INTERIM / FRACTIONAL BUSINESS MANAGEMENT - EVERYTHING YOU NEED TO KNOW

WHAT IS INTERIM BUSINESS MANAGEMENT?

Chances are if you live in the USA, you may not be familiar with the term interim management. This is because while popular in Europe and Australia (and other parts of the world) for decades, only recently are interim management companies popping up in the States.

With that said, there’s a lot of misunderstanding out there regarding what an interim manager does? Being passionate about (and working in) the field, I have spent countless hours researching the subject, best practices, etc, and am here to clear it up.

An interim manager is a professional executive who can be deployed quickly to implement positive change in an organization. They are contracted as an outside agency for either a specific project or a specified time period which can range from a month to a couple of years. Interim managers not only help with strategy, but they also lead the implementation of their ideas, train employees, then hand off the torch when they are done.  They are experts at managing crises, managing change, and managing improvement and are given authority to execute their suggestions. An interim manager is a true leader who is paid for and thrives on results.

Interim management is increasing in popularity and a viable option for businesses of all sizes these days. Some of the typical positions which companies hire interim managers for are GM (for smaller businesses), CEO, CFO, COO, CIO, CMO, and CSO. Interim managers are sometimes referred to as ‘fractional executives’, as there is only a small difference in designation which we will get into later.

Let’s dive a little deeper into the subject…

HOW IS INTERIM MANAGEMENT DIFFERENT FROM SOME OF THE OTHER OPTIONS OUT THERE?

If you’re still reading, you may be wondering how interim management is different from a business management consultant or the host of other options out there these days? Let’s unpack some of these starting with a brief explanation of the alternatives.

Business Consultant: A person who provides expert advice professionally. Basically, a consultant is paid to give suggestions and sometimes a road map for accomplishing those suggestions. The problem is if a company is in the position to hire a consultant in the first place, they usually do not even have the resources and talent needed to create a strategy, never mind execute it. If you are interested in the subject, this article from The Harvard Business Review outlines perfectly where consultants tend to fall short. Ironically, this was written in 1982 and sadly not much has changed since. 

Business Coach: A business coach is similar to a consultant, they just add a few extra ‘pats on the back’. The main role of a business coach is to identify areas of weakness and encourage the client to make changes where needed.  A business coach can be a great option for people who know what they need to do but just are not doing it.

Outsourcing / Outsourced management:  This terminology is popular with bookkeeping agencies, HR agencies, etc. in the USA and around the world. Generally speaking, outsourcing makes sense when you can hire a company to do a continuous task which you do not have the internal manpower or know-how to. Lots of times, for tasks like bookkeeping, you can outsource for less money than hiring internally. Outsourcing is often on a more permanent basis so long as specified deliverables are met on both ends consistently.

Acting Manager: An acting manager steps into a role for a specified period of time. Generally, an acting manager is hired to minimize disruption during a management transition, and they are a direct employee of said company for that specified timeframe. The objective of an acting manager is more to maintain the ‘status quo’ during this period than to shake things up and implement change.

Project Manager: A project manager generally sees a project all the way through from start to finish and works in tandem with company shareholders and a team. Usually, a project manager is hired to complete a specific predefined project or service, and not necessarily to determine the initial scope of work and objectives.

Fractional Manager: A fractional manager (sometimes called a fractional executive) is essentially the same as an interim manager. This designation just indicates that the agreement is on a part-time and limited basis. Good fractional or interim managers can lead positive change in an organization at a ‘fraction’ of the cost and in a ‘fraction’ of the time vs an internal full-time hire. It is not uncommon for interim or fractional managers to work on a part-time basis with multiple companies concurrently.

So what makes interim (or fractional) managers and executives different? Well, there are a few fundamental differences that separate this breed from the others. We will get into my top nine advantages of using an interim manager, but here are the main differences:

1) Interim managers have the responsibility for an entire process, and the authority to carry out mutually defined goals between the company owners/shareholders. 

2) Interim managers are leaders. They are hired for the experience needed to execute their recommendations, not just for the advice.

3) Interim managers are paid for tangible results, not simply for creating a to-do list. They are held to a much higher standard as they have to ‘talk about it’, and ‘be about it’.

Oftentimes, interim managers are part of a company or organization which has a broad team of professional executives specializing in different areas of business. It can be extremely helpful in working with a company that has a group of various experts because more often than not, company objectives have overlapping causes and effects with other departments. Having a team of experts to address cross-departmental issues can help ensure you’re taking all the right steps.

WHO CAN BENEFIT FROM INTERIM MANAGEMENT?

