The Valtus View

Interim Management: The case for performance based bonuses

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 tonne 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 interim 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 interim 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 we are there to ensure that what is delivered is what was expected. True, our selected interim 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

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

Interim Management: The UK Market Explained for European Leaders

One of the key benefits of working with the London Office of Valtus, the European market leader in Interim & Transition Management, is that we get the opportunity to?help clients solve problems ‘cross-border’. This might be working with a UK-based client with interests overseas but, increasingly, it means working with European businesses who need help and support here in the UK.

Brexit has a lot to do with this. Whereas, in previous times, a business might have ‘exported’ a rising star, a trusted Interim Manager or established consulting partner, this is now virtually impossible. If the individual concerned doesn’t have either a UK or Irish passport, getting a visa quickly enough to fix an urgent problem is generally impossible. As far as our current government would put it, ‘Brexit means Brexit’ and there is little chance of utilising a European national to fix a UK issue.

Fortunately, the UK Interim Management market is, in many ways, the most mature of any in the world. European clients are often surprised (and delighted) to find that, for many situations, they will get?a strong choice of Interim Managers, and that they also might be able to find talent here that they couldn’t find at home e.g. ESG, Digital, Sales, etc.

Interim Management is a preferred career choice for many senior leaders here in the UK, and this has a bearing on the breadth and quality of managers available.

It also has a bearing on pricing. The laws of supply and demand do not apply to UK managers compared to their European compatriots and, typically, they will charge around 25-30% more than in France, for example. Generally, the cost of living is higher here, and permanent salary packages also reflect this. Even Brexit fanatics would be hard pressed to claim that our departure from the EU has had a positive effect on prices!

Generally securing Interim Management talent is easier in the UK, but European clients sometimes get confused by the UK taxation relating to it. This isn’t their fault, as a good proportion of UK clients also find it difficult to understand, particularly when it comes to the HMRC’s ‘notorious’ IR35 statute. This determines the rate of tax an Interim Manager pays and, hence, influences the charge to the Client. Despite the thousands of web posts which say otherwise, it is actually quite easy to support a Client through this and we do so regularly. It is about common sense, transparency and filling in a form properly!

The final difference that many European clients observe is that the UK Interim Management market can seem more ‘transactional’ than they have been used to, especially when compared to France and Germany. This is often fair comment. While mature in terms of the availability of Managers, most Interim Management providers here in the UK offer little more than an ‘introduction service’, without the added value that we at Valtus see as core to our offering. In this respect,?our proposition here is ‘disruptive’?and, for UK Clients, quite unexpected.

At Valtus, we are committed to doing the right thing by our Clients and our Interim Managers, not the expected thing.

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Steve Rutherford is a Partner in the London Office of Valtus. If you are trying to fix a problem or secure talent across international boundaries then?contact us here.

Interim Management: Successful Interviewing for Business Leaders

“At first, I was very surprised”.

I am talking to my fellow Valtus partner, Olivier Marret, about one of his early assignments here in the UK.

“The client didn’t want me to attend their interviews with my shortlisted interim managers”.

At Valtus, we know that our market offering is somewhat different.?Our partners?have typically held senior roles in major corporations, our networks have been built through recommendation rather than LinkedIn, and the?support we offer to both client and interim manager?on assignment is the benchmark in our industry. This has led to our being the leader in Continental Europe and a growing presence in the UK.

It works.

However, an integral element of our offering – attending the first and/or second meeting between the client and the shortlist – often elicits an unfavourable response from the client.

“I find it strange”, continues Olivier.

“The client has shared their ‘problem to solve’ in depth, we have written a detailed proposal which they have signed and then we have produced a robust, qualified shortlist. To step out at this critical stage, only to pick up after the crucial conversations have taken place, seems totally illogical. Why wouldn’t the client want you there if you are prepared to give up the time?”

My two penneth, with thirty years’ experience of challenging and (occasionally) accepting the norms of UK talent acquisition, is that there are two reasons why the client doesn’t want us there.

Habit is definitely one. Like all unhealthy habits, this is ingrained and difficult to kick. While our counterparts in Executive Search would regularly sit on a panel, and be seen to be adding value, it just isn’t the norm for an Interim Management provider to be there.

Bad habits can be broken, but my suspicion is that the other reason why clients want to fly solo is harder to overcome.

They don’t want us there because they feel we will unduly influence the outcome – salt the deck – make sure our preferred option becomes their preferred option and generally just get in the way.

Olivier has something interesting to say about this.

“I am?absolutely?there to influence the outcome; I want to ensure that I have the right interim manager to work with to deliver my client’s requirement.”

Well, that’s let the cat out of the bag!

However, our reasons for doing this are honourable. Most clients have little experience of interviewing interim managers and none of doing it well. Every C-suite leader will have spent hundreds of hours interviewing permanent candidates. Every C-suite leader will probably have been on every course about competency-based interviewing, eliminating unconscious bias and values-based assessment. This is good and valuable stuff.

It is of no relevance at all to Interim Management. Back to Olivier.

“Interim Management isn’t recruitment. It is something completely different. It is the fixing of a major problem, more akin to management consultancy.

“Would you assess KPMG’s fitness to deliver a transformation programme based on how well their lead partner can remember and articulate their CV?”

The first meeting between our client, our interim manager, and Valtus, should resemble a consultation and diagnostic with a surgeon rather than a conventional interview.

“Clients like the idea of this, once properly explained, but have little experience of conducting this kind of meeting”, says Olivier.

This isn’t the client’s fault. Most senior executives have risen through businesses by doing good stuff in good companies, and, if they hit a problem, jumping onto a faster escalator in a better business. They get things right.

Interim managers inhabit a parallel universe – the sub-optimal – and are best assessed by people skilled in the methodology of Problem, Diagnosis and Cure.

“We add considerable value?when the client lets us”, says Olivier.

Not only by attending the meeting, but by actively participating and sometimes leading, the client gets the benefit of our experience.

They get something else too.

“The tri-partite meeting is not only the end of the selection process, but also the kick off point of the delivery”, says Olivier.

Having the three key players at the ‘diagnostic’ meeting means it is much easier to draft up the project plan. The plan is clearly owned by the selected interim manager, but it is produced with the support of the Valtus partner, and the latter takes on the responsibility for the ongoing support of the assignment.

“This is so much easier to do when you have actually been there when the client and interim manager have agreed the plan,” says Olivier. “Otherwise, you’re relying on reported speech and the accuracy of recollection. I do a better job when I am relying on my own detailed notes.”

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Steve Rutherford is a partner in the London office of Valtus. If you would like to discuss how we can help solve a problem, or?help with a transformation, get in touch?here.