1. Focus on performance:
the new normal?
Interim managers and the economic
recovery: Annual Research 2014
2. O
ur fourth annual survey
of the interim market
looks at the demands on
interims and their views
on the UK business environment and
the broader economy.
Whilst some sense of normality
has returned after five tough years
of volatile trading some things are
unlikely to go back to the old ways.
The recession has further accelerated
the shift in businesses’ focus
on performance – there will be
little reversal from that position.
Expenditure and investment has
to be accounted for, the need to
test and prove ROI in advance is
more widespread than ever. Vanity
projects will be rarer than ever, and
an ill-defined hunch will no longer
be enough to get a major investment
off the ground.
The pressure to cut costs to the
bone has eased, but the pressure to
measure and deliver performance is
not going away.
Today, senior management in
publicly listed, public sector and
private equity backed organisations
feel that pressure to perform at every
level in the organisation right up to
and including board level.
For example, the Quoted Company
Alliance now recommends that
businesses ensure they disclose
what objectives company directors
are set and how they performed
against those objectives. This new
best practice for the C-suite in public
companies is just one example of an
increased focus on quality in UK
businesses. If board directors are to
be exposed to that level of scrutiny
then we can expect that interims will
also be more closely measured on
performance. After all, many of them
take on roles at, or just below, C-suite.
The new emphasis on performance
and the greater demand for more
“bang for their buck” both feed
demand for interims because it is a
sector that has a justifiable reputation
for delivery. Unsurprisingly, there
is increasing acceptance that
interims that can prove they deliver
performance are getting far higher
rates than their peers.
We have been conducting this
research annually since 2011. The
results are based on a total of 3,064
responses from our community of
interim executives, and this year we
see a continuation in the trend for
top class managers and directors
choosing the interim path as a
route to avoiding the box checking
“The pressure to cut
costs to the bone has
eased, but the pressure
to measure and deliver
performance is not going
away...”
Introduction
Having played a key role in helping UK plc deal with the shocks, cost cutting and
restructurings demanded by the recession, interim managers are now helping
businesses across the UK deal with the equally challenging job of delivering growth.
compliance burden that is now
associated with so many senior
permanent roles.
The large redundancy programmes
implemented by many large
corporates during the downturn
have also proved, to even the most
valued directors and managers, that
job security can quickly evaporate
– traditionally a key advantage of
permanent over interim work.
With interim managers now playing
such an important part in driving
the success of UK corporates, we
think it’s important to find out
exactly what that slice of the business
community thinks: not just on
the role of interims but also on
wider issues affecting UK plc such
as the continuing debate over EU
membership, corporate governance
and the economy.
If you have any comments or
queries on the results, or on
any other aspects of the interim
management market, we would be
delighted to hear from you.
Please email me at
AKyriacou@interimpartners.com
“With interim managers
now playing such an
important part in driving
the success of UK
corporates, we think it’s
important to find out
exactly what that slice of
the business community
thinks...”
Adam Kyriacou, Partner,
Interim Partners
2 Interim Partners Interim Partners 3
3. 56%
47%
43%
2013
2012
2011
Executive Summary
n Demand for use of interims at the most senior level in
organisations is accelerating – 56% of interims said they
are seeing a higher percentage of interims at the most
senior management levels, up from 47% in 2012 and
43% in 2011.
n Whilst interims are taking more of the most senior roles,
they are also getting younger – the average age of our
respondents was 53 years old compared to an average
of 54 last year. 15% of respondents were aged 45 or
younger, in comparison to just 9% last year.
n More senior executives are becoming interims not
just for the attractions of the role but also to avoid
some of the downsides now associated with the most
senior positions in listed companies – for example:
our research found that 37% of respondents said that
pressure over boardroom pay was a factor in them
becoming interims in 2013, compared to 28% in 2012.
n Project and programme delivery roles will be in the
highest demand over the next year. 30% of interims
put this first, followed by change management roles at
27%. Only 9% put turnaround specialists, down from
19% in 2012.
n The biggest year-on-year jump in anticipated new job
creation for interims is in the technology, media and
communications sector, with over three times more
respondents putting this first compared with last year
(23% in 2013 compared to 7% in 2012).
