Businesses: Why call on interim management?

June 9, 2020 10:00 am Published by TeamRH

The concept of ‘Interim Management’ was born in the USA and in the Netherlands in the 1970s. It only appeared in France at the end of the 80s. Since then, it has made a place for itself and continues to become more widespread with an annual growth rate of 25%. Today, more than 50% of French businesses have already made use of it. What should we take from this way of working that is becoming more and more established?

Management of a strategic situation for the business

Initially called upon to quickly resolve situations at risk for businesses (e.g. restructuring, unexpected departure of an employee, crisis management etc.), resorting to interim management gradually spread to the management of all strategic situations, both urgent and non-urgent.

This ‘resort to high-level, external operational skills for a limited time in order to achieve a specific task’, as defined by the Fédération nationale du management de transition (FNMT) is used in both an offensive and defensive context.

The most frequent intervention contexts in 2019 were the following 4:

  • Management replacement
  • Conducting a one-time or strategic project
  • Management of a change
  • Crisis, turn around, improvement

Any business can make use of interim management, whatever its size or even its industry.

The interim manager: the right man or woman for the job.

The interim manager is an external professional with a high level of expertise and qualifications, in a key function of the business. Age is no longer the main criteria; certain areas of expertise or specific experiences are now more important.

More than 80% of jobs relate to top management, general management, finance, HR or even industrial functions. Manufacturing remains the sector that calls upon interim management the most often. In fact, more than 60% of projects are within this industry. Next comes the service and distribution sectors, which shares the final 40%.

The objective being for the business to meet a strategic need. It certainly an expertise from this professional, but equally a lot of flexibility and responsiveness. The interim manager will therefore be the right man or woman for the job, for a given period. This is typically less than 12 months. Strategy, growth, performance will drive them throughout the accomplishment of their task.

The interim manager’s methods of intervention.

The interim manager can generally intervene in two ways: as a self-employed worker or appointed by a firm.

In practice, we see that the business will generally use a service contract signed with an interim management firm. The client will receive a monthly bill of fees that corresponds to the manager’s salary, legal costs, all costs related to the assignment, and the firm’s margin. The interim manager stepping in here is an external service provider linked to the firm.

The cost of an interim management service.

1300€ excluding Tax per day would be the high end of the intervention cost of an interim manager. The lower end would be between 400 and 600€ excluding Tax for a technical expert or a team leader. The client company does not yet have an official classification that can serve as a reference.

The key figures of interim management.

According to a study carried out by the FNMT in 2019 (Fédération nationale du management de transition), ‘The intermediate-sized businesses (50 to 1500M€ turnover) retain their predominant place as an interim management client with close to 45% of assignments, with an increase of 40% compared to 2017. These companies are mainly located in the Paris region (43%).’

This study equally demonstrates a strong potential for development outside our borders.

43% of clients are calling on interim management for the first time, which shows the growing confidence of businesses in this type of management.

The industrial sector is still the most demanding for interim management (with almost 57% of assignments in the first quarter of 2019).

‘Management replacement’ represents 29% of the number of assignments carried out in 2019 and thus the most sought-after type of job.

Finally, the HR and CFO functions remain the most requested areas of intervention with 25 and 18% of the market share respectively.

 

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