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 When sector fixation can be misguided
By Chris Sammes ACA
Are you fixated on sector expertise when hiring senior management? Do you believe that only permanent executives can be truly aligned to the business, using the incentivisation of equity to achieve it? Are you unsure that interim executives can be relied upon to see an assignment through to the end? Any one of these lines of thinking could be costing your investment more than it should. Chris Sammes, a serial interim executive with more than 20 years’ experience under his belt, explains why.
As a private equity investor you would be right to think that extensive sector expertise has to be a pre-requisite for particular key hires, such as in marketing, sales or technical. But not all hires require that level of sector knowledge. On many occasions in my career I have been hired for critical assignments specifically for my skillset and track record, despite my lack of previous sector experience. Indeed, once an assignment has started the goalposts can move and the initial focus on sector issues and experience diminishes as it emerges that the critical tasks are those which are in fact common to all business sectors.
Where major change is urgently required, or additional expertise is needed to undertake a critical project, the experienced interim CFO or CEO, for example, will deliver a change programme or project just as quickly and effectively because they have delivered a similar result several times in their career already.
Can interim executives be truly aligned?
Experienced interim executives used to operating at board level are fully aligned to the businesses they work for. We know that we are only as good as our last assignment; we simply cannot afford to fail. Unlike a permanent employee, who may take months to settle in, we want to demonstrate our contribution from day one and because we are often over qualified for the role we can quite literally hit the road running. Plus, there’s an end game: the assignment has a clear set of objectives and once these have been achieved the assignment will come to an end. If a financial incentive is considered important to ensure alignment, a success fee can always be incorporated or it can even become the principal basis of remuneration. And whether the assignment takes weeks, months or even years we will want to see it through to the very end.
Rapid results in a tough economic climate
If you are seeking rapid results in this difficult economic climate employing a highly qualified and totally flexible executive with a track record of achievement across many sectors will be safer than enduring the risk and delay of a tightly defined permanent hire that may end up a costly choice should they not be able to achieve your objectives. Many interim executives have a very strong track record of success having already helped many companies through several bumpy markets and crises, including the recessions of 1991-1994 and 2001-2004.
And whilst we will operate as a full member of the management team, we carry no political or career agendas. We can therefore retain the independence which enables us to be totally objective and ask the questions the permanent team member might not seek to ask. And the more diverse our sector experience is the more likely it is that we can use that broader experience to see the wood from the trees when the current management have been unable to find the right solution.
One of the most pressing tasks for management in this recession is to carry out a fundamental review of every aspect of its operations so that the business can be realigned to maximise cash generation, whether to pay off debt or release funds for investment. But this vital task hits management at a time when it is already overstretched. An experienced interim CFO does not require extensive industry experience to assist management with this task, indeed it is more likely that their skills and experience honed across several industry sectors will ensure that the review leaves no stone unturned.
PILOTpartners comment
Chris Sammes is an interim executive who has acted as CFO, Project Manager and CEO across a wide range of industry sectors for private, public and private equity backed companies. Invariably he has been recruited for his overall management expertise rather than his sector knowledge.
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