The Newest Breed of Temp May Run Entire Company : Employment: Short-term executives’ tasks range from helping start-ups that want to mature to shutting down divisions that are losing money.
Ken Ross’ reign as chief executive lasted only nine months. But that was three months longer than he expected.
After selling off his software company nearly three years ago, Ross began a career as a temporary executive. This week, the 47-year-old executive completed his third temporary assignment as head of a high-tech start-up firm in Fremont, Calif.
Ross is among a growing number of temporary top managers often referred to as interim executives. Unlike the typical office “temp,” who fills in for a vacationing secretary or clerk, an interim executive arrives to run a department or an entire company at a monthly salary that can reach $40,000.
Budget-conscious companies eager to hold the line on personnel costs have been more willing to deal with temporary executives, many of whom have been laid off in recent waves of corporate mergers and shake-ups.
But the supply of potential temps far outstrips demand, and working on a temporary basis is something many status-conscious executives would rather not talk about.
“It’s kind of a sensitive issue,” said Lynn Taylor, a spokeswoman for Robert Haft International, which places temporary top management through its Executive Corner division. Executives are “not interested in the notoriety of being a temp. They don’t want it known.”
Still, the pool of available temporary executives has never been greater, thanks to corporate mergers, takeovers and reorganizations that resulted in the layoffs of large numbers of top- and mid-level managers in the 1980s.
“With all the downsizing and restructuring of companies, the availability of senior executives” has increased, said John Thompson, president of New York-based Interim Management Corp., or IMCOR. “We got all kinds of people from RJR Nabisco. (Kohlberg Kravis Roberts & Co. took over the company in a leveraged buyout in 1989.) We let human resource people know we are an alternative” when their companies lay off executives.
Victims of shake-ups at large corporations, many temporary executives have landed assignments at start-ups that have just gotten off the ground or are maturing into established concerns. Client firms have also signed up temporary executives to set up offices in new territories or manage closures of divisions.
Temporary management “seems to apply best in any organization that is experiencing change,” said Steve Pickford, president of Corporate Staff, a San Francisco-based pioneer in the temporary management field.
There was plenty of change at the 80-store Merksamer Jewelry chain at the end of 1989. The Sacramento-based firm was going through a leveraged buyout and company President Sam Merksamer needed a chief financial officer who could help deal with the situation.
“Most jewelry CFOs understand jewelry companies, but they don’t understand the complexity of an LBO,” said Merksamer, who hired a temporary financial chief through IMCOR for four months beginning