Tag Archives: interim

More examples of what not to do AKA how to stay in the frying pan and not fall into the fire.

This is the second article in the series about what not to do.  The person suggesting this article asked for examples of things that might help you save yourself from yourself.  Please send me your examples and stories of things not to do.  Your confidentiality will be protected unless you want credit for the idea.  Sharing this experience, especially with younger executives is one of the best ways to serve the industry.  I have an outline of a third article and depending upon response, I could probably keep this going for a while since like a consultant friend of mine used to say, “One idiot can keep three consultants busy forever.”

Project planning

Ben Franklin’s adage goes, “Failing to plan is planning to fail.”  I have found this profound simple statement to be true time and again.

After being appointed interim CFO in a hospital, I learned that there was a major construction project under way.  The project and the rate at which the hospital was burning money on the project did not make sense to me.  To make a long, complicated story short, no one could produce a feasibility study to support the project’s value proposition or pro-forma analysis to support the project’s underlying  financing.  When no one could produce a sources and uses of funds analysis, I spent a couple of weeks creating my own from scratch.  When I was finished, it was clear that the project was underfunded by over $20 million and the hospital did not have sufficient reserves to cover the shortfall.  When this information was provided to the Board, after they recovered from the shock and horror, they decided to stop the project that would have resulted in a problem with the bonds used to finance the project by drawing reserves below bond covenant minimum requirements triggering a technical default.  The entire organization was oblivious to this looming disaster.

Ole Abe said that, “You should spend twice as much time sharpening your axe as you spend cutting with it.”  The implication of this admonition is obvious to anyone that has ever cut wood with an axe.  Still and yet, executives let distractions and competition for their time lead them to allow ill-conceived initiatives to go forward then they are surprised when the projects blow up on them.  If you want to entertain yourself, pick any executive out at a cocktail party and ask them if they have ever seen a project go bad.  The war stories you will hear are spectacular. Better yet, ask the ‘expert’ if they have ever seen a peer do something stupid.  Apparently, they have not heard or have disregarded the advice of Einstein, “Doing the same thing and expecting a different outcome is the beginning of insanity.”

Project control

Oh boy!  The easy part of a project is the planing and approval.  The hard part is execution.  There are a lot of challenges with project execution.  One is that other unanticipated confounding priorities arise in the organization that bleed capacity from the organization’s leadership to remain focused on a critical project.  Another commonly seen problem with project execution is the loss of key leaders during the course of the project.  All too frequently, critical assumptions underlying the project’s rationalization are proven inaccurate or incomplete once execution begins.  Sometimes, a project’s success is largely dependent upon one person and if that person leaves or is incapacitated, the entire project goes into jeopardy.

To some degree, a project is analogous to a marriage.  In order for it to succeed, more than 100% commitment is required from all sides.  Every effort you make to manage your risk can be thwarted by uncontrollable changes in your business partner(s).  There is no guarantee that the people that sold a deal and made commitments on behalf of your business partner will be around to honor those commitments.  If they made commitments that were not in the contract, they may not be allowed to honor them.  More than once before a project was completed, I have found myself dealing with an entirely different cast of characters.  What about a business partner that gets acquired during implementation and none of the commitments made before the acquisition are honored?  A business failure or overcommitment by a business partner can move into your life like bad in-laws.  This is why business partner selection is so important.  Too often, a decision maker will chose a business partner based on cost alone and in the process buy himself a set of problems that turn out to be exponentially more expensive than the most expensive option that was under consideration at the time the decision was made.

A project does not have to fail to become a disaster.  Delays in a project can be as damaging.  I do not know of a delayed project that resulted in a better outcome.  Sometimes, delays cause cascading problems.  Take a construction project for example where the electrical contractor is contracted to start on a date certain and the project is not far along enough for them to begin work.  This kind of a delay can rapidly spread throughout an organization and create enough problems to overwhelm the ability of the leadership team to address them.  This is the reason you were required to study PERT in school.  How often do you see it applied in practice?

If a mistake is to be made in project management, it should be biased in favor of overcompensation for potential problems.  I am regularly criticized for being too conservative and too hard on pro-forma analysis assumptions. Never the less, time after time I see projected revenues and time lines being overstated and projected expenses understated.

Waiting too long to intervene

I have watched executives demur from engaging an issue in hopes that it would go away.  I have rarely seen this strategy work.  More often than not, a problem in an organization will get worse the longer intervention is delayed.  There are a lot of reasons that this occurs not the least of which is that addressing operational problems most often involves dealing with a personnel problem.  I do not know many executives that enjoy taking on a personnel problem.  Vince Lombardi said, “Hope is not a strategy.”  Failing or refusing to intervene can allow a problem to become exponentially more damaging until it reaches the point that the organization’s financial statements are impacted.  Time and again as an interim, I have been asked, why it was going to take so long and cost so much to address a problem?  I have seen ten or more interim executives committed to address what had been allowed to become a major business problem on more than one occasion.  My answer to this question is always the same.  Cutting costs after an organization finally decides to address a problem only prolongs the time and cost necessary for the mitigation.  All too frequently, organizations create a problem by under-resourcing an area or initiative.  When this leads to a melt-down, the leaders charged with the mitigation are frequently frustrated by the cost and time associated with fixing the resulting mess.  Sometimes, I have to tell them for their future reference that the cost associated with keeping a process or function under control is always a small fraction of the time and resources necessary to straighten it out after it goes catawaumpus.  Every executive I know can relate one or more horror stories to prove this point.  More often than not, the fiasco is related to an I/T implementation where the costs and operational consequences associated with a failed project can exceed the original budgeted cost of the project.

Fire fighters are known for over-commiting resources to a fire.  This strategy is designed to err on the side of having more resource than is needed to address the fire as opposed to running the risk that a growing fire will overwhelm the resources that are available on site.  Once, I asked an interim CEO how it was going relatively early into his engagement in a very troubled large hospital.  His answer that I have never forgotten was, “The platform is on fire.”  A platform is like a ship.  When it catches fire, getting off is rarely an option.  You must fight the fire where it is and failure is not an option.  Remember the USS Forestall?  Skimping on resources when dealing with a problem like this can lead to figurative death in the form of an unplanned career transition.  A business problem is analogous to a fire in the organization.  If you are going to make a mistake addressing a problem, your personal risk will be much lower if you respond aggressively to a problem and err on the side of over-commiting resources until the problem is resolved and the situation stabalized.  The alternative is a potential conflagration.

Non-evidence based decisions

The mantra of UAB’s Doctorate of Administration in Health Sciences program is, “Evidence based practice in Healthcare Administration.”  I have commented before on what appears to be a paradox in healthcare.  On the clinical side, most of what is done is based on evidence gained from objective, peer reviewed research.  The purpose of the research is to yield better outcomes and safer facilities for patient care.  In the administrative suites of too many healthcare organizations, decisions are routinely made based on seat-of-the-pants hunches, historical precedent, little or no analysis, ridiculous assumptions, no assumptions, flawed analysis, systematic ignorance or reckless disregard of applicable evidence and research.  More often than not, harried administrators do not even bother to see if any applicable research is available to help them make better decisions.  In other cases, decisions are made for political expediency or to appease Dr. Huff-and-Puff.  I got into trouble in a Catholic hospital for suggesting the leadership team’s decision making ranged from magic eight ball to Ouija board.  I now keep a magic eight ball on my desk as a reminder to not fall into this trap.  It is funny to have younger people ask me what the magic eight ball is.  They’re not old enough in some cases to have ever heard of the magic eight ball and they are fascinated to see how it works.  It is a wonder some organizations get along as well as they do.

Indecisiveness
I was perusing novelty signs in a gift shop in Indiana when a sign captured my attention.  It said, “Decision making around here is like a squirrel crossing the road.”  Indecisiveness can be dangerous when it is practiced in the front office.  At its least, indecisiveness can lead to project and initiave delays.  At worst, it can wreck not only projects but the credibility of executives with their Boards.  There’s a one liner that says, “The road to failure is littered with run over squirrels.”  In an earlier article I said, “If you are a decision maker, make a decision.”  Not making a decision is making a decision.
As before, I would like to thank Dr. Christy Lemak Professor and Chair of the UAB Department of Health Services Administration for the inspiration or should I say assignment that resulted in this article. I am looking forward to seeing my grade.
Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link that usually appears as a bubble near the bottom this web page.
There is a comment section at the bottom of each blog page.  Please provide input and feedback that will help me to improve the quality of this work.
This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and provide links to supporting documentation for non-original material.
If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.
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What is a blind reference?