There’s a myriad of reasons why a company might find themselves in need of an interim manager or fractional executive. For the sake of this post, I’ve broken down the list into two main categories:

1) Crisis: Companies from 1-2 employees to thousands of teammates find themselves in crisis every day.  A few of the reasons you might find yourself in ‘crisis mode’ and in need of interim management include:

• Sudden departure (“Screw this place, I quit!”)
• Illness
• Death
• Sabbaticals
• You are growing too fast for your britches
• You’re spiraling out of control
• You have a PR problem
• Corporate turnaround
• Restructuring after a ‘Pandemic’

 2) Change and Improvement: You might not be in ‘crisis mode’, but maybe something is going on which you just aren’t used to, or an area of your company you are looking to improve upon. Here are some examples:

• Mergers and acquisitions
• Sales management/improvement
• Project management
• Change/transition management
• Brand management/improvement
• You want to improve your business and don’t know where to start
• You want to scale your business and do not have the best management skills
• You historically fall short on the follow-through of projects
• You want an outside perspective on ‘the way you’ve always done it’
• You have a pulse and are 100% committed to positive change
• You can’t make the tough decisions

WHAT’S WORKING WITH AN INTERIM MANAGER LOOK LIKE?

Interim management is a great option for companies facing any of the above-listed scenarios. Here’s a basic overview of what the process usually looks like. You will notice the first couple steps of the process are more like a ‘consultant’ role and the later steps are more akin to ‘project management’. Interim managers have a unique blend of experience which allows them to not only serve as an analyst and strategist but also as the leader, manager, and catalyst of that change. Here’s what a typical interim manager’s partnership with a client looks like from start to finish, which generally ranges anywhere from one month to two years:

1: Preliminary assessment(s)

Through any combination of 2-3 phone, video, and/or in-person meetings, the client and interim manager will assess not only the situation but also each other.  Both parties need to feel comfortable. Here are the usual main objectives in this step:

• What the client thinks they want, or what are their objectives?
• Due diligence on both sides to ensure a good match.
• The interim manager will create a brief summary of the project or problem.

Side-notes:

a: There may or may not be a contract already after this stage

b: This step is usually no more than two meetings.

2: Analysis of Situation

After both parties mutually agree they want to work together, things move to further diagnosis. The goal of this step is to dig a little deeper and identify any underlying issues. The interim manager generally is paid for their time here even if there is not already a contract in place. Depending on the project and how much work needs to be done for this step, many interim managers may charge an hourly or daily fee for this work.

This step generally yields helpful information you may not discover on your own – similar to what a ‘consultant’ would do. So it is certainly still money well spent.

Here are the main objectives for this step:

• How did this problem or new objective come up?
• What changes need to be made to accomplish the objectives?
• Who needs to be involved?
  • Oftentimes the Interim manager will need to speak with parties which can include:
    • Vendors
    • Employees
    • Customers
  • This can bring to light other underlying or more important issues that need to be straightened out.

Depending on the scope of the project, this generally takes at least a couple of meetings and a bit of ‘behind the scenes’ investigative and research time on the interim manager’s side before creating an actionable plan.

3: Action Plan

Here’s where it’s the interim manager’s job to outline a more thorough analysis of the situation, a recommended action plan, as well as ‘who’ and ‘what’ is needed in terms of resources. Don’t be surprised if what you thought you wanted differs significantly from what is proposed. This is the experience and expertise you’ve been looking for. This step generally includes the following:

• A written contract or proposal if one has not already been established.
• What is the goal or desired outcome?
• Basic steps for implementation.
• What will the interim manager need from the owners/shareholders in terms of resources, accessibility, internal manpower, etc.?
• What authority will the interim manager need to have to ensure success?
• What other employees, vendors, or customers need to be involved?
• What will the owners/shareholders need from the interim manager?
• Timeframe for completion?

4: Implementation – ‘Make it Happen’

This is really what separates a consultant from an interim manager. Interim managers make shit happen. They take personal responsibility and are effective project managers. Good interim managers have the right combo of soft skills to get teams aligned and the hard skills to execute mutually defined objectives that yield positive change. Usually, the implementation step includes the following:

• Sign any outstanding documents and contracts.
• Get everyone aligned and moving in the same direction toward the desired outcome.
• Delegation of work.
• Both parties continue to assess, adjust, and implement until completed.
  • Feedback meetings and recaps occur as needed along the way.
• The interim manager will document and outline processes along the way.
• The interim manager will identify and find a way to track any data and KPI’s to keep an eye on moving forward.

5: Completion

Once both parties agree the job is nearing completion as outlined, you can move on to the final step. A good interim manager will make sure to do the following before finishing a job.

