The Economist has a great article about the type of work I’ve been doing for ten years, Interim CEO. The piece addresses why many American companies are now adopting a practice that originated in Europe, and why so many top-notch execs are enjoying these temporary CEO jobs.
The Economist postulates that “interim executives may be the wave of the future in all rich countries, as these countries evolve from what Peter Drucker called a ‘society of organizations’ into a ‘society of networks.’”
Why Companies Do It
The article details three reasons why a company might choose to hire an interim boss:
- Speed: Companies usually employ interim executives to cope with an immediate crisis; while traditional search firms can take six months or more to fill a sudden vacancy, an interim CEO can be in place in a matter of days.
- Expense: Interim CEOs can tackle a short-term problem without acquiring a long-term obligation to an expensive executive.
- Efficiency: The traditional “market” for CEOs is so inefficient that 20% of CEOs hired depart within 18 months; use of an interim CEO allows companies to “try before they buy.”
Why Executives Do It
The article also details three reasons why CEOs accept interim positions rather than holding out for permanent ones:
- Selectivity: CEOs can, in effect, pick and choose the jobs that appeal most to them.
- Flexibility: Interim CEO jobs allow executives to control when and how much they work.
- Efficiency: Because the market for CEOs is one of the oddest and least efficient, interim CEO work allows the executive to also “try before they buy!”
Temp to Perm
My experience completing 10 interim assignments in the last 10 years at companies like Eink, Ember, and MIT Media Lab for venture capital firms like Atlas, Polaris, and Venrock closely parallels what The Economist describes, with one exception; while The Economist notes that 25% of interim executives are offered permanent positions, I’ve found the percentage over 75%. In nearly all of my assignments, somewhere around day ten the ‘powers to be’ have asked me to switch the role from interim to permanent. Read this post to see why they ask and why, to date, I’ve always declined.
For the full article – titled, “Talent on Tap: The fashion for hiring temps has reached the executive suite” – check out the 10 December 2009 print edition of The Economist.