Some people naively think that the only reference checking that is done is with the references given by a candidate or to a head hunter.   Executives recruiting for talent will peruse your CV looking for places where you and they might have common acquaintances.  They will also look for places that some of their friends and professional contacts might have insights.  When these links are found which is most of the time for an experienced recruiter or hiring executive, you are about to become the victim of a blind reference.

A ‘blind reference’ is an investigation into your past by a hiring executive that you know nothing about.

I do not put a lot of faith in  references provided by a candidate although I have had candidates give me references that were not very complimentary of them.  If you are going to give a reference, at least have an idea about what they are likely to say about you.  No one that has any sense is going to intentionally give a bad reference on a candidate to a stranger.  I also disregard reference letters.  No one is going to write a letter that states the candidate is bad.  On occasion, I will write a reference letter for someone as a personal favor but I aways counsel them that reference letters in my opinion are a total waste of time.  The only time I pay any attention to a reference letter is if I know the author.

Because of political correctness and the cold legal realities associated with references these days, the best you are going to get from formal references in most cases is that the candidate was hired on one date and departed on another date.  The most you are likely to learn is that the candidate actually did work for the firm you are contacting for the stated period of time.  They will rarely tell you anything more because references are subjective by nature in most cases.  Subjective references that cause a candidate to be ruled out of a search can become a liability for the person that gave the reference.  This is one of the reasons that blind reference checking has grown in my opinion.

If I get a reference call on a candidate being evaluated by someone I do not know, I refer the call to HR where I know what they are going to be told.  Even if the reference call comes from a friend,  I know the candidate and I know them to be bad, usually instead of giving a bad reference, I will usually refer my friend to HR where they will get the standard, canned response.  The hiring manager gets the message.  If a friend encounters me refusing to give a reference, they get the message.

The more frequent call that I get is from a decision maker that is checking references that are not on the candidate’s list.  These are the calls that are dangerous for candidates because they are blind to the candidate; hence a blind reference call.  The candidate will never know in most cases they were vetted through a blind source.  This is one of the many reasons why it is so important to keep up your networking and to not burn bridges unnecessarily.  If you left a place under questionable circumstances, you need to have a good explanatory story and you need to be forthcoming and transparent.  Of course a blind reference is not necessarily a bad thing.  Under the right conditions, it can propel you to the front of the line.  I received a blind reference call on a candidate I happened to be considering at the same time.  I told the blind reference caller that they could dispense with their questions because my reference will be very simple, “If you do not hire her, I will.”  I had worked with this candidate before and she is outstanding.  She was going to end up with a gig regardless of how the reference checking worked out in this case.

When I get a blind call from someone I know and trust, they are going to learn the whole story.  The reason is that I know I can call them to have the favor returned at some point in the future.  If the candidate departed under less than ideal circumstances or told a story that I know to not be true, I will give the reference to HR as stated above.  This usually surprises the decision maker that hoped to get something from me.  The fact that I refuse to provide a reference for someone that the decision maker knows I know well usually tells them enough, especially when I put off multiple requests for help.   About the third time I refuse to provide any information, the recruiting executive gets the message.  If you are going to engage in this activity, you have to be absolutely certain that your confidence will be protected.  This is the main reason that I resist giving references to head hunters unless I know them personally because it is hard to be certain your confidentiality will be protected.

When you are looking for a job, who will the hiring decision maker call?  What will they be told by people you used to work around?  Time after time, I have received blind reference calls.  Often, these calls are about someone that has done little if anything to endear themselves to me or to even keep in touch.  People like this generally do not return calls, ask of an acquaintance while offering nothing of value i.e., they do not engage in networking, they do not accept meetings or referrals, they do not attend or participate in industry related networking or continuing education activities such as ACHE or HFMA.  I wonder what these people expect I am going to say about them?  And of course, all of this is above and beyond anything I might know about their acumen, experience or capabilities.   I would rather not receive these calls in the first place but I do not control who calls me.

I do not know what it is about some people.  In one case, I reached out to an executive that I thought might benefit from my insight about handling executive turnover in his organization.  He humored me then never called me back in spite of the fact that I specifically requested a call regarding a wealth of information that I volunteered.  I never heard from him and I do not expect to hear from him because his failure to take my advice was at least partially responsible for his own firing a couple of months later.  A few weeks ago, I got a blind reference call.  The guy was seeking employment with a consulting firm and I knew the hiring executive very well.  What do you think happened?

This kind of thing does not have to happen to you.  If you are smart, you will get serious about networking and building as many positive relationships as you can.  Many of these relationships come from active participation in associations, alliances and industry peer groups.  You should volunteer your time to give yourself exposure to people that you might need for a job some day and in the process help them develop a positive impression of  you.

There is a saying that there are three kinds of people;  Those that make things happen, those that watch things happen and those that wonder what happened.  You never know when someone is going to make a call to someone that you might not even know; about you – a blind reference.  When that occurs, what will the results of that call be?  If you or someone you know is having difficulty getting a job and their qualifications appear competitive, they may be the victim of blind reference checking which puts them in the category of wondering what happened.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link that usually appears as a bubble near the bottom this web page.

There is a comment section at the bottom of each blog page.  Please provide input and feedback that will help me to improve the quality of this work.

This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

Where is Mark Richt?

A lot of people do not understand executive succession events.  It is common for a leader to be liked inside and outside the organization.  The performance of the leader is seen differently based upon the perspective of the viewer.  While many may see a leader as ‘nice’ and ‘trying hard’ others see him as ineffective.  In several of my articles, I make reference to the fact that as you progress in leadership, you are evaluated more on the results of what you do than the effort expended in leadership.  Some times, personal or organizational limitations inhibit the potential of a leader to be effective regardless of how hard he tries.  Ultimately, the people responsible for the leader conclude that in order for the organization to reach its perceived potential, a leadership change is necessary.  It is at this point that executive turnover begins and it is almost always followed by collateral turnover as lower level leaders are replaced in an effort to improve the ability of the organization to better meet its challenges or mission.

In Georgia, we have an excellent example of this phenomena.  When someone asks me what happened to someone or how the organization could do something so harsh to such a nice guy, I ask them, “Where is Mark Richt?”  In November of 2015, the University of Georgia announced that Mark Richt was leaving.  Many wonder why.  This gives me an opportunity to launch a Socratic dialog.  My questions usually go something like this:

Would anyone argue with the following premises?

That Mark Richt was not a nice guy?

That he compiled a record at Georgia and in the NCAA that places him among the icons of sport leadership?

That he did not understand the game of football?

That he did not want to win?

That he did not live an exemplary Christian life?

That he intervened in the lives of dozens if not hundreds of young people to set their lives on a better course?

And in spite of all of this, he is gone.  However painful the transition must have been for him, at least it was a homecoming of sorts as he has returned to his alma mater in Florida.

The reason for the transition is that the people responsible for Mark’s employment concluded that the program was not going to reach its expected potential under his leadership.  Those of us familiar with SEC football know that this means that nothing much matters in GA if you cannot beat Alabama and Florida consistently.

People are inclined to blame a lot of things for a situation like this.  Things like recruiting, the players, the coaches, facilities, funding, the play book, play calling and on and on.  Sometimes a coach like a business leader is handicapped by unexpected loss of talent due to behavioral issues like those pointed out in another of my articles, injuries, transfers or other losses.  The reason is irrelevant.  The leader of an organization or part of an organization is accountable for the results achieved or lack thereof and a responsibility that cannot be abdicated rests upon his shoulders.

Sometimes, leadership turnover induced in an organization makes things worse.  We will see as the season progresses if the Georgia team has achieved improvement.  As is the case in situations like this, it may take some time (several seasons) before the final analysis can be done.  As I have said before, if you are a leader, you have to lead; from the front.  You cannot wait for someone to tell you what to do.  In order to be effective, you must take initiative and frequently risk if you wish to keep yourself ‘off the radar.’  This is unless you have reached the limits of your capability and are falling victim to the Peter Principle.  If this is the case, you still have control of your destiny.  You must continue to invest in yourself though study, professional credentialing, post-graduate education or other means of continually re-inventing yourself and maintaining your relevance to a constantly changing and increasingly challenging environment.

The current healthcare environment is difficult to say the least.  As the industry transitions to value based payment, many of the rules and assumptions of the past are crumbling before our eyes.  Individuals and organizations that are capable of adapting and prospering in this rapidly changing environment will do well while many others will fall by the wayside.  Leadership is hard enough in a ‘stable’ environment if there is such a thing.  It is infinitely more difficult in an environment where the organization is striving to improve itself while it reacts to external environmental forces.

What is the outcome of your self assessment?  Are you up to the challenges?  Do you understand the nature of coming heightened demand to make your area better?  If so, are you up to the challenges and opportunities that are being presented?