• A detailed summary of project completion.
• Pertinent documentation gathered along the way.
• Handover training (Pass the torch). This may even include finding a competent hire to take over the project or position if contracted to do so.
• A discussion of whether the interim manager will continue on an Ad-Hoc basis and the plan/contract for that?
• Ask if there are other projects which the interim manager or their colleagues can help with?

WHAT ARE THE ADVANTAGES OF INTERIM MANAGEMENT?

Ok, let’s get down to the brass tacks.  Whether you found yourself in ‘crisis mode’ or you just are ready to ramp things up, there’s a ton of advantages to working with an interim manager. Here are my top nine benefits of using an interim manager:

1) Cost-Effective

• You can hire interim managers for much less than a full-time hire.
• No payroll tax.
• No vacation / No health insurance / No expensive benefits packages, etc.
• Interim managers can get a lot done in a short amount of time and usually work with multiple clients at once. e.g. The interim manager may be spending only 10-20 hours a week, but you are getting C-Level results. Hiring a full-time employee of this caliber would cost you crazy money.
• Bad hires are VERY expensive.

• Experienced interim managers can identify your problems fast as they have worked with multiple clients in multiple industries.
• They can be hired and start accomplishing objectives much faster than a new hire which requires lengthy interviews, employee handbooks, meeting everyone internally, training, new hire paperwork, etc.
• Interim managers are hired to complete a certain project or overhaul a certain area of the company, as opposed to having a broad spectrum of responsibilities. This focus equates to expedited positive change.
• They’re not held back by people blocking their way via internal corporate politics.
• They have the authority to handle a certain objective and are responsible to complete that.
• Employees are usually less threatened by an interim manager due to short time assignment. This equates to less resistance to change.

3) Experience

• Interim managers oftentimes have a team of experts they work with every day that specialize in different fields of business. You usually get a whole arsenal of experts if you go with an interim management company vs a freelance interim executive.
• They will either fix your problems or refer you to someone who can.
• There’s not much you could throw at them that they have not seen before.
• They’ll take the time to understand your objectives and help identify the best areas of focus based on their personal experience working with companies in all different types of industries.
  • There are certain processes and methods which when executed correctly, yield the positive changes in any industry, no matter the size of the business.
• Even more valuable than ‘good experience’ is sometimes ‘bad experience’. Interim managers probably have made some of the mistakes you might be making in your business. Or they may simply have seen this situation already and resolved it with another client. That’s valuable.

4) No Long-Term Commitment

• While generally lasting from a couple of months up to a couple of years, many Interim managers end up with an option to continue after on either an ad hoc or a limited basis.
• Oftentimes interim managers get hired for a longer-term than originally outlined with a new contract for a different project or focus. But again, these are short term contracts.
• No unemployment costs if a bad hire is made.

• Since interim managers work for themselves – they do not need to abide by the normal ‘company politics’ which may occur in an organization. This allows them to work much faster to accomplish their objectives without bias.
• Good interim managers are adept at quickly finding the right people on your team to work with.
• They’re enlisted to get the job done efficiently, and can cut through internal red tape faster than an employee who might start by ‘tiptoeing around’ to feel things out.

• A good interim manager has seen what works for companies and what doesn’t and will offer suggestions accordingly. For example – you may have done something the same way for years because it’s the only way you knew how. But maybe there’s a better way!
• Small inefficiencies can add up over time without you noticing them. A good interim manager can spot these quickly and work at putting in ‘tried and true’ processes.

• Unlike a consulting company that may just give you advice, an interim manager has a certain level of authority to implement change. This helps ensure you are investing your money – not spending it. Many business owners fall into this trap of paying for advice but not following through on their end.
• Interim managers are paid based on predefined outcomes and results, unlike a new hire who is on payroll whether they perform or not.
• They have ‘skin in the game’. Their work relies on referrals. Without positive results, they get no referrals. This motivates an interim to not only provide outstanding results but to do it as efficiently as possible.
• They work with you and your team to understand the process.

• Interim managers refine procedures, identify bottlenecks, and set up a system everyone on your team can understand for future benefit to your organization.
• They will document changes, steps, and processes along the way for future training and reference.
• They will establish appropriate KPIs, goals, and data to be tracked for internal monitoring in the future.
• They’ll assist in passing the torch to someone else (handoff).

• Many interim managers either work for a company with a wide range of experts or have colleagues they can call if they run into problems outside of their field.
• A good interim manager just might become an extension of your team and a valuable resource for years to come.

As you can see, interim / fractional management has a lot of benefits. I hope this article helped you better understand the subject. 😊

~Brian