Interims suffer a fall in demand

In recent years, interim management has found itself preaching largely to the converted. The number of inquiries to the Interim Management Association (IMA) from banking, finance and insurance fell by 3% for the fourth quarter of 2001, although there were significant rises in other sectors.

Nevertheless, Ian Daniell, IMA's chairman and managing director of the interim management firm Executive Support Group, says: 'interim management works extremely well in the financial services sector, especially at this time when there is a lot of transition and change.'

In theory, it makes perfect sense to use interims at a time when costs are under scrutiny. Anne Rowan, recently appointed director of client services at the interim management firm Praxis, who joined the firm after a career in investment banking, says: 'Cost is a very important consideration (in financial services) at the moment. interim management is a fantastic tool if used properly in a short, sharp way.'

At Impact Executives, which does some 25% of its business in financial services, managing director Christine de Largy says: 'Investment banks make a profit by refining and paring costs. Many have been using interim management in the back office.' She adds: 'What a client is buying [from an interim management] is the expertise skill that is not necessarily available in-house.'

Praxis does 70% of its work in project-based interim management, where Rowan suggests that many institutions are creating 'artificial projects' because of hiring freezes.

But other providers indicate that interims are not being widely used, even in this sense. Torrie Smith, who heads PricewaterhouseCoopers Interim, says: 'We haven't seen much demand in recent months. The financial services community are not making up the shortfall, even where they have let people go - they're using what they've got left.'

PwC Interim, like many other interim providers, sees most of the demand from investment banks coming from the back office. Roles in IT, finance and operations, and the HR department constitute most of the vacancies. Interim providers are hopeful that investment banks are increasingly finding HR a popular area in which to use interims. When Goldman Sachs made a substantial number of HR staff redundant last year, some of them found themselves working in HR roles on an interim basis elsewhere.

Penna Interim, part of the Penna Group of headhunting and career management specialists, is able to provide good examples of specific and varied interim management assignments within financial institutions. When a US investment bank had a permanent role within operations outstanding for over a year and could not find anyone of the right background to fill it, Penna provided an interim. His job entailed covering for six months, making the role more attractive in the marketplace, bringing in a permanent replacement, and successfully managing his own exit.

Penna also helped a financial services company that ran into problems with sorting out continuing pay obligations to employees under the UK's Transfer of Undertakings Protection of Employment law (Tupe) at the final stage of an acquisition process. An HR director was provided to run a three-week period of negotiation and settlement that enabled the acquisition to proceed.

Raj Tulsiani, head of Penna's City interim operations in London, says: 'The bulk of the use of interim managements in financial services is in HR or compliance projects specific to the FSA's N2 legislation.'

He points out that Penna generates its interim managers by networking, as well as using those who choose to register with it. 'We try to find interim managements in between their private clients, and manage their downtime.'

interim management providers have seen a notable increase in the number of individuals interested in going into interim management. 'Senior people being made redundant are keeping their skills updated and looking at becoming interims,' says Tulsiani.

Smith at PricewaterhouseCoopers says: 'Many more people in mid-career are looking at interim management. In uncertain markets, two or three years of doing interim management assignments can give you very good experience.'

Because the interim manager is sold to the client as 'over-qualified' for the job in question, until now a relatively small proportion of them have taken up permanent places when offered them. But that could be changing.

Calibre One provides interim managements to FTSE 250 companies, VCs and start-ups. Managing director Chris Hindle says: 'VCs are beginning to use interims to come in and 'turn around' companies. They're on a short-to-medium-term contract of six months to one year, and then later they may become permanent. It's more of a trial period than a traditional interim role.'He says there are so many good people out there right now that the VCs find they can take their pick, whereas a few years ago they faced intricate discussions about equity in the business.

It begins to sound as if soon there may be more interim managers in the financial services marketplace than there are jobs for them.