One of my personal challenges is that I am ever cognizant of the difference between what I believe are my capabilities those of my team of leaders and what I believe the environment is demanding.  I will never be satisfied that we are accomplishing as much as our collective potential should deliver.  As a result, I spend a great deal of time in continuous study and research in an  effort to improve my ability to understand and properly respond to challenges, opportunities and risks that come my way every day.  I feel the burden of leaders reporting to me, the staff of the organization, the patients, the medical staff and the hope of the community that we will ‘get it right’ for them.  I find the exhilaration of this dynamic environment stimulating and I am up to the challenge.  My hope for you is that through these articles and your development of you own capability you will be inspired to emerge as one of the strongest leaders in your organization.

As the healthcare environment continues to become more challenging, organizations and their leadership teams are being shaken out.  This is what is causing a lot of the consolidation we are seeing in the healthcare industry.  Leaders, systems and processes that worked in the past are failing in this tougher environment.  Some of the problem is government induced problems that are difficult if not impossible for community hospitals to overcome.  An example is the cumulative effects of government healthcare policy on rural hospitals that are systematically being forced out of business.  In spite of these handicaps, some organizations do better in a given environment than others.  There is a dearth of leadership in healthcare just like there is in professional sports, business and other endeavors.  One of the causes of the inordinately high turnover in healthcare administration is a continuing effort on the part of hospital Boards and executive leadership to improve the caliber of talent and this effort is one of the reasons that good people are being turned out of organizations at an alarming rate.  One of the few benefits of this activity is that it is creating growing demand for Interim Executive Services.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link that usually appears as a bubble near the bottom this web page.

This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

What is the value proposition of an Interim Executive?

Interim Executive Services as defined in my ‘About‘ page is not as common in the US as it is in Europe.  On the continent, in order to practice as an interim executive, a person needs to have a certification similar to a CPA in the US.  In the US, it is still the wild west when it comes to interim executives.  A few years back, a private enterprise in NC attempted to establish a credential for interim executives but the effort failed so now it is a buyer beware market.  There are firms providing interim services but in my experience these firms do very little in terms of either training or providing oversight for their interims.  The interims are placed and they are usually on their own from that point.  This raises the question of the value proposition of an interim executive because the proposed pricing is usually higher than the hourly rate for the employee being replaced.

In my experience dealing with buyers of interim services, the first and often most heavily weighed consideration is the cost of the interim resource.  The less sophisticated the decision maker, the more likely that they will be motivated primarily if not exclusively by cost.  This is because they do not get or choose to ignore the value proposition.  This has happened to me time after time.  Each time, I held my ground and demanded a fair premium for my services.  In each case, I told my client that if they did not find value in my services, they could terminate me without cause or notice.  Once they had a chance to experience what a sophisticated interim executive could provide, the cost issue was not raised again.  A decision maker that seizes an opportunity to buy interim services at a small or no premium should be worried about what they will be getting for their money.

I am aware of interim firms that prey on executives in transition that are desperate for income.  Some of these interims will take any job at any price.  The interim firm then sells their services based on price alone and is successful getting a markup of 30% to 50% while providing a price sensitive decision maker just what they paid for.

What would rationalize a premium for a sophisticated interim executive?  There are many considerations that a decision maker should contemplate in addition or in lieu of rate.  I am making repetitive use of the adjective ‘sophisticated’ when referring to interim executives.  There are differences in the sophistication of interim executives and the decision makers that engage them.  These differences are discussed in an earlier article.

The criteria below while useful in understanding the value proposition of a sophisticated interim executive may be equally if not more valuable in evaluating potential interim resources for fit in your organization.

I would advise against hiring the first interim you see unless you have a recommendation from a source that you highly trust.  When I worked with Tatum, they made it a habit to present at least two resources on each project so that the decision maker would have the ability to see more than one alternative and make their own choice instead of letting the interim firm sell them on whoever happened to be currently sitting on their bench with nothing better to be doing at the time.

Experience – One thing worth paying a premium for is experience.  The typical sophisticated interim executive is a late career individual with a lot of experience, usually in a number of organizations.  The depth and breadth of this experience allows them to assimilate quickly an organization and to begin creating value almost immediately.  This is particularly true if the interim has on-point experience, something you should always look for.

In addition to career experience, it is worth paying a premium for an interim executive with multiple interim engagements on their CV.  The approach to a position as an interim is radically different from what one would take as an employee.  It is worth paying a premium for an experienced interim unless you already have another interim in the organization that can serve as a mentor.

Credentials – In addition to being highly experienced, sophisticated interims tend to carry above average credentials.  Things like advanced degrees, CPA certifications, ACHE, HFMA  and/or fellowships.  These credentials may or may not specifically make one person better than another but the probability that a credentialed executive is going to have a higher level of cognitive capability and an innate drive toward personal excellence is a pretty safe bet.  Another consideration is that no one requires executives to seek advanced education and professional credentialing.  In a situation where everything else is equal, I will always favor a credentialed individual because the very fact that they have obtained a credential is proof of their drive to go beyond the minimum required to get by.  In my experience, credentialed executives are always superior for this reason alone.  As most of us that are credentialed know, you do actually learn something in the credentialing process that might come in handy once in a while.

Expertise – Knowing what you are doing should count for something.  I have seen more than one decision maker hire the first resource they could find that had a heart beat only to make the situation infinitely worse when the interim executive failed.  Most decision makers I have met do not know how to supervise or manage an interim executive.  For example, I would argue that most CEOs do not have the ability to manage a CFO from a technical or risk management standpoint.  I discuss this phenomenon in an earlier article.  The risk for the decision maker is that if the interim fails, the decision maker will usually be held accountable.  The interim will go on to the next gig while the decision maker that may not have been considering relocating finds himself hanging paper from home.

MentorshipSophisticated interims are invaluable in the potential they present to mentor rising executives in an organization.  A sophisticated interim executive that knows how to mentor properly can help turn younger leaders into rising stars.  In addition, interim engagements frequently lead to demand for additional interim resources that were not anticipated at the beginning of an engagement.  In this situation, an interim that has the capability to manage and/or mentor other interims can bring a very high value to an organization.  I have engaged a number of interims while serving as an interim myself.  I can say from experience that I believe I have delivered substantial value by making sure that the other interims were doing what they are supposed to be doing.

Judgment – You have probably heard the one liner that says, “Good judgment comes from the experience we get by exercising bad judgment.”  I would argue that having the ability to bring above average experience and judgment to bear on a problem is worth paying for.  Experienced executives, especially interim executives can be expected to have better judgment than a decision maker might be accustomed to.

Stability – A transition situation is unstable by definition.  My practice has shown me that the only thing you can be certain of in a transitory situation is that you cannot be certain of anything.  Some people have difficulty dealing with unstable, unpredictable situations.  After or arguably before a decision maker initiates a transition, they should be thinking ahead about their next steps and high among them should be an effort to stabilize the situation so that a business interruption or a bad outcome may be avoided.

Morphing deals – Some people need predictability and stability in order to function effectively.  They are unnerved by constantly changing circumstances and seize up.  An experienced interim executive knows that as a project progresses, things will happen and changes will become necessary that were not initially expected.  The project morphs from one set of circumstances to another.  It is worth paying for experience that can not only help stabilize a situation but experience that can adapt to unforeseen challenges.

Easy to sever – I have seen interim engagements fail.  There is no way that I know of  to accurately predict in advance if the interim executive will be what was expected or whether or not they will be effective in your organization.  In the event that the engagement is not working, you should have the ability to have the interim replaced immediately without cause or notice.  I discuss this in my article about contracting.  If the interim deal is not working, it is highly unlikely that it will improve.  I have had to terminate an interim before the end of their second week in an organization.  In the event that something like this occurs, the sooner you act, the less the potential for damage.  The other side of this is that the issue may not be anything worse than a bad fit.  I am happy to be the easiest person in the organization to get rid of but if I am expected to bear this risk, part the premium I receive justifies me taking this risk.

Interim services firms will endeavor to mitigate this risk by asking for minimum engagement time periods.  My advice would be to pay the premium and refuse to accept a minimum term as explained in my contracting article.

Velocity – In my article about contracting, I talk about the importance of velocity as it relates to interim engagements.  Frequently, decision makers procrastinate about making a decision but once they make up their minds, they want the resource TOMORROW.  Providing this kind of flexibility is worth paying a premium for especially if the resource you want has been waiting for you to make a decision.  If you want a resource to sit around waiting for you make a decision and be at you beck and call at any time, you need to be prepared to pay a premium for this luxury.

