· 4 min read · Features

Interim managers: Can they save the financial sector?

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The financial sector is leading demand for interim managers as it emerges from a period of restraint into a more regulatory world. So what can these experts offer and what can they expect in return.

Five years since the collapse of Lehman Brothers and the darkest days of the global financial crisis, the City of London is now in better shape. Having weathered the storm, banks and financial services companies are eyeing new opportunities and looking at growth rather than retrenchment.

Yet in the fast-changing, complex and heavily regulated world of finance, hiring permanent staff is not always the most effective way to address business needs, especially for projects that require specific skills and particular expertise. There is a well-established requirement for interim appointments in banking and financial services, but all the signs point to demand being on the rise and possibly even greater than ever.

According to research from interim management solutions company Interim Partners, banks and financial services companies accounted for 48% of all private sector interim management roles over the past 12 months - up from 43% in the previous year. This is, claims Interim Partners, the sector's highest-ever share of the market, with demand driven by change management initiatives and the need to review or implement programmes relating to issues such as PPI or interest rate swaps. The research concludes that it is usual for interim managers to be appointed at, or just below, board level.

If anything, those findings may understate the current size of finance's slice of the cake. Over the past five years, Ipsos MORI has undertaken quarterly market research for the Interim Management Association (IMA). Typically, finance has accounted for 40-45% of private sector usage. But the most recent quarterly research reveals usage in finance hitting 59%. To put this into perspective, the next highest industry on the list - chemical, pharma and biotech - accounts for just 7%.

Raj Tulsiani, chief executive of executive search firm Green Park and IMA vice-chairman, says there are several reasons for the rise in demand. Among them are an increased regulatory framework and a tightening of the permanent pool of UK talent available in the areas of financial risk management and compliance. Allied to this is the broader economic recovery. Employers that cut headcount a few years ago now need more managers to address new projects and increased business, but may still be wary of taking on too many new permanent staff.

After all, although there is a mood of renewed buoyancy in the Square Mile, it is not so long ago that prospects seemed far bleaker. "On 10 July, the BBC reported credit ratings agency Moody's had upgraded its outlook for the UK banking industry to 'stable' from 'negative'," says Rupert Dobson, practice director of Hoggett Bowers Executive Interim. "While part of this was prompted by the country's increasingly stable economic outlook, it was also due to the improvements in the banks' capital as a result of stricter regulations. Implementing these has required a small army of experts and the executive interim market has played a significant role. Our clients would never have achieved their deadlines without the ability to flex their leadership resource."

So, compliance is partly responsible, yet other aspects ought to be considered.

Sarah Dickens, people director at Provident Financial, a specialist in supplying consumers with 'non-standard credit', says the emergence of new digital solutions is another factor driving the interim boom. "The 'app revolution' has sparked a step change in IT innovation and significantly reduced the change timelines in businesses, making things happen much more quickly," she says.

"This has enabled businesses to be much more responsive and relevant to their customers. As a result, businesses need to be much more agile with their employee base to enable and respond to the pace of change while managing costs. The use of interims can, therefore, be a great source of expertise in the delivery of change programmes."

She adds that Provident Financial has increased its use of interims in recent months.

It is a similar story at Nationwide Building Society where expertise has been needed to help implement a major IT system upgrade, for maternity cover, and change management relating to acquisitions and compliance issues.

But can it be dangerous introducing outsiders to what may be sensitive circumstances? Group HR director Robert Aldrich says the key is to be clear about the behaviours expected, adding that to be successful interims must embrace the culture of each organisation they work for.

"Often with interims, they are brought in to achieve two or three clear goals," he says. "But if they do that by behaving badly towards other employees or contractors, that would be unacceptable."

Particularly in the field of compliance, Aldrich notes, more people have forged 'interim careers' with the result that the pool of permanent talent available has shrunk, making an interim appointment ever more likely as a solution. An upshot of this is that hiring senior interims for such roles has become a more expensive proposition.

As a result, Aldrich adds, the onus on HR is to guard against a kind of mission creep, where expensive interims remain employed longer than necessary.

"It's important to have a clear purpose and to keep on top of that," he says. "Also, it's about up-skilling your people - not letting the knowledge come in and then go again when the interim leaves. You want to make sure they are recording it and passing it on to people within your organisation."

There are times, however, when an interim role evolves into a permanent position. Take Irene McDermott Brown, who became Barclays Group human resources director in an interim capacity in October 2012 only to be appointed to the position permanently in July 2013, having proved her mettle delivering the bank's transform agenda.

Evidence supporting Aldrich's point about interims becoming a more expensive option is provided by Executives Online's UK Interim Report, which found that average day rates had increased from £621 in 2011 to £637 in 2013. Moreover, 63% of interim managers surveyed report being busier than a year ago - a strong indicator that economic recovery is driving growth, which is creating new opportunities and a heavier workload.

This upswing is further underlined by a Robert Half survey of 200 CFOs and FDs which identified heightened demand for interim managers in four key areas: systems implementation; mergers and acquisitions; accounts payable; and assistant accountants. In the case of M&A briefs, Robert Half says its clients typically look for senior finance professionals with proven analytical and problem-solving abilities, together with exposure to major transformational activity, to support integration and decentralisation activities.

These are good times for interims with the right skills. Demand is strong and day rates are rising. The challenge for the banks and other financial organisations hiring them is to ensure they deliver against a number of key criteria: value for money, meeting concrete pre-agreed objectives, staying in tune with corporate culture and not undermining the employer brand, and imprinting their knowledge within the company so that it does not accompany them out the door on their last day.