According to the OECD, the UK economy is expected
to grow at an annual rate of 3.3% in the first six
months of 2014, outpacing the US, Japan, Germany,
France, Italy and Canada. But what does that mean for
the interim market?
Chapter 1 – Performance and
pay: what is it like working as
an interim as the UK economy
grows?
Our research found that the sentiment amongst interims is that hiring for
senior level executives is finally starting to heat up – after so many false starts.
Just as a rise in the use of contractors normally predicts an increase in the
hiring of permanent staff, an increase in the use of interims is seen as an early
indicator of increased demand for senior executives.
56% of senior interim executives polled said that more businesses were taking
on interims at a senior management level, continuing an upward trend
evident in recent years.
Percentage of senior executives who said businesses were taking
on a higher proportion of interims at a senior management level
“An increase in the
use of interims is seen
as an early indicator of
increased demand for
senior executives...”
About the broader
economy:
n The Government’s
economic priority should
be to cut public debt
according to 55% of
interims, up from 26%
last year.
n 68% of interims said
that a referendum on EU
membership would be
bad for the businesses
they work for.
n Almost all (92%) of
interims said that
businesses need to
do more to address
corporate governance
issues that arose during
the financial crisis.
4 Interim Partners Interim Partners 5
4. Improved confidence in the economy and the growing use of interims has
led interim managers to be more confident in their pay expectations. Our
research found that a third (34%) of all interim managers polled expected
their daily rate to increase in the next 12 months. That is significantly up on
the one in four (26%) who expected rate increases last year.
In contrast, the number of interim managers who thought their day rate
would decrease over the next year nearly halved, falling to 7% from 13%.
Nearly one in five interim managers (18%) we surveyed indicated that they
earned £1,000 or more per day. Interim managers also said that they earned
48% more on average as an interim than as a permanent employee in 2013.
Given that pay rates for interims have been broadly flat for a considerable
period of time, these are all positive signs that the market is improving. Those
interim managers who are seen as proven performers are going to be the first
to benefit as real rises in day rates accelerate.
Interims also appear to be getting younger. The average age of our
respondents was 53 years old compared to an average of 54 last year. 15% of
respondents were aged 45 or younger, in comparison to just 9% last year.
Our research also found that even though the senior level permanent jobs
market is improving, public pressure over boardroom pay and other corporate
governance issues has encouraged more board level executives to avoid the
increased burden of compliance by becoming interims.
Public and investor pressure about boardroom remuneration intensified in
2012 when shareholders at a number of FTSE 100 companies rallied against
their boards over executive pay, in what was termed a “Shareholder Spring”.
In 2013, the UK Government in response introduced legislation giving
shareholders a binding vote on how much executive directors are paid.
Our research found that 37% of respondents said that pressure over
boardroom pay was a factor in them becoming interims in 2013, compared to
28% in 2012.
Increasingly, top executives are choosing to become interims because it allows
them to take on exciting projects but sidestep the politics, red tape and box
ticking that now goes with a boardroom post.
“Top executives are
choosing to become
interims because it allows
them to take on exciting
projects but sidestep the
politics, red tape and box
ticking that now goes
with a boardroom post...”
Chapter 2 – The interim market:
what sectors and roles will see
the highest demand?
This year’s responses reveal a shifting view of which types of job roles will be
most in demand as we leave recession behind and business activity picks up.
W
ith corporate budgets likely to be constrained
for some time the competition for internal
budgets will remain tough – again with those
areas that can prove profitable ROI being placed at the
front of the queue.