Rapid acclimation – When I was at Tatum, the firm’s mantra was ‘Velocity.’  The connotation is that the firm focused on rapid response.  What I have learned from the stages of an interim engagement is that once a decision maker decides to bring an interim executive in, they want them tomorrow.  Part of the premium a decision maker pays is to get  an interim executive  to get to their site quickly,   Sophisticated interim executives also know how to assess a situation quickly.  This skill and experience allows them to become productive much faster than would be expected of an employee.  Decision makers tend to vacillate and procrastinate about a decision to bring in interim resources.  They should not be unhappy about paying a premium for a resource that can help them compensate for the time it took to get the interim on their site.

No benefits – An interim deal is simple from the perspective that it usually only involves the professional fee and out of pocket expenses.  Unsophisticated decision makers will compare the salary rate of the departed employee with the billing rate of the interim and conclude that the interim is expensive without taking into consideration that the employee had benefit cost somewhere in the range of 25% of their compensation.  Not having an interim executive on the organization’s benefit plan is clean and can be a cost saving aspect of the engagement.

Living and travel burden – If you don’t think an interim executive deserves a premium, try living in a hotel and traveling every week.  Not only does this create an expense that substantially adds to the cost of an interim engagement, it is very hard on the interim executive.  The longer the engagement lasts, the harder this becomes on the interim.  It is too easy for decision makers to forget the interim executive as they are going home a warm meal and the privilege of going to bed with their spouse while the interim is separated from their family, eating out and going to sleep in a cold bed.  This aspect of interim executive consulting by itself warrants a premium.  I accept that the burden of travel goes with Interim work but I wonder if the price my family and marriage have paid for me to do this work has been worth any amount of money.  I have lost my sensitively about what I ask for my services primarily be causes of the burden that the interim lifestyle places on the consultant.  I discuss this in detail in my article about becoming a an interim executive.

While I could take the position that it is not a problem of mine, I deeply resent the cost associated with being an interim executive.  Travel, food, temporary lodging and other costs associated with an interim executive is a significant proportion of the total cost of an interim resource.  It drives me crazy to pay these costs or incur them on behalf of a client.  This is one of the strongest reasons for making sure that you are getting your money’s worth from any interim you engage.

Hired independently or via a firm – My experience is showing me that there is a growing population of ‘free agent’ interim executives.  Firms that place interims will take somewhere in the range of 30% – 50% of the total professional fee for their overhead and profit.  In addition, because of what I would describe as oppressive government overreach, most if not all firms now require their interims to work on a W-2 instead of a 1099 or K-1.  This can result in the interim losing tax benefit in the best case and paying tax on out-of-pocket expenses in the worst case.  While free agent interims can be harder to find because you have to know how to network to find them, they can be less expensive because they are not taking a hair cut in a direct deal.  In my experience, a free-lance interim is likely to be much better than interims that come from firms for a variety of reasons that are beyond the scope of this article.

Summary – I could go on but I trust that as a decision maker or an interim for that matter, you can see that there is plenty of justification for a premium for interim executive services.  The premiums I have seen run 50% or more over the base salary of the executive being replaced.  If you are a decision maker, you should not be afraid of paying a premium to get superior skills and resources brought to bear quickly on complex or dangerous business problems and or transitions.  Quibbling over rate can slow down the process of getting the right resource and can prevent you from getting the best possible skill in place.  One of the most profound value propositions of an interim executive is their ability to raise the probability that the decision maker that hired them will not also become a victim of the transitions that created the need for the interim in the first place.  In my experience, decision makers routinely discount this aspect of an interim engagement’s value that is in  my opinion one of the strongest reasons for paying a premium for the right interim.

If you are an interim executive, you should not ever sell yourself short.  I took a haircut on a deal that was only supposed to last 3 months to mitigate on behalf of the firm something that I had nothing to do with.  After three months, the firm would not get my rate corrected and the engagement ended up lasting thirteen months.  I will not work with that firm again because they have demonstrated in more than one case involving me that they cannot be trusted.  As an aside, from my perspective in this case, the firm detracted significantly from its value to me while adding insignificantly to the client’s value.  If you have experience as an interim, you know that one certainty is that you are probably going into a situation that will turn out to be significantly different from what was described and invariably more challenging.  You also know that there is a very high probability that you are going to be in the organization much longer than the decision maker assumes at the onset.  In my  experience once you have proven your value, decision makers will take considerably more time getting you out than they took getting you in.  I have helped decision makers over the cost hump by reminding them that hiring me is a no risk proposition.  They can send me packing the day that they decide that the engagement is not working or that I am failing to produce more value than they expected.  I am happy to take this risk as long as I am being appropriately compensated.  I have yet to be sent packing.  In every case, I have remained much longer than initially expected or planned.  Some interim firms prey on unsophisticated executives in transition by buying them at or below what they were receiving as an employee and reselling them at a market consulting rate.  If you allow yourself to be prostituted in this manner it is your own fault.

In closing, I believe there is substantial justification for paying a premium for interim executive services.  I postulate that the time usually lost by decision makers that struggle with the decision to bring an interim in can quickly create costs and/or losses that far exceed any premium.  As I said in an earlier article, if you are a decision maker, make a decision.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link that usually appears as a bubble near the bottom this web page.

This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

 

 

So you want to become an interim executive?

I get requests about Interim Executive Services from people that are starting to look at interim consulting as a means to make a living and/or make a difference.

My first response to this question from someone is why?

What is their perception of interim executive services?  What about it do they find attractive?  What is their level of understanding of what is involved?

Collectively, these questions address the level of sophistication of an interim executive as described by Goss and Bridson.

Unless the person is legitimately interested in becoming a sophisticated interim executive, I am done talking with them.

The reason is that an unsophisticated interim has the potential to cause more problems than they solve and they will be conflicted in the organization(s) they serve.  I believe an organization that is interested in securing interim assistance deserves a sophisticated interim even if they do not know any better themselves.  If the interim is not serious about their role as an interim and what they are really looking for is a job or to disrupt a search, I have no further interest in wasting time on them.

So what is being an interim about anyway?  First the bad part.

You will be working long (12 + hour days) while living in a hotel in a strange town.  It can get very lonely. You will be working in a stressed or  distressed organization that is unstable because of prior and coming managerial transitions.  A lot of people in the organization will resent your presence.  This resentment has several sources.  Frequently, there is remorse for the departed executive.  It is common for people to feel like their previous leader did not deserve to be terminated or that they got a bad deal.  These concerns are generally valid.  I rarely follow ‘bad’ executives.  I follow people that are no longer in the organization due to politics, the performance of their area of responsibility or the fact that they became collateral damage to other potentially unrelated turnover.  Sometimes people I follow have left the organization because the executive lost credibility.  In other cases, it was determined that either the organization or their area of responsibility is not meeting its mission and that things were unlikely to improve.  I discuss this phenomena in an earlier blog.  Sometimes a need is created when a successful executive takes advantage of a career opportunity and decides on their own to move on.  Another reason for resentment is that in addition to employees seeing you ‘taking’ their prior leader’s job, they sometimes see you getting paid what they believe to be premium pay for providing your services.

In addition to the resentment, there is a trust issue.  People are naturally cautious about trusting someone they do not know.  In  a transition, there is plenty of paranoia about what you have been told, your goals and how people around you might be affected by your role in the organization.  They know you are very closely connected to the Board and/or the front office and they fear your knowledge about the future direction of the role you are filling or the organization.

The lifestyle that goes along with interim executive services can be brutal.  Your life devolves into a two dimensional existence that consists only of work and sleep.  You lose touch with friends and activities back home until eventually they are no longer a part of your life.  Having a ‘routine’ disappears as you lose the ability to maintain exercise, a social life and healthy eating activities. After a usual schedule of four ten to twelve hour days, you get to go through the only remaining legal form of torture; air travel – twice per week.  The expense, the hassle, the strip searches, the time and frustration of travel further eats into your time until you have little if any personal time left.  Hobbies and extracurricular activities become memories.  Living in a hotel and eating out every day becomes an old drag quickly.  Anyone that has done this knows how fast the ‘glamor’ of being a consultant wears off.  It even takes a lot of time to begin to figure your way around  the town.

You are in the organization but you are not really part of it.  You do not share any of the culture and history and there is usually no expectation that you will be around long enough to develop meaningful relationships.  Remember the ‘Replacements’ segment from the TV series, ‘A Band of Brothers?’  If not, you should look it up.  You are rarely included in social activities in or out of the organization. As a result, you feel isolated and alone.  Initially, no one expects you to be around very long so they make no effort to get to know you.  The distance that others in the organization establish, particularly other executives is palpable.

Under good conditions, you are drinking daily from a firehose, particularly in the earlier stages of an engagement.  You do not know anyone, you do not know where anything is, you do not know who controls what and as you proceed through your engagement, it is common to identify issues that need attention at a rate that far exceeds your ability to address them.  People are cordial either because it is the right thing to do or they feel it helps their personal cause without going out of their way to be particularly helpful most of the time.

