Temps at the Top : County’s 1st Rent-an-Executive Firm Thinks It Has the (Interim) Answer for Companies Wanting Good Help
When Printronix Inc. announced last week that it was laying off 50 people because of a business slump, Harry C. Stevenson was handed another selling point for his nascent “interim management” business.
Printronix, an Irvine computer printer manufacturer, said that about half of the employees being laid off were mid-level managers, some hired during an 18-month boom in business that ended late this summer.
Stevenson, a former Xerox executive who is busily marketing the services of what could be described as Orange County’s first rent-an-executive firm, sees the situation at Printronix as a stellar argument for his services.
“Businesses should have permanent staff, especially at the higher-paid management levels, for the bottom of a cycle and use interim management to handle projects and tasks that are created during growth periods,” he said.
In management circles, it is a controversial philosophy that likely has more detractors than adherents right now.
Although some corporate officers and management specialists say that hiring temporary managers makes sense in some applications, many others resolutely maintain that a manager’s effectiveness is firmly rooted in long-term commitment, loyalty and a thorough understanding of the corporation’s culture.
But thousands of executives have been laid off or pushed--gently or otherwise--into retirement as a result of the flood of corporate mergers, acquisitions, consolidations and downsizings that have shaken up the U.S. business world in the past half-decade.
GTE Corp. Is an Example
A recent example is GTE Corp., which announced Nov. 10 that it was getting rid of 25% of its total office staff: 7,000 jobs, a number of them in management.
It is that sizable and growing corps of experienced but out-of-work professionals that has made the interim management business feasible, said Lyman Porter, professor of management and an organizational behavior specialist at UC Irvine’s Graduate School of Management.
“The major trend today is that business organizations are trying to maximize flexibility so they can respond rapidly to changes in their environment. Short-term hiring is flexible because you have what you need when you need it, without unlimited obligations,” Porter said.
“It is all tied up with what has happened since the early 1980s in the need for businesses to be more competitive and faster to meet change. Management is becoming more project-focused, and projects, by definition, are specialized and have limited time frames.”
Interim management, Porter said, “is an idea whose time has come.”
Temporary managers actually have been around for decades, according to management specialists. But the idea of organized central registries that handle the marketing, job hunting and contract negotiating on a formal, for-profit basis is a relatively new one.
Stevenson’s business, Arhness Coventry Inc. in Irvine, is one of just a handful of firms nationally that offer contract management personnel to businesses.
The oldest interim management firm in the country is Corporate Staff Inc. in San Francisco. It has just celebrated its fourth birthday.
Similar companies have been started in Cleveland, Chicago and New York in the last 3 years, and a few temporary employment services have added small interim management operations to test the waters.
But that’s about it as far as a formal temporary management industry goes.
“There have always been contract engineers, labor relations consultants, management information systems people and marketing specialists who work for themselves or a consulting firm on a per-assignment basis. But there were always a couple of things understood in that mode, and one of them was that the person was not a manager but an adviser,” said Gustavo Vargas, a former Uniroyal executive and now an associate professor of management at Cal State Fullerton.
Under the interim management concept, Vargas said, “the people, in addition to being advisers, are coming in and implementing policies and changes. There have been examples of this in the past, mainly turnaround specialists who come in to rescue financially troubled companies, but now we’re seeing people trying to make it more widespread--to take it into middle management.”
That is exactly what Arhness Coventry (an anagram for Harry C. Stevenson), is hoping to do.
Stevenson’s company, still in the start-up stage, so far is the only one in Southern California dealing exclusively in management personnel.
That exclusivity, however, may not last.
An area like Orange County, with its thousands of small growth companies, is
fertile ground for the interim management business, said William Crandall, the former Bechtel executive who founded Corporate Staff in San Francisco in 1984. Crandall won’t comment on his firm’s expansion plans, but Corporate Staff is known to be looking for offices to rent in Orange County.
And Bruce Clark, a co-founder of Interim Management Corp. in New York, said that his 9-month-old firm is doing so well that “we are looking for a branch” in Southern California. The company recently placed an interim manager with a West Coast company, its first job on this side of the Mississippi, Clark said.
“With all the downsizing, turnarounds, refocusing and what-all that is going on in the business community, there are things that need to be done in many companies that the current staff just can’t do,” Clark said.
Interim Management Corp., Clark said, has a primary cadre of about 500 managers and a backup group of another 300, “and we are inundated with applications all the time.”
