The Advent of the Temporary Executive
By Chris Lacoranta
Four Dynamics that will Change the Way You Hire Your Next Executive
Organizations have always needed strong, effective leadership. It is especially true at the top of the organization. The war for top talent has been raging on for years with mixed results.
Experts calculate that CEO failures alone cost the U.S. economy more than $13 billion annually and can wipe out market capitalization that took decades to build.
We have now arrived at a point that even the best succession, recruitment and development of internal talent will not be enough to bridge the future gaps for top executive talent.
A wide array of market forces and demographics are forcing a dramatic shift in the skills profile, deployment and available supply of the new breed of talent needed in the next business cycle.
The interim executive management industry in particular seems poised to capitalize on this wave of new business challenges.
The Race for Growth- The Too Big to Fail Phenomenon
With now more than four decades of massive corporate expansions, mergers and outsourcing strategies, the footprint of even the average middle market company can now span the globe. Wal-Mart, the poster child of rapid growth, posted 2012 revenues of more than $469 billion, and 10,000 store locations in 27 countries with a staggering 2.2 million employees.
A CNNMoney.com piece in October 2010 by Peter Elkind entitled, "Ex-Citigroup Chief says Bankers Behaving Wildly", interviewed John Reed, the ousted CEO of CitiGroup and one of the principal architects of the merger between CitiGroup and Travelers.
Reed commented that looking back now he called the merger, "a mistake as the combined businesses may have been too complex for anyone to manage".
The sheer size and scope of these baby boomer breed organizations present extreme challenges for the succession of future management teams especially in down business cycles.
Execution- The New Imperative
Companies spend more than $2 trillion on acquisitions each year. Yet study after study puts the failure rate of mergers & acquisitions between 70-90%.
The number of mid market deals in the U.S. valued between $100 million and $500 million jumped dramatically since 2009.
Amidst a myriad of factors, insufficient management resources, and poor execution of integration work routinely make the list of top causes of these failures.
The spectacular failures of AOL - Time Warner ($164B), and Daimler Benz ($37B), continue to highlight just how costly it can get. For a mid market company it can be deadly.
Outside the M&A arena executive leaders cite insufficient, unskilled talent, and execution errors as most consistent reasons planned business objectives are not achieved. Lack of knowledge and skill routinely make the top of the list.
The execution factor takes on a special and more costly meaning when companies secure expensive consulting firms to help define a road map to success only to watch the whole process become a failed program due to lack of internal ownership and ability to execute.
Who among us have not gazed with disdain at the attractive illustrations on the conference room walls of past improvement programs that flopped!
Great Leaders Wrong for the Time
Seeding executive talent for top posts has always been risky business. High profile CEO failures such as Bob Nardelli's ($210million), and Hank McKinnell of Pfizer ($123million) have continued to demonstrate that recruitment at even these levels is still more art than science.
Even company "lifers" like GM's Rick Waggoner who had vast organizational intelligence, industry experience, and years of grooming demonstrates that there are no guarantees that executives will be effective at top posts as businesses and cycles are in constant change.
GM desperately needed new thinking and a leader with enough charisma to make wrenching changes in order to be competitive in the new global business normal.
GM needed an IBM style turnaround. Lou Gesner and a team of skilled turnaround executives took the reins of one of the most entrenched cultures on the planet. After much pain and effort, this interim approach saved IBM and its shareholders from catastrophic losses.
The Talent Supply Gap
According to the National Association of Corporate Directors and The Center for Board Leadership, approximately half the boards of public, private and nonprofit organizations have stated that their efforts to make sure there is effective management to take over for current executive teams is not complete or is lacking. A full one quarter of the group felt the efforts were non-existent.
Making matters worse, a study by Boston College Center for Aging and Work, noted that 60 percent of HR respondents to this study believed that the retirement of the Boomers is causing a skills gap at their companies, while 40% stated that management skills would be the area that has the shortest supply of applicable workers to fill the open positions.
What is particularly alarming is that studies suggest the vast majority of corporate leadership, 93% overall, is made up of Baby Boomer Generation.
A final dynamic effecting today's challenges is the advent of white collar layoffs that began in the 1980's. This short term headcount reduction strategy along with the consistent under investment of training and development of future leaders has effectively hollowed out the middle management ranks that would be the next generation of executive talent.
The Interim Executive Industry Poised for Growth in the U.S.
Interim management had its birth in Europe over two decades ago in an effort to counteract restrictive labor and HR laws and practices. The industry, now estimated to be over $4 billion in Europe, has continued to grow in acceptance affording companies the temporary use of high caliber leadership talent.
Now gaining acceptance in the U.S., the value proposition of closely matched executive skill to events, increasing execution levels, reducing risk, filling skill voids, and flexing talent as needed seem to provide a vital tool for the multi-faceted challenges now facing the American business landscape.