I could go on and on about this but hopefully you are beginning to get the point about the challenges of being relatively unwelcome in a strange organization in a strange town where the organization is being roiled by the effects of what is usually an unexpected turnover event or multiple turnover events.  I served an organization that had released nine senior executives at the same time including the CEO and most of his direct reports.  The managers left were shell shocked and some of them had survivor’s remorse.  They could not function because they could not understand why they were left and some of their best friends and associates were gone.  Most of these people eventually left the organization.

Given all of this, the obvious question is why on earth would anyone that had not lost their mind would want to have anything to do with this kind of work?

I believe there are two primary answers.  The first is that there will never be a better opportunity in that organization for an interim executive executive to have a transformational impact that can literally alter the course of the organization.  The second reason is that the work has the potential to be exhilarating from the intellectual challenges it presents while being more lucrative financially than traditional employment.

A turnover event starts when the organization or its Board concludes that the organization of a part of it is on the wrong track and the existing leader is not meeting the organization’s needs.  When the body of evidence that the situation is unlikely to improve reaches critical mass, the turnover and succession processes start.  An interim coming into a situation like this finds that unlike an employment situation where you have to fight politics, bureaucracy and undermining peers to get anything done, the organization is hungry for fresh ideas, new blood and the injection of energy into an area that was perceived to be falling behind.  It is common to enjoy considerably more latitude than your predecessor to make what would have previously been considered radical recommendations to get the organization moving in the right direction.  Leadership and governance are actually interested in what you have to say and are considerably more likely to act on reasoned recommendations.  Of course, the burden of responsibility that comes with being such an advisor is sobering because you are expected to ‘get it right’ 100% of the time.  This is not an easy burden to bear.

Another reason for performing interim executive services is what I call empowerment.  Employees at every level sub-optimize routinely because they engage in self preservation.  They guard their jobs and roles at any cost.  When you have nothing to lose by being fired and you have absolutely no fear of being fired, you enjoy a sense of liberation and empowerment that can only be appreciated by experiencing the phenomena.  Because you have no ‘job’ to protect, you can say and do things no employee would ever consider.  You can challenge the organization, its leadership and governance to do hard things if they are the right course of action for the organization even if making the recommendations puts your own role at risk.  The only objective I have as an interim executive is to get the best result possible for the organization regardless of how I am affected.  If I get run out of town for that, I will leave happy with knowledge that whether they agreed or not, they will at least be making informed decisions.  I recently told a community leader that my biggest concern if I got run out of town would be whether or not I could stay out of work long enough to have a decent vacation. There is no shortage of organizations needing competent, professional Interim Executive leadership services.  So far, I have not been run out of a town and I have said and done things in Board rooms that have resulted in shock, awe and horror.  I have pressed organizational leaders and Board members to do the hard work necessary to make their organization better.

The upside of this is that I have left every organization I have served a better place and I have continuing excellent relationships with Board members and CEOs of every organization I have served.  This is another of the many benefits of interim services; the residual impact of your transformational leadership in an organization will last for years after you are gone.  The courage and determination you demonstrated in your efforts to achieve better results for the organization will inspire many that follow you.  This probably will come across as cliche’ but the US is a great county.  My wife and I have been blessed to serve healthcare organizations in many states.  Every part of the country has a unique culture and climate.  It is interesting to learn how certain concentrations of ethnic groups came to be located as they are around the country.  You cannot learn nearly as much about an area passing through  as you can by living in the community for several months  at a time.  These aspects of Interim Executive services can be extremely rewarding.  Decision makers in distressed organizations are generally anxious to get help.  I frequently encounter staff that have been frustrated by the fact that they were let down by their leadership and as soon as you establish credibility, they engage you in as much Mentorship as they can absorb.

In the past year, I have received two of the most rewarding telephone calls of my life.  One came from the Chairman of the Finance Committee of a hospital system that had just been upgraded by a rating agency.  The first call he made was to me to thank me for my intervention years earlier.  In his opinion, the results of my run in that organization laid the groundwork for the improvement in performance that led to a rating upgrade years later.  The second call was with a CEO who told me that the people in the community served by his hospital owed me a debt of gratitude for my service in spite of the fact that there were only a very few members of the community that had any knowledge that I had ever been there.

You might say, all of this sounds good but what about the people that came before?  I make it a habit to resist criticism of my predecessor(s) or the decisions they made.  In fact, I told one Board that as far as I could tell, the guy they got rid of was better technically than me.  As I said before, in nearly every case, they are good people and I do not know why they did what they did.  I was not there at the time previous decisions were made and I am not privy to the information they had or the pressures they were under when they made the decisions that sent them on a path toward transition.  I do know from personal experience how brutally agonizing it is to go through a transition, especially if it is the first transition for that departing leader.

The most common primary concern of departing leaders have expressed to me is that their successor will ‘trash’ them.  I have had this happen to me and I know how it feels, especially when the criticism is coming from someone that does not know me.  As a result, I have made it my habit to reach out to my predecessor and offer any assistance that I could during and following their transition.  These people are not happy and initially some of them have not been particularly happy about dealing with their involuntary successor.  I am very proud to say that in most every case, each of these executives have gone on to much bigger and better things and I maintain friendly, cordial realationships with them.

I have been instrumental in replacing myself in several organizations including casting the deciding vote.  I am happy to say that in each of these situations, my successor is still in place and the organizations are better for my Interim Executive intervention.  I was blessed and honored to have the opportunity to serve in a variety of cultures, climates and communities.

So if you are looking at a career move, you can handle the lifestyle and you wish to make a difference while earning above average income, you might be suited for Interim Executive Services.  Obviously, this work is not well suited for people trying to raise families.  I will conclude by stating that if you are married,  the unqualified support of your spouse is a necessity for success as an Interim Executive.  I will write an article in the future on how to qualify yourself for one of these roles.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.

This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

An old epiphany AKA my Barbara Mandrell story

A few years ago, my wife and I had the opportunity to spend the better part of a week in Nashville, TN.  While there, we decided to check out the Fontanel Mansion.  Fontanel was Barbara Mandrell’s ‘cabin in the woods.’  As of this writing, Fontanel is number 4 of 209 things to do in Nashville according to Tripadvisor.  Barbara named Fontanel after her youngest child.  I will leave it to you to look up the meaning of the word and to see if you can see the inspiration.

I highly recommend visiting Fontanel if you are in the area.  It will leave a lasting impression.  Barbara’s ‘cabin’ is some 27,500 square feet in size.  At the time of its construction, it was the largest log structure on earth.  It is still in the top five.  The magnitude and scale of the mansion defy description.  As I said, you need to see it for yourself.  The mansion is so large, the Mandrell family regularly lost their children in the house so everyone had to carry walkie-talkies to stay in touch.  A huge indoor swimming pool, indoor shooting range, 5,500 square foot ‘great room’, arcade, commercial kitchen, lavish finishes and irreplaceable casework and finishes overwhelm the visitor.

At the time I visited Fontanel, I was struggling personally with what I perceived to be a lack of ability to have the degree of favorable transformational influence in the organizations I served as an interim executive.  I knew what needed to happen.  I knew what it looked like when it is right and what it looks like when it is not right.  I was frustrated by  the fact that the organizations just did not seem to be as interested in changing as I expected.  Many of my recommendations either fell on deaf ears or were humored then subsequently ignored.

You can easily spend an entire day at Fontanel.  There is a lot to see and do.  It takes a while to begin to comprehend the magnitude of the mansion.  To me it was as impressive if not more impressive in its own way than the Biltmore house.  Late in the day we had an opportunity to hear Barbara’s daughter Jamie speak.  She stayed with the new owners of Fontanel as an interpreter and her comments brought the place to life.  I was standing with a group of people listening to Jamie talk about her childhood experience at Fontanel.  She was explaining that she had to reach high school age where she started getting out into friends’ homes before she realized that her childhood experience was any different than that of any other child.  She and her brothers assumed that their childhood experience characterized by wealth, maids, butlers, chauffeurs and the like was no different than the childhood experience of other children.

It was at this second that I could have been knocked over with a feather.  I was overwhelmed by a wave of dawning realization that nearly overcame me.  In one second, I got it!  In the blink of an eye, I finally understood the problem I was experiencing.  The reason that I could not get people in the organizations to see my vision for what they and their organization could be was that the environment they were in as dysfunctional as it might be is their sense of normalcy.  They cannot see the possibility of something so much better because their view of the world is characterized by their role in their environment.  They frequently see little if anything that needs to be fixed.  It is normal for me to hear, “Everything here was fine until you showed up and starting changing everything.”