When asked what job function or area of specialisation
they expected to see in highest demand over the next
year, the top response was project/programme delivery
roles, with one in three (30%) respondents putting
this first, up from just over one in five last year. The
expectation is that firms are likely to rely increasingly on
interims’ depth of experience and breadth of expertise
to implement and execute key strategic initiatives to
increase competitiveness and deliver targeted growth as
the business environment improves.
However, respondents suggested that broader sales and
marketing teams would continue to see low levels of
activity.
Prospects for change management roles remained stable
with 27% putting this as the highest growth area for
the second year running, but demand for turnaround
specialists is expected to be lower than it was last year.
Only 9% said this area would see the highest demand
in 2013, compared with 19% in 2012. That is not to say
interims will no longer be needed to overhaul failing
companies and drive major improvement programmes –
far from it. However, it does suggest that sentiment about
the direction of the market is changing.
Job functions expected to see highest
demand over the next year
Job function 2013 2012 2011 2010
Project/Programme delivery 30% 21% 19% 31%
Change Management 27% 27% 31% 46%
Turnaround specialist 9% 19% 19% 39%
Finance 8% 6% 8% 16%
Compliance 5% 6% 3% 7%
CEO/MD 4% 2% 2% 7%
IT 4% 5% 4% 7%
Marketing 3% 1% 1% 4%
Sales 3% 4% 1% 8%
Manufacturing/ Operations 3% 5% 4% 6%
HR 2% 1% 1% 6%
Procurement 2% 3% 3% 7%
Property/ Facilities Management 1% 1% 0% 2%
Interim Partners 7
5. C
onstruction was the
sector expected to create
the most new interim
management jobs over
the next 12 months,
with more than a third (34%) of
respondents putting this top. This
is a major turnaround compared to
a few years ago – only 4% expected
to see growth in their sector in 2010
in the depth of the recession. This
significant change reflects both the
extent to which the sector contracted
following the credit crunch and the
speed with which it is bouncing back
as the residential and commercial
property and civil engineering
markets gather pace, with interims
poised to play a critical part in
managing and maximising its revival
in fortunes.
The biggest year-on-year jump in
anticipated new job creation for
interims is in the technology, media
and communications sector, with
over three times more respondents
putting this first compared with
last year (23% in 2013 compared
to 7% in 2012). The explosion of
m-commerce, digital transformation
and overall investment in corporate
IT and comms infrastructure after
a long period of cost-cutting, means
interims feel this is a sector set to
outperform in the next few years.
Aerospace + defence
Construction
Financial services
Green technology
Manufacturing
+ engineering
Technology,
media, telecoms
Pharma
Retail
Private sectors expected to create the most
new jobs over the next 12 months
2013
Aerospace + defence
Construction
Financial services
Green technology
Manufacturing
+ engineering
Technology,
media, telecoms
Pharma
Retail
2012
Both the manufacturing and engineering and financial services
sectors are also expected to see robust jobs growth in the
year ahead. While financial services reports good growth
in interim usage some inherent weaknesses and threats
exposed by the credit crunch and the regulatory backlash
remain. This is where interims’ skills can really come to the
fore, managing risks effectively and capitalising on strengths
to navigate firms through what may continue to be relatively
uncertain times.
Interim managers are poised to play a critical part
in the rapid revival of the construction sector.
8 Interim Partners Interim Partners 9
6. In the public sector, the NHS was the area of government
expected to create the most new interim management
jobs over the next 12 months, with nearly half of all
respondents (46%) putting this first. This is in line with
last year’s figure (47%), suggesting that the NHS will
continue to rely heavily on the skills and flexibility
interims can provide, at a time when the NHS continues
its radical shift towards a new commissioning model,
while facing growing budgetary pressures to meet the
needs of an aging population.
Clearly change creates demand for interims and the
fundamental reforms of the NHS over the last few years
involves a broad and deep restructuring that is far from
being completed.
Central government saw the largest year on year rise in
anticipated new job creation in the public sector, with
17% of interims placing this first, compared to 12% last
year, reflecting recent signs of robust job growth we, at
Interim Partners, have seen in this area.
