Iain Hamilton: Interim Management & Consultancy - A Comparison

Iain Hamilton, who is currently on assignment at the University of Pretoria, has written a paper on Interim Management. He has very kindly given us the go ahead to share it with you. We are publishing an abridged version:

Interim Management and Consultancy - A Comparison

Historically, specialist consultancies and consulting units attached to company auditors have provided assistance to organisations undergoing change. Their role was mainly advisory, and directed towards the client accepting their recommendations. Implementation was the responsibility of their client.

Recently however, there has been a significant growth in the use of board-level and senior management Interim Executives. Initially a distress purchase as "Company Doctors", called on as turn-around specialists of the last resort, their use is now less and less associated with failing businesses, and is increasingly being recognised as a serious strategic option when organisations are facing change or addressing new opportunities.
If we consider the numbers, Management Consultancy is big business. In the UK it is in the billions per year, and Interim Management now exceeds £200 Million, although both operate largely in the same business sectors. In South Africa Interim is still in its early stages, but growing rapidly.

The rate of growth of use of Interim Executives now exceeds that of the traditional management consultancies.in the UK In 2005, the number of industry captains who consider Interim Executives more suitable and cost-effective than management consultants continued a steady increase to and in addition, the proportion of Captains who have not used Interim Executives at senior/board level has decreased.

A very attractive further benefit is that Interim Executives are usually around half the cost of traditional management consultants.

What are typical Interim Management roles?

Interim Roles can usually be classified in one of three ways:

Company Doctor

This is the use most often seen until the last few years - a turnaround manager: an objective outsider; a heavy hitter; available at short notice; and capable of intense focus on the matters at hand.

Critical Vacancy

Replacing a senior executive can be a lengthy process, often of up to a year. The business cannot usually wait, and needs someone on board to steer the ship while the recruitment process completes. The candidate needs to: be over qualified; available at short notice; able to provide an outsider's view of the business; able to take pragmatic and objective decisions outside the client's safe zone. This area has seen the greatest recent growth.

Planned and Unplanned Change

No company is static. If it is it is doomed to eventual failure. Companies will go through acquisitions, mergers and disposals, restructuring and urgent responses to sudden changes in market conditions. At such times, they generally need additional skills and expertise in the short and perhaps medium term to help them navigate through the transition period. Candidates again need to be available at short notice; able to provide an outsider's view of the business; able to take pragmatic and objective decisions outside the client's safe zone.

Why Interim Executives not Consultants ?

Consultants

Management Consultants have had the run of the market until very recently. Their offerings are keenly tailored, often repackaged to reflect the flavour of the month. As a result they offer a broad range of services from the purely strategic to the dedicated operational. However, close examination of their work shows that their teams are usually multi-level with overall project management and direction provided by a part-time senior consultant or partner, and the detailed full-time on site work is carried out by junior staff, often recent graduates. While the floor-level consultants are highly educated and keen, they have very little practical business experience, in particular of line management.

Common scenarios are:

The outcome of their work is a detailed report, consisting of an Executive Summary (the "Janet and John page"), the bulk presenting as a restatement of the problem they were asked to solve, supplemented with a schedule of recommendations. An outline project plan and budget for its implementation is attached. The size or "thud factor" of the report is proportional to the size of their fee;
Skills transfer to client staff is minimal;
The client is left with the task of implementing their recommendations, and is strongly encouraged to re-engage the consultants to do so.

Interims

Interim Executives become embedded in the client's business. Clients have found that they are an effective means of gaining competitive advantage by delivering rapid and lasting change. They bring objectivity, and by working from within with the client's internal staff, achieve greater buy-in. They build and lead real internal management teams - managing internal resources and external suppliers - including consultants.
Interim Management is not longer seen as buying a "specialist of last resort", but rather as a valuable new resourcing option for managing and accelerating the rate of change. The interim executive is selected to champion the change process and to focus single-mindedly on delivery.

However, having said all that, Interim Executives and management consultants are not mutually exclusive.
BIE Interim Executives, a leading UK supplier of Interim Executives consider:
"...the services offered by interim executives differ greatly from those offered by management consultants, both in terms of style and content. If the client is looking only for analysis and ideas, then consultants will provide this. If, on the other hand, the client is seeking a practitioner to "make it happen," winning over the hearts and minds of the staff, then an interim could well be more appropriate. Often a combination of the two services provides the ideal solution, with the interim acting as the client's representative to ensure total objectivity"...

Summary

Sean Egan, CEO of Bluecycle.com notes:
"With an interim, you get what you pay for - with a consultant, you often buy from the expert and get the trainee doing the job."
Ian McKinnon, chief executive of Luxfer Group, says:
"We have just put an interim executive into one of our acquired businesses, which means we will have a heavyweight, hands-on manager on site. This is one of the advantages of interims. You get the benefit of an outsider with a lot of experience of handling change, at a cost which is roughly half that of a management consultant."