In one organization I served, the Vice President of Finance told me one day that she was there when I came and that she would be there after I was gone.  She went on to explain that she had ‘broken-in and trained’ five CFOs and had survived them all as she would survive me.  We managed to co-exist for a few months primarily because as an interim, I resist  taking personnel actions that will alter someone’s career unless I am forced into a situation where my options have been reduced to one.  In this case, the first thing my successor did was rid himself and the organization of this caustic cancer of an employee.  I have seen multiple examples in organizations that I have served of shock and awe when the degree of dysfunction, sub-optimization and loss were revealed.

The only thing worse than a dysfunctional culture is a toxic culture.  A dysfunctional culture fails to meet the needs of the organization while a toxic culture is more detrimental to the organization because it characterized by active degradation.  There are a number of characterizations of dysfunctional or toxic culture many of which are obvious to independent, disinterested observers while being transparent to the people that are a part of the toxic culture.   These phenomena are more easily recognized to the degree the observer is viewing the situation academically or clinically without personalization of the circumstances or any of the people involved in the issue.  The problem with this is that people rarely change.  In fact, most of us are extremely resistant to change.  The observation of this phenomena over a long time spent in a variety of organizations has led me to the conclusion that achieving a change in culture without changing the cast of characters is generally a fool’s errand.  Ascension Health is the largest not-for-profit healthcare system in the US.  Ascension is also the largest US Catholic healthcare organization.  Ascension places high value on the worth of individuals and in my experience errs on the side of doing the right thing by people in its employ.  I have seen the focus inspired by this culture in Ascension hospitals lead them to make substantial investments trying to salvage leaders that should have been long gone.  Sadly, more often than not, these efforts fail and the person ends up leaving the organization anyway.

How does this apply to leadership?  Every time an organization is presented with the opportunity to fill a leadership position, it needs to think about the role and function that now needs new leadership.  In the case of senior executive positions, I strongly recommend that an assessment be conducted to document the degree to which the previous incumbent and the function was meeting the needs of the organization.  Some organizations have a stronger bias than others to promote from within.  While I support this organizational value, it can be problematic.  There is no substitute or alternative that I know of for the enriching experience of working in different organizations, cultures and climates.  This experience provides insight and perspective that is un-achievable for persons that have grown up in the organization with most or all of their experience being in that organization.  They have no capacity to see things differently than how they currently exist.  In some cases I have seen, internal candidates have been victimized by poor or weak mentorship or leadership in the organization.

This is not to say that an internal candidate should not be considered.  The internal candidate does have the experience and insight to know the history of the organization and the location of every closet where a skeleton is hung and the site of every grave.  They can be up to speed immediately while it can take an outsider months to come up to their full potential.

The moral of this story is to be cognizant of your culture and the degree to which it might be impeding your ability as a leader to move your area of responsibility forward.  You need to ask yourself the very hard question of the degree to which you might be part of the problem.  This is one reason that continuing professional education is so valuable.  You need to be concentrating on improving your education and skills continuously.  In this process, you will begin to gain clarity as to how you may have been sub-optimizing.  This is also an example of how consultants can be very valuable to your personal survival probability.  Use them for their subject matter expertise but ask them questions and listen to them very carefully.  You have experience in a few organizations.  They have experience in many organizations and are uniquely qualified to help you understand where your organization might be missing opportunities to improve.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.
This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

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CFO Radio Interview

On October 17, 2011,  I was interviewed by Lorraine Chilvers on CFO Radio on the topic of Interim Executive Services.  The interview that lasted around 45 minutes is proceeded by some industry news.  During the course of the interview, I am asked about a variety of aspects of Interim Executive Services.  Since Lorraine has insight into the Interim Executive Consulting business, her questions were deeply probing and she did a very good job of engaging me on many of the more important aspects of Interim Engagements and the Interim Executive lifestyle.

Lorraine and I previously served together at Tatum.  Eventually, we went our separate ways.  I went on with my Interim Executive Services career and Lorraine went on to found Delaney Consulting and CFO Radio.

At the time of the interview, I was serving as the Interim Chief Financial Officer of The Central Florida Health Alliance serving Leesburg and The Villages in central Florida.  I recently listened to the interview again and it struck me that the material in the interview is just as current now as it was then.

The interview may be found here.

What should you look for in an interim executive agreement?

Sometimes in the heat of dealing with a crisis, the decision maker is so focused on getting someone into a vacant position that they jump on the first deal they can get done.  In other cases, because of a referral, they take the deal offered at face value.  In my post titled “Types of interim executives and types of clients” I discuss the various types of interim executives and the organizations they serve.  I discuss the importance of matching the skills, experience and sophistication of the interim and their client as a means of achieving maximum value from the engagement.  There are a number of ways to make sure you get the best from your interim engagement.  This process starts with the contract.  Following are some of the considerations that are key to getting the best for your organization from an interim engagement.  The principles I am going to outline here are not only applicable for an interim engagement but they are useful in other contracting situations.

Rate:  Not only is the rate or fee associated with an interim important, the structure is equally important.  Structures can range from monthly to hourly and anything in between. While a monthly rate insulates the hosptial from excessive hours, it can also result in the hosptial paying for time it did not get.  If there is going to be a structure other than hourly, you should request a time sheet from the interim to support the billing.  If you are not going to be watching your interim’s time, you should have someone in your charge performing this function.  I do not advise putting interims on your timekeeping system because there may be an issue down the line regarding their status as an independent contractor.  The fact that you are doing timekeeping for interims on your system makes them look more like employees.  As far as fees are concerned, you should expect to pay between $75 per hour for a high level clerical position like an accountant or analyst to over $300 per hour for a C suite interim.  When you are converting hourly fees to monthly rates, remember there are 4.33 weeks in a month.

While I am on the topic of rate, I should take time to emphasize the importance of getting the most from an interim engagement.  Too many decision makers focus only on the rate while ignoring the potential for an interim to deliver many multiples of their cost.  I will address the reasons that interims are more expensive than employees in a future blog.  Instead of obsessing over the rate, give consideration to what you need to get accomplished and what that would be worth to your organization.  Do not forget to consider the risk you may incur from not having appropriate skill in a critical role during an unstable transitional situation.

Retainer:  Increasingly, I am seeing interim firms ask for a retainer.  They will ask for a lump sum payment representing thirty or more days of fee in advance.  The purpose of a retainer is to insulate the interim firm from credit risk associated with doing busines with you.   Unless you are in or expect to be in a bankruptcy proceeding, this is ridiculous.   All this does is make you the interim firm’s bank.  You are furnishing them an interest free line of credit.  If they are concerned about your ability or willingness to pay, you should question how interested they really are in becoming one of your business partners.  I have worked with an attorney that is of the opinion that a voluntary hospital may not have the legal ability to make a loan to a private enterprise and that is what you are doing when you pre-pay expenses.

Payment terms:  Interim firms will try to get their fees paid in advance.  The typical request is fees in advance and expenses in arrears.  Paying for services advance is almost as bad as providing a retainer.  You do not pay your employees in advance.  You should not be paying your interims in advance.  There is no reason to front expenses for services that have not been delivered.  If the interim has to go for any reason, you will have a settlement to negotiate.  If you find yourself in a dispute, you can always improve your leverage by withholding payment in the event of a breach of your agreement.

Severance / Notice:  This is one of my favorites.  An interim firm will tell you that you have to engage their resource for a minimum of anywhere between 60 and 120 days or more.  I have a couple of questions for you.  Are you in a right to work state?  Do you generally give non-executive employees or executive employees for that matter severance?  Why would you give an interim a better deal than you give your employees?  Once I had a CEO that had just come into the organization I was serving ask me what my deal was.  I answered that my ‘deal’ was to “serve at his will and pleasure. ” When he incrediously asked what the hell that meant, I told him that I was available to him as long as he saw value in my work and if he reached the point that I was not providing value in his opinion,  I was out of there.  I went on to explain that he would soon learn that he had more than his fair share of problems in this organization and I did not intend to become one of them.  If your interim needs the protection of severance or a notice deal to feel comfortable working in your organization, you have to ask yourself whether you have the right interim.  This is one of the things you pay a premium rate for.  I am comfortable working without a safety net.  I have actually refused time committed contracts once explaining to a bewildered CEO that I did not need that type of commitment; I am OK with being the easiest person in the organization to get rid of.   I am happy to earn my privilege of being in an organization on a day to day basis.  In every case things have worked out and I have ended up staying longer than either of us initially anticipated.  All of this being said, while my contract has a termination without cause provision,  I do ask for a courtesy notice of two weeks or more at the end of the engagement under ‘normal’ conditions.  This is for my convenience only and I would not require my client to observe or pay me pursuant to this clause if things were not going well.  So far, none of this has ever happened to me and if I am a decision maker on an engagement, I will not accept this term in a contract.  Local employees generally do not like interims all that much to start with.  I am not going to be party to giving myself or other interims a better deal than I have or a better deal than the organization’s employees get.