An opportunity is being created for public sector
interims by the government’s drive to lessen its
dependence on management consultancies to direct,
manage and implement projects. Making use of more
skilled interims is not just about saving money: it is also
about ensuring that the public sector has the right skills
in-house to improve the governance and performance
that was seen as lacking from many central government
projects.
Chapter 3 – Interims’ opinions
on the UK economic recovery
Our research found that more than half of interims
thought that the Government’s economic priority should
be to cut public debt compared to just over a quarter
last year. In contrast, 45% of interims thought that the
Government’s economic priority should be to stimulate
the economy with tax breaks or spending increases, down
from 74% last year.
What is particularly interesting about this is not
necessarily the fact that interims believe the Government
should be doing more to cut public debt, but rather that the
economic recovery in the UK has moved so quickly in the
last 12 months that there is now believed to be less need for
economic stimulus.
With most business sectors affected in some way by the
cheap monetary policy, a growing share of interims think
a rise in the Bank of England base rate is needed. Our
research found that 29% of interims thought that the Bank
of England should increase interest rates over the next 12
months, up from only 12% of interims in 2012.
Surprisingly, a high percentage of interims were concerned
about whether the economic recovery in the UK can be
maintained.
In line with the business community’s general concern
over “zombie” companies who are only just covering
interest payments on their debt, our research found that
more than a third (37%) of interims thought that an
interest rate rise by the Bank of England would lead to
business insolvencies on a large scale.
The possibility of high inflation also remained a pressing
concern for interims in the UK. 57% of interims surveyed
said that inflation posed a risk.
An overwhelming majority (95%) thought that it was
important or very important to rebalance the UK economy
towards more manufacturing and exporting of goods and
services. 87% of interims were either very confident or
confident that an increase in exporting goods and services
from the UK would contribute meaningfully to strong
economic growth.
Interims, like permanent employees, have faced difficult conditions throughout the
credit crunch. What do interims think should be done now to ensure a quick and
full-scale economic recovery?
Interim managers increasingly believe that the
Government should be cutting public debt
0
20
40
60
80
100
2012 2013
Stimulating the economy with tax breaks or
spending increases
Cutting public debt
High demand for interim managers within the NHS
expected to continue over the next 12 months
Interim Partners 11
7. Chapter 4 – The future of the EU
and its impact on UK plc
Significantly, an even higher proportion – almost three
quarters (74%) – said that even the debate itself over
whether to hold a referendum at all could be detrimental
to UK plc. This accords with the stance taken by
business groups such as the CBI who have argued that
the political debate over the vote on Europe has been an
unnecessary distraction from the real issues affecting the
economy. The concern is that it could discourage business
investment and undermine the attractiveness of the UK
to foreign companies looking to base operations here.
However, at the same time more than half (54%) said
that repatriating powers from Europe would improve the
attractiveness of UK businesses, highlighting the delicate
balance posed by the whole European question. As far
as most interims are concerned, being in Europe is vital,
but greater autonomy over the UK’s own destiny is also
important.
As politicians debate the pros and cons of the UK remaining part of the EU, interim
managers think that the uncertainty surrounding this key issue could be bad for
the businesses they work for. Many believe that for large-scale corporates, the
impact on trade as well as their ability to recruit and retain the best talent could be
considerable if Britain were to leave the EU. More than two-thirds (68%) said that a
referendum on EU membership would be bad for business.
More than two-thirds of interims believe that a referendum
on EU membership would be bad for business
A referendum on EU membership would be good for business
A referendum on EU membership would be bad for business
Chapter 5 – What do interims
say about the state of corporate
governance in the UK?
More than five years since the financial crisis exposed so many risks and
weaknesses within companies of all sizes and in all sectors, our research has
found that many interims feel that corporate governance today is not as robust as it
should be.
The overwhelming majority of respondents (92%) said
that businesses could do more to restructure their
corporate governance to address issues that arose during
the financial crisis. While may improvements have been
made, the concern is that systemic flaws could remain,
and that these may continue to be overlooked or even
worsen as the economic recovery takes hold.
