MINDSET OF THE SENIOR MANAGEMENT TEAM?
Mission definition – see above – is the most important ingredient in working with the existing management team on interim work. It is, by definition, interim, so the team will act accordingly. No reason for them to make a long-term commitment to an interim nor should they. The “however” here is that an effective interim CEO needs to work closely with the senior team to accomplish the short-term objectives. Recognizing that in some cases an interim might need to provide an assessment of the management team to ownership as part of the assignment, buy-off from the team – a commitment from the team – is feasible only with mission clarity.
HAVE THE COURAGE TO LOOK AT THINGS VERY DIFFERENTLY
A partner posed the question of whether it is feasible to “break a few things” in order to find out what is working and not working. Sometimes it is necessary to do just that; to change up and shift up a few things during interim work to examine the company from a different perspective. It might be a system that needs to be broken, or a go-to-market strategy that isn’t working…it could be several systems that need to be “broken”, or at the very least “stressed” to ascertain long-term viability. Not always fun or easy but breaking up the ordinary and customary is often an invaluable learning exercise for ownership. This is fucking brilliant!
ARE THERE CLEAR, CONSISTENT, COMMUNICATIONS OCCURRING BETWEEN COMPANY AND OWNERSHIP?
In any CEO role, long term or interim, constant, systematic communications is essential for success. For interim work, communicating up – to ownership – is as important as communicating down/cross – to a management team. In my interim work, I set up regular, systematic communications with the ownership groups that I worked for so that nothing slipped through the cracks. Regardless of direction, weak communication is a death knoll for effective interim work.
EXAMINE, ASSESS, AND REPORT
The most effective work that an interim can do is to provide sharp, independent, unbiased assessments to ownership of the goings on at the company. The ownership team already has its assessment, provided either by the former CEO, an outside consultant, a Board member, or a combination therein. Whether it is in marketing, sales, IT, finance, or operations, an interim CEO is worth his or her weight in gold if they can provide an up close and personal assessment of the performance of the company. A distinct view not biased by the history of the entity or a flawed strategic agenda of others. If nothing else, this is the most invaluable service an interim CEO can provide.
ABOUT THE AUTHOR
James Still is an operating executive and Board of Directors member with extensive experience in the middle market. His sector experience includes business services, education, training, health care services, and financial services. Formerly the CEO of five privately held companies, he has a passion for leadership. This is one of a series of thought leadership articles centered around best practices for interim senior management, Boards of Directors, private equity owners and operating management.
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