Termination / Replacement:   A transition situation that requires an interim is unstable by definition.  Sometimes the match is not right.  Sometimes the interim does not fulfill your expectations.  You should have an agreement that gives you the ability to request that an interim be replaced or terminated without cause or notice.  An interim producing value will never have a problem.  The more common problem for an interim that is producing value is getting out of the engagement as clients are reluctant to release interims that are creating significant improvement in the organization.  The organization should have the flexibility to terminate an interim arrangement without notice in the event the interim takes inappropriate action or gets involved in something  that would be a termination offense for an employee.

Jurisdiction:  Fortunately, I have never been involved in a disputed interim services contract.  However, I have knowledge of disputes over interim agreements and other types of contracts.  Most vendors will ask for legal venue in their home state.  They typically take the position that this term is not negotiable.  The question you have to ask yourself is that if you end up in a dispute, do you want to bear the cost of going across the country and hiring local counsel to resolve the problem in the vendor’s home town?  If they want to take money out of your town, they should be prepared to settle any dispute in your town.  I have not seen a vendor refuse local jurisdiction if the alternative is that they do not get the business.

Contact structure:   In my opinion, the most efficient way to structure an interim agreement is through a master contract / statement of work structure (SOW).  The master contract sets out the entire relationship except for the particulars about the interim resource(s).  Then SOWs are added or deleted from the master agreement as engagements occur during the course of the business relationship.  The concept is to make the engagement of interims through the same firm more efficient, especially if your organization has a rigorous review of contracts and documents.  One thing I have learned is that even if there is no intent to add interims at the beginning of an engagement, as a transition progresses, more skill often becomes necessary.  Adding a single page SOW to a master agreement is an easy way to facilitate getting additional resources on the job quickly and efficiently.

There is a potential problem with SOWs.  I encountered a situation with a firm I previously trusted that was trying to change the terms of their master agreement via a SOW.  This was going to create a situation where different interims from the same firm were going to have different engagement terms.  They introduced terms into a SOW that were different from the master agreement that were totally unrelated to the specific interim resource I needed.  To make matters worse, they threatened to cancel the interim’s travel plans if the SOW was not executed before the interim’s imminently scheduled airport departure.  For the first time in my career, I found myself negotiating an agreement under duress on a Sunday morning with a hostile firm that was trying to change the deal mid-course via the SOW.  Of course, all of this was blamed on bureaucrats in their nameless, faceless legal department.  I demanded and I am still waiting for the decision maker responsible for this fiasco to meet with me face to face to explain why this firm engaged in this activity and what they expected to gain.  Needless to say, I will not say that I will not use this firm again but I will exhaust all other alternatives before I ever use or recommend this disingenuous enterprise in the future.  The volume of my use of interims from this firm has declined significantly and will eventually reach zero.  There was nothing illegal about this.  However, a business partner that endeavors to change a deal without proactively telling you what they want to accomplish and why is not your friend. 

Exclusive agreement:  I have seen interim firms ask for exclusive arrangements.  There is potential synergy and possibly a small pricing advantage to using one firm for as many interim needs as possible.  That being said, it makes no sense for a decision maker to limit their options to only one firm when they may have widely varying needs.  For example, I have learned in the school of hard knocks that there are interim consulting firms and executive recruitment firms that specialize in one area or another; materials management for example.  Until I brought the resources of a ‘specialty’ firm to bear on a specific need, we were going nowhere in getting a resource into a key position.  If you enter an exclusive agreement and the firm you are using cannot fill your needs, then what?  Do not limit your options voluntarily .  .  .  ever.

Time period of an engagement:  Most interim agreements cover a defined period of time.  I have seen them as short as a month and as long as a year.  To me, the term of the agreement is not an issue if it can be extended or terminated on short notice without cause.  For example, you should be able to terminate a one year agreement upon reasonable notice if you find a permanent resource.

Standard terms and conditions:  As they say, the big words giveth, the small ones taketh away.  Most organizations have standard terms they require in every agreement.  Make sure all of your terms are in the agreement as you wish them.  Business partners will tell you that their contract is non-negotiable or that no one has ever asked them to make a change.  My advice is if you cannot get what you want in an agreement (as long as it is reasonable) move on.  Do not sign an agreement you have not read.  Do not sign an agreement that you do not understand every word, phrase and clause.  Do not sign an agreement that contains anything you do not like.  Just because the vendor is telling you that everyone else has signed the agreement or that it is their ‘standard’ contract, you should demand your right to get the agreement in a suitable form.  If the vendor will not accommodate this, tell them thanks and move on.

I should make a point here about contract language.  I have been reminded by a highly respected attorney mentor that if you find yourself in a court room arguing about the initial intent of the parties, your dispute may be settled by a jury of high school drop-outs.  If you want them to understand what you intended, you have a duty to insure that your contract is written in plain, simple, straight-forward English.

Teaching someone how to do contracting in a single blog is not going to happen.  My purpose in writing this is to sensitize decision makers to some of the considerations and traps in interim service agreements that work more to the advantage of the resource provider than the organization being served.  I find this distasteful but it has become a relatively standard practice.  You do not have to take the deal as offered and you should get terms that are fair not only to your organization but to the faithful employees in your employ that do their part to make things as they should be each and every day.

All of our interests would be served if we could collaborate to develop a contracting template for interim services.  I will be happy to compile and post a resource that contains the best of the suggestions that come from this effort.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two you would find value in.  I can also help with career transitions or career planning.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.
This is original work.  I have not discovered content of this nature in my extensive dissertation research.  This material is copyrighted by me with reproduction prohibited without prior permission.  I always note and  provide links to supporting documentation for non-original material.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

The stages of an interim executive engagement

I have come to realize in my practice that an interim engagement follows a predictable pattern.  I have seen this happen time and again.  I understand the process that a decision maker goes through during the course of an interim engagement.  A majority of decision makers dealing with transitional situations have little or no experience with interim executives.  I asked about this as a part of my dissertation research.  A small proportion of my respondents (35.7%) reported having experience engaging and managing interim executives.  Another 33.6% of my respondents said they were knowledgeable about interim executive services but had not engaged an interim executive.  Similar to Elisabeth Kübler-Ross‘ five stages of grief, I have observed one organization after another going through a similar process during an executive transition.  The primary difference between organizations and decision makers is their exit point from this process. Some never get around to making a decision or decide to avoid the use of an interim.  In order of their occurrence, here are the stages of an interim engagement that I have experienced.

We do not need an interim – When faced with a transition situation, organizations employ a variety of strategies.  Some use internal resources, some leave the position open and others resort to consultants.  In a future blog, I will address the difference between an interim executive and a consultant.  Organizations will frequently initially resist the fees associated with engaging an interim executive.  They will search for any possible alternative to engaging the interim.  They will spend weeks or months struggling with the interim decision.  I have seen the passage of over six months between the time first contact was made with a decision maker regarding an interim position and the time the engagement actually started.

Acceptance of an interim – All too often, once the decision is made to employ an interim, the client wants the interim TOMORROW!.  Generally, the client communicates their desire to accelerate the interim engagement as a means of managing the cost of the interim engagement.  Sometimes, too much time passes between the time the decision maker meets an acceptable interim and the time they make a decision.  Then they are frustrated when they call to find that the interim they wanted is now engaged.  I once had a potential client get upset with me for ‘putting pressure’ on them to hire me.  All I had done was to tell them that I was being proposed by the firm I represented on multiple jobs and if they wanted me, they needed to make a decision.  In this case, one of the reasons they wanted me was perceived cultural fit.  They wanted someone that would fit into a rural eastern North Carolina culture and I had been a hospital CFO in that area.  Two weeks later, I received a desperate call.  They wanted to know how fast I could get to their site to address what had become a big problem.  I told them that I was literally on my way to Milwaukee.  I had been engaged a few days earlier by one of the other clients that had seen me.  The potential client that had let me ‘get away’ was not happy.  Ultimately, the firm lost the gig because they did not have any other resources that this client liked and I got to spend the winter in Milwaukee instead of eastern NC.  If you are a decision maker, MAKE A DECISION.

 
Recognition of the value proposition – I start my engagements with an assessment.  The purpose of the assessment is to determine the degree to which the function I am filling is or is not meeting the needs of the organization.  During the assessment, it is common to find a number of significant opportunities for improvement.  My experience has been that when a client sees the difference between the interim and what they had before or when they see the magnitude of opportunity revealed by the assessment, the value proposition ‘clicks.’  There is no easy way that I have found to tell a prospective client before an engagement that my experience might be valuable to their organization .  It comes across as self serving.  Once they understand the potential of working with a professional interim that is capable of being transformational in their organization, they want to get as much as possible out of the the engagement as fast as they can because they understand that the potential value is multiples of the cost.  This frequently reduces the client’s focus on getting the engagement over as fast as possible.