With this in mind, almost two-thirds (64%) of interim
managers said that all listed companies should have a
Chief Risk Officer and an independent risk committee
at board level. This is up from 60% last year. This would
elevate risk to a top-level priority and would help ensure
that good corporate governance is instilled throughout
organisations from the top down.
Another area for improvement is greater diversity in
the boardroom, according to respondents. With women
and ethnic minorities still a relative rarity on company
boards, many believe that companies would benefit from
taking affirmative action: 17% said that quotas should be
used to increase female representation at board level.
Corporate governance is an area where interim managers’
varied experience and fresh perspective can make an
important contribution. Interims’ serial placements at
a wide range of companies, and their position working
closely with top tier management on a day-to-day basis
while reporting directly in to the board, enable them to
develop an informed opinion on governance issues and to
feedback best practice where appropriate.
As companies push towards placing a greater emphasis
on performance and making sure interims prove their
value, interim managers also have the opportunity to
instil positive change from within, especially in the area
of corporate governance.
The number of interims who believe that quotas should be used to
increase female representation on company boards continues to rise
17%
16%
15%
2013
2012
2011
12 Interim Partners Interim Partners 13
8. The scope of their role has also
been significantly broadened
by the recession, shifting from
implementing tactical programmes
to more strategic change.
The mission-critical cost cutting
and turnaround programmes
implemented by many interims
during the recession were the
difference between survival and
insolvency for many businesses.
Even with the recession behind us,
businesses are now getting used to
asking interims to lead the delivery
of the kinds of in-depth structural
changes that have traditionally been
the preserve of top tier strategy firms.
However, for interims to continue to
pick up these key roles they will be
expected to continue to find ways to
measure and prove their worth.
The feedback we are getting suggests
that demand for interims over the
year ahead looks likely to strengthen
in the construction, consumer,
media and technology sectors. We
also expect both the manufacturing
and financial services sectors to build
on recent high levels of demand to
create a strong pipeline of new roles
in the year ahead.
So although the purse strings might
slowly be loosening, any investment
in staff – whether permanent hires
or interim appointments – will be
carefully scrutinised. Few companies
are yet prepared to take the risk of
appointing someone that does not
meet the criteria they have set out
and that extends to the interim job
market too.
However, having demonstrated
throughout the recession that
interims can be highly effective
additions to the skills of permanent
top management teams, it is clear
that they will continue to play a key
role in leading and delivering the
growth plans of businesses as the
economy recovers.
At Interim Partners, we are keen to
work with both interim managers
and the businesses that use them to
ensure that the unique value, skills
and insight that interims can bring
are fully utilised.
Conclusion – How can UK
corporates make the most of
interim managers’ expertise
going forward?
About Interim Partners
We place experienced individuals into a wide range of
roles for clients in the UK and internationally. Our blue
chip client base includes companies from the Fortune 500
and FTSE-100 through to rapidly growing SMEs and the
public sector.
Placements of interims by sector
Financial Professional Services has been the most
active area during 2013-14, with over a third of interim
executives being placed in this sector.
There was also significant activity recorded within
Manufacturing, Energy, Infrastructure and Services,
which accounted for 21% of placements. This is currently
our second largest sector.
The public sector accounts for 19% of placements
followed by Consumer, Retail and Technology with 18%.
Since the recession, UK corporates have increasingly recognised that interims
are not just a substitute for senior executives – they can also deliver skills and
experience that complement those of the board and other senior managers.
Breakdown of interim executives placed by
Interim Partners during 2013-14
Other
Financial + professional services
Public sector
Consumer, retail
+ technology
Manufacturing, energy,
infrastructure + services
Interim Partners helps clients manage change by providing a flexible and
experienced executive resource for company turnarounds, change programmes
and short-term cover for executive absence.
14 Interim Partners Interim Partners 15
