Abstract: This article looks further into the value proposition of a sophisticated Interim Executive.
I have become accustomed to being ruled out of a beauty pageant for an Interim Executive consulting position based on rate alone. In most cases, I am told by the decision maker about this problem after the fact. It is common for the decision to be made without consulting me or giving me a chance to negotiate. While I could have been flexible, my flexibility is limited by the opportunity cost of existing or potential competitive opportunities. When I talked with the decision makers, they were frequently operating from the assumption that the gap was too big to close. Instead, they lost an opportunity to get a resource with my background and experience while settling for an alternative solely based on cost. It is clear that these decision makers severely discounted the potential value of engaging a more experienced resource. Or, I could have simply been beat on price by an equally or better-qualified competitor but I doubt it. I have seen too many cases of decision makers making what could be a critical decision based on the hourly rate alone. Lest this come across as bitter, I have not failed to end up with a desirable engagement and I am generally happy with the outcome. I have learned that as Mick Jagger said, “You can’t always get what you want. But if you try sometime (sic), you find you get what you need.” I cannot help but wonder how things are going in the organizations that passed me by.
What would some of the common excuses for a supposedly otherwise intelligent decision maker making a choice solely on rate?
We are in financial distress. Interim Executive Services typically price on the experience and relevance of a proposed interim to a specific situation. This is analogous to hiring a lawyer. One of my friends liked to say that one of the worst things that can happen to you is to end up with the second best attorney in a critical situation. To gain access to the best and most experienced talent in a law firm, you must be willing to pay the firm’s highest rates. The reason that older, more experienced law firm partners’ rates are higher is that the market will bear their rates whatever they are because their time and expertise are in very high demand. For those of us that make a living selling time, you are limited as to how much you can sell. A firm in financial distress can end up in bankruptcy. Another bad outcome for a firm in distress is to default on debt obligations that can result in the Board and leadership team losing control of the organization. Banks and bondholders can and will accelerate the debt and take other actions to preserve their interests. The pertinent question for the decision maker to make in this situation is what is the best resource available to avoid the undesired outcome regardless of cost because the cost of failure is infinitely higher. If you think an Interim Executive is expensive, check the rates of bankruptcy attorneys and debtor in possession consultants.
I can get someone else for less money. Inexperienced or ignorant people do not understand the differences between physicians. They assume a doctor is a doctor is a doctor. They do not understand the difference between a pathologist and a proctologist. This is the kind of logic used by a decision maker that assumes that there is no difference in interim executives and places the first and/or cheapest resource they can find in an effort to get someone, anyone with a heartbeat into a position. The pertinent question in this situation is what is the cost of failure and how small is this cost as a percentage of the difference in the cost of the cheapest resource available vs. a competent, experienced advisor. I followed an interim CFO in a hospital that had somehow managed to miss a growing over-valuation of accounts receivable that ultimately led to a write-down of A/R in excess of $50 million and a number of executives including the CEO of the place losing their jobs. Maybe the CEO should have looked at my article on how to avoid getting whacked. In my experience, hiring decision makers rarely account for the personal career risk they may be taking by thier involvement in bringing an interim aboard.
We can absorb the workload. This is one of my favorites. Really? Are you telling me that the departed executive did so little that a potentially prolonged vacancy of their position will not be missed and there is no risk in not having the role filled? If this is the case, the decision maker should eliminate the position. Just because the departed executive may have not been meeting the organization’s needs does not translate to their role not being worth filling with someone that knows what they are doing. As a matter of fact, putting an experienced interim into a key role say CEO or CFO, might go a long way towards demonstrating to the organization how the role should be filled and carried out. If you engage a sophisticated interim, there is a very good chance that the permanent executive you hire to ultimately fill the position will not come close to the value-adding potential of an experienced interim executive. On this point, it is not a good idea nor is it fair to candidates to benchmark them against an experienced interim. This makes it hard on everyone by unnecessarily delaying the recruiting process in some cases and potentially creating unreasonable expectations for a permanent candidate when there is a successful recruitment.
These are but a few of the excuses I have heard as reasons to rule me out of an Interim gig. I am sure my readers can contribute others possibly spawning a series of articles on this topic. One of the key things to remember if you are an interim executive as I said in my article about the value proposition of interim executives is what Zig Ziglar said, ‘You cannot control what someone else is going to do. All you can control is how you respond.” Don’t take rejection personally. Remember, in baseball, a hitting failure rate of 70% or more is considered to be an excellent performance. Another thing to think about is you never know what you may be saved from. I can say from experience that I have been fortunate on more than one occasion to not get something I desperately wanted at the time. You may never know the degree to which fate or divine intervention may be bearing on the outcome of one of your proposals. If you are a decision maker, you owe it to yourself and those around you whose fate may be tied to yours to undertake the most objective, evidence-based decision-making process you are capable of whether the decision has to do with engaging an interim or any other key decision for that matter.
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