At Corporate Staff, the corps has grown from about 300 when the company began in 1984 to what founder William Crandall refers to as a “resource base” of 1,800 people.
And Arhness Coventry, the new kid on the block, has seen its roster grow from a dozen to more than 125 in less than 6 months, even though the company has not yet made a placement.
The rosters include people who have run their own manufacturing and service businesses, and executives who have worked as chief financial officers and in various engineering, retail sales, marketing, personnel, facilities planning, export shipping and computer systems management slots.
The typical person assigned to a job by an interim management firm is 50 years old and has about 20 years of management experience.
About half are either retired or lost their jobs in corporate reorganizations, mergers or work-force reductions. A third are people who have already made a career of interim management by offering their services on the informal circuit, and who are now looking to broaden their exposure by joining a formal network. The rest are consultants who will occasionally take a temporary management assignment.
Their salaries generally are slightly higher than salaries paid to permanent, full-time managers, but they receive no costly benefits from the firms that retain them. Some of the interim firms consider the temporaries to be their own employees and provide benefits. Others, like Corporate Staff, work only as referral and negotiating services and consider the managers independent contractors who are responsible for their own insurance, vacations and taxes. In any event, the temporary management companies receive a portion of the fees charged to clients.
The reasons for seeking temporary rather than permanent management posts are as varied as the people themselves.
Some prefer the individual freedom that temporary work allows. Others are too old to easily find permanent employment in a corporate milieu that still tends to prefer youth to experience at many middle-management levels.
To a large degree, the marketing of interim management personnel--Stevenson says that “temporary” is a dirty word at the executive placement level--is little different from selling companies on the idea of using temporary clerical or production workers.
A company that hires a permanent management executive has committed not only to a salary but to health, retirement and vacation plans and often to bonuses, stock options, company cars and a plethora of additional benefits that can easily boost the direct salary cost by 50% or more. In addition, there are recruiting and training costs.
‘No Fringe Benefits’
Hiring an interim manager with equal or greater skills, Stevenson says, involves only a direct salary. “No fringe benefits, no recruitment costs and no termination disputes or severance packages when the interim manager’s usefulness ends. When the contract period runs out, that’s it.”
The big difference between selling temporary clerical help and selling the temporary management concept is in the willingness of a corporation to entrust management responsibility to a contract player.
At many companies, the idea of a temporary manager is distasteful.
Tektronix, a Beaverton, Ore., computer parts maker, long has used temporary production workers and has found them to be an efficient and economical way to manage manpower needs.
But a spokesman said the company would not be likely to hire managers on anything but a permanent basis.
Tektronix has been cutting its work force for several months because of flattening business and has reduced its layers of management “because we have too many,” the spokesman said.
When business starts picking up, however, the position at Tektronix is that “we see a need for continuity, for an understanding of the corporate culture by our management personnel,” he said. “I think we would use outside suppliers and marketing and public relations firms to help us out in a boom. . . . We’d be more inclined to contract out a particular design than to bring in a temporary manager to run an in-house project.”
At Printronix, however, President Robert A. Kleist said the company has been using temporary managers for a number of years.
“We call them consultants,” he said, “because we get them from a consulting firm after it comes in and studies a problem area and tells us what we need to do. Sometimes it can take 4 to 6 months to find the right person to hire permanently for a management slot, so the consulting firm provides a temporary person. Right now, both our materials manager and our purchasing manager are temporary people.”
Kleist said he wasn’t aware of companies like Stevenson’s. But because Printronix “has had good experience” with temporary managers, he said, “I guess I’m endorsing the validity of the idea.”
The Same Arguments
Stevenson and others pushing the interim management concept are well aware of concerns like those voiced by Vargas and the Tektronix official--they run into the same arguments on a daily basis as they try to sell their services.
“But I try to explain to them that interim management isn’t a way to avoid permanent hiring,” Stevenson said. “Instead, it is a way of augmenting it. You don’t make your top managers and policy-makers interim people, but you hire interim managers to provide skills that are lacking until those skills aren’t needed anymore.”
Crandall said that the typical Corporate Staff assignment is “like our name: corporate staff functions, support work, human resources, financial management, marketing, public relations, computer systems and procurement. I don’t think we work, or try to work, as an alternative when there is a a real need for a permanent person.”
But temporaries don’t lose their competitive edge or their skills just because they are temporary, Crandall argues. “The people that do this work recognize that they won’t be successful unless the client is happy.”