 
Employment overtures – Somewhere along the line, usually in the six to nine month period of an engagement, the client decides that the interim is highly desirable and recruitment overtures start.  Sometimes, they come to doubt that a recruitment would result in an equal or better permanent solution. According to my dissertation research, 25% – 40% of the time, the overtures result in employment even if it was not the initial intent of either party.  Tatum called this a ‘conversion.’  The respondents to my dissertation research survey stated that they had converted their interim 35.9% of the time.  If the interim is sophisticated, they will generally resist converting as they see consulting preferable to employment.  The challenge to this part of the process is to get through it without the client becoming concerned that they or their organization are not good enough for the interim.

Diminishing returns – If the interim does not convert, they ultimately begin to experience difficulty in achieving transformational gain in the organization.  Initially, they were a novelty full of energy and fresh ideas.  They are generally very impressive compared to their predecessors.  They are humored by the bureaucracy in the organization and their harvest of low hanging fruit is impressive.  Sooner or later, the resistance of the organization to engage in increasingly difficult change and increasing resistance on the part of the bureaucracy reduces the ability of the interim to produce transformational change.  One day the leadership is evaluating their situation and they conclude that the consultants are not earning their keep and the transition(s) start.  I will discuss the topic of culture and change in organizations in a future blog entry.

Recruitment – During this stage of the process, the interim participates in the recruitment by performing a number of key tasks.  They spearhead the development of a revised job description, they develop a specification for the recruiter, they participate in the interviewing and vetting and ultimately in the selection of the permanent candidate.  I have cast the deciding vote on my replacement more than once.

 
Transition – The transition occurs when the interim is replaced by a full time employee which can be the interim.  If it is not to be the interim, the interim generally assists the organization with the recruitment and on-boarding process.  When the on-boarding process is complete, the interim moves on to their next challenge usually leaving their client organization in much better shape and thankful for their service.

I have personally experienced this progression of an interim engagement time after time. I have also seen every one of my engagements run longer than initially discussed.  Before a client appreciates the value proposition, they are very highly motivated to get the engagement over as fast as possible.  I have been told time and again to not expect more than ninety days, 120 days at the most.   My average engagement is nine months and I am currently twenty months into an engagement  was initially mutually understood to be limited to an assessment only.

The other interesting phenomena that I have seen is that the process can be exited at any stage given circumstances unforeseen initially.  This is one reason that I go the extra mile by making it very easy for my clients to exit an engagement should it become necessary.

One of the factors that lead to engagements dragging on is that the client becomes comfortable with the interim and they allow distractions to degrade their focus on moving the organization beyond the interim engagement.  The next thing they know, the engagement is approaching its first anniversary.

If you are a decision maker considering an interim, my hope is that this material will enable you to better manage the engagement and get the most from it for you and your organization.  If you are considering interim services, and if you are any good, you should expect that your engagements will nearly always run longer than initially discussed with the clients.  Therefore, as an interim, you need to be careful making forward commitments that assume the engagement will be over by a time certain.

This is original work.  I have not seen content of this nature in my extensive dissertation research.  This material is copywrited by me with reproduction prohibited without prior permission.  I always note and  provide links to supporting documentation for non-original material.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two you would find value in.  I can also help with career transitions or career planning.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.

Types of interim executives and types of clients

I have run into too many people in healthcare administration that believe that executives are interchangeable.   To them, getting a CFO or other executive is like going to the store and buying a tool.  One is as good as another.  Sadly, many of these folks look at interim executives the same way.  Nothing could be farther from the truth.  A frequent cause of executive ‘failure’ is not that the executive did not have appropriate skills and experience.  The problem was that either the skill and experience match was not correct or the cultural fit was not right .

People have different reasons for going into the interim business and some of them have nothing to do with getting the best result for the firms they serve.  Similarly, decision makers and the organizations they represent often do not consider their own state of sophistication and have no idea how to get the best from an interim executive.  All too often, they are looking to get a warm body into a role ASAP.

When I was doing my dissertation research (RAS Dissertation 130530), I came across an article written by Goss and Bridson titled Understanding Interim Management.  Among other things, this article lays out the varying levels of interims and organizations.  When there is a mismatch between the interim and organization, the engagement is likely to fail to reach its potential to provide maximum value.   I have not seen an organization put this kind of thought into the selection of an interim executive.

Supply Side characteristics of the individual     Demand side organizational requirements  
Type of Interim Motive Capability   Need Role
Simple Route to a permanent job Operational and supervisory competencies Instrumental stopgap Managerial temp
Formal Best present option High level functional specialism Functional stopgap Applied consultant
Sophisticated Commitment to interim management career Strategic, entrepreneurial competencies and executive experience Transitional stopgap Transformational leader

One of the first questions this table raises from the perspective of an organization is what kind of interim are you looking for?  The sophistication of the interim and organization increases as they move down the table.  Two of the three types of interims are not really interim executives.  They are people that are looking for something to do or extra money as they seek a ‘permanent’ job.  Some of them are motivated to use the interim engagement as a means of bypassing the typical retained search processes that accompany executive transitions.  This is one reason why some recruiters do not like interim executives.  It is not because they do not appreciate the potential of an interim to add value to their mutual client but some of them have seen their searches disrupted by an interim that was angling for the job instead of properly supporting the transition.

The phenomena of an interim becoming an employee is more common than many people think.  This occurs in spite of the fact that there may not be intention on either side of getting into an employment relationship at the beginning of the interim engagement.  In the business, an interim that becomes an employee is typically described as a conversion (to employment).  When I worked with Tatum, we were told that the firm experienced a 25% – 30% conversion rate.  I looked into this issue as a part of my dissertation research.  Of my respondent decision makers, 35.9% have hired an interim executive.  Of this group, 45.5% have considered hiring their last interim executive and 34.7% of them were successful.  In other words, when a decision maker decided to try to hire their interim, they were successful in getting the interim to convert 76.3% of the time.  Had I known this in advance, I would have asked some questions designed to assess the sophistication of the decision maker to see if it made a difference in their tendency to try to convert their interim.

I understand the tendency of an interim to be solicited for employment.  It has happened to me on nearly every one of my engagements.  I selected interim executive services as a career for a number of reasons that in my mind make it preferable in my personal situation to employment.  This and other characteristics of how I approach an interim engagement meet the criteria of a sophisticated interim executive and my services to the organizations I serve are typically strategic and transformational.  In a future blog, I will address the topic of evolution of an interim executive engagement.

The table above shows that it is more likely than not that the interim you are considering is in a transition is either either using the interim engagement as a route to a permanent job or having nothing better to do at the moment.  This is a big problem for the engaging organization from my perspective.  If the interim is looking for the permanent job in your organization, they will not be objective and independent.  Every decision they make will be weighted on the scale of the degree to which engaging in a potentially difficult situation will affect their candidacy as a permanent employee.  If this is not the case, they could be using you as a safe harbor while they continue their search for a ‘real’ job.  Most of these types of interims are too dim to realize that no job is ‘permanent.’  The primary difference between an interim and and an employee is how they are paid.  Not only that, I consider it theft to be working on anything other Thant the engagement when I am on my client’s clock.  It is the mindset that goes along with the interim service that determines how much value an organization gets from the interim’s service.

To get the best from an interim, they should fall into the sophisticated category.  I uniformly recommend that organizations do not put their interims into their searches.  If an interim is interested in the job, they should compete for the job on the same basis and with the same handicaps as all other applicants.  They should not be trying to leverage their role to gain an advantage in a search.   I advise my clients that putting an employee into an interim role then ‘running’ them for the permanent job also results in sub-optimization of the role and its potential to benefit the organization.  In my opinion, an interim executive that is also a candidate for the position they are filling is conflicted by definition.  I would not take advantage of interim service as a means to get a job and I will not tolerate it if I am a decision maker on an interim assignment.  I do not think that is fair or honorable to the client, especially if the client is unsophisticated and not likely to recognize the conflict.

It is not hard to assess the level of sophistication of an interim.  Look at their track record and ask questions that are designed to gain insight into their personal plans and aspirations.  It should be easy to figure out how sophisticated your interim prospect is.  Similarly, if you are a true interim executive, make sure your client is sophisticated enough to use your services effectively.  If all they are looking for is a warm body to keep a chair occupied, you run a risk of being frustrated with your inability to address obvious problems in an organization.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two you would find value in.  I can also help with career transitions or career planning.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision maker with experience engaging interim executives in healthcare.