Interim Management: The case for performance based bonuses

By Steve Rutherford, Partner

Having spent nearly three decades involved in talent acquisition, I have rarely come across a senior permanent role where an element of the remuneration wasn’t performance related. It is an accepted way to motivate and reward leaders, and bonuses also allow the business to send a strong message, when performance goals aren’t being met.

Conversely, and perhaps surprisingly, performance related bonuses are uncommon in the UK Interim Management market. While more junior ‘contractors’ often receive ‘loyalty bonuses’ – money to stay put – bonuses for senior interim managers aren’t at all common. No senior interim manager would want a loyalty bonus anyway. They are there to get the job done regardless.?

Why is this?

It certainly isn’t because interim managers don’t want their performance assessed, and nor is it because they aren’t prepared to put an element of their compensation ‘at risk’. Many interim managers prefer some kind of risk:return model, as it gives them the opportunity to ‘keep the client honest’ by sticking to the agreed plan. They back themselves to create the plan and deliver the outcomes required within the time available. From my perspective, interim managers who are prepared to work this way mark themselves out as the crème de la crème, and often my first choice for a role.

So, it must be the clients then. While they accept that their compensation will have a performance related component, they don’t want to extend this to their interim managers. Maybe they are already paying them a ton of money and don’t want to be ‘in for’ paying out more??

I just don’t buy it. When I have discussed this with clients, particularly those who have some familiarity with how Interim Management actually works, I have found them to be responsive and intrigued by it. True, sometimes it just ends up being an interesting conversation, but there is generally enough there to suggest that the absence of bonuses for interim managers can’t be placed solely at the clients’ door.

The uncomfortable truth is that the reason why performance related bonuses aren’t common in Interim Management is that providers don’t support or promote them.?

Interim Management provision differs from conventional recruitment in that we ask our client what they want to achieve, rather than what sort of person they are looking for. Interim Management is about the creation of a plan, the delivery of that plan and leaving the business in a much better state than they found it. This means that putting a bonus against delivery can’t be beyond the wit of man, as all the key deliverables are there in black and white.?

Why don’t more providers push this and make sure it features in most assignments?

Sadly, some of it is down to pure indolence. Why go to all that trouble when the client is happy to pay for a high touch ‘introduction service’ anyway? The setting and monitoring of deliverables seems like a lot of extra work – and work that the provider isn’t going to get paid for. No client is going to cut them a slice of the bonus cake, are they?

Not for an introduction several months before and the occasional ‘check in’ over the phone, no. Who would?

Interim Management provision doesn’t have to be this way . At Valtus, we frequently agree contracts with clients and managers which involve a bonusable component, and one where we share in the success of the assignment.

Our model – and that of fellow more enlightened Interim Management providers - is to work very closely with the client and the manager from the inception through to the delivery of the outcome. We are the third spoke in the wheel , supporting both the client and the interim manager, and there to ensure that what is delivered is what was expected. True, our selected manager does the bulk of the work and, quite rightly, takes the bulk of the bonus, but our contribution is frequently something our client is prepared to pay more for. Significantly, the client feedback in these scenarios tends to be better, despite having paid more!

Interim Management is about delivering objectives. Objectives can be measured and performance rewarded. Interim managers should expect their providers to champion this model.?

Steve

Steve Rutherford is a Partner in the London office of Valtus, Europe’s leading Interim Management provider .

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