Organizations have always needed strong, effective leadership. It is especially true at the top of the organization. The war for top talent has been raging on for years with mixed results.
Experts calculate that CEO failures alone cost the U.S. economy more than $13 billion annually and can wipe out market capitalization that took decades to build.
We have now arrived at a point that even the best succession, recruitment and development of internal talent will not be enough to bridge the future gaps for top executive talent.
A wide array of market forces and demographics are forcing a dramatic shift in the skills profile, deployment and available supply of the new breed of talent needed in the next business cycle.
The interim executive management industry in particular seems poised to capitalize on this wave of new business challenges.
The Race for Growth- The Too Big to Fail Phenomenon
With now more than four decades of massive corporate expansions, mergers and outsourcing strategies, the footprint of even the average middle market company can now span the globe. Wal-Mart, the poster child of rapid growth, posted 2012 revenues of more than $469 billion, and 10,000 store locations in 27 countries with a staggering 2.2 million employees.
A CNNMoney.com piece in October 2010 by Peter Elkind entitled, "Ex-Citigroup Chief says Bankers Behaving Wildly", interviewed John Reed, the ousted CEO of CitiGroup and one of the principal architects of the merger between CitiGroup and Travelers.
Reed commented that looking back now he called the merger, "a mistake as the combined businesses may have been too complex for anyone to manage".
The sheer size and scope of these baby boomer breed organizations present extreme challenges for the succession of future management teams especially in down business cycles.
Execution- The New Imperative
Companies spend more than $2 trillion on acquisitions each year. Yet study after study puts the failure rate of mergers & acquisitions between 70-90%.
The number of mid market deals in the U.S. valued between $100 million and $500 million jumped dramatically since 2009.
Amidst a myriad of factors, insufficient management resources, and poor execution of integration work routinely make the list of top causes of these failures.
The spectacular failures of AOL - Time Warner ($164B), and Daimler Benz ($37B), continue to highlight just how costly it can get. For a mid market company it can be deadly.
Outside the M&A arena executive leaders cite insufficient, unskilled talent, and execution errors as most consistent reasons planned business objectives are not achieved. Lack of knowledge and skill routinely make the top of the list.
The execution factor takes on a special and more costly meaning when companies secure expensive consulting firms to help define a road map to success only to watch the whole process become a failed program due to lack of internal ownership and ability to execute.
Who among us have not gazed with disdain at the attractive illustrations on the conference room walls of past improvement programs that flopped!
Great Leaders Wrong for the Time
Seeding executive talent for top posts has always been risky business. High profile CEO failures such as Bob Nardelli's ($210million), and Hank McKinnell of Pfizer ($123million) have continued to demonstrate that recruitment at even these levels is still more art than science.
Even company "lifers" like GM's Rick Waggoner who had vast organizational intelligence, industry experience, and years of grooming demonstrates that there are no guarantees that executives will be effective at top posts as businesses and cycles are in constant change.
GM desperately needed new thinking and a leader with enough charisma to make wrenching changes in order to be competitive in the new global business normal.
GM needed an IBM style turnaround. Lou Gesner and a team of skilled turnaround executives took the reins of one of the most entrenched cultures on the planet. After much pain and effort, this interim approach saved IBM and its shareholders from catastrophic losses.
The Talent Supply Gap
According to the National Association of Corporate Directors and The Center for Board Leadership, approximately half the boards of public, private and nonprofit organizations have stated that their efforts to make sure there is effective management to take over for current executive teams is not complete or is lacking. A full one quarter of the group felt the efforts were non-existent.
Making matters worse, a study by Boston College Center for Aging and Work, noted that 60 percent of HR respondents to this study believed that the retirement of the Boomers is causing a skills gap at their companies, while 40% stated that management skills would be the area that has the shortest supply of applicable workers to fill the open positions.
What is particularly alarming is that studies suggest the vast majority of corporate leadership, 93% overall, is made up of Baby Boomer Generation.
A final dynamic effecting today's challenges is the advent of white collar layoffs that began in the 1980's. This short term headcount reduction strategy along with the consistent under investment of training and development of future leaders has effectively hollowed out the middle management ranks that would be the next generation of executive talent.
The Interim Executive Industry Poised for Growth in the U.S.
Interim management had its birth in Europe over two decades ago in an effort to counteract restrictive labor and HR laws and practices. The industry, now estimated to be over $4 billion in Europe, has continued to grow in acceptance affording companies the temporary use of high caliber leadership talent.
Now gaining acceptance in the U.S., the value proposition of closely matched executive skill to events, increasing execution levels, reducing risk, filling skill voids, and flexing talent as needed seem to provide a vital tool for the multi-faceted challenges now facing the American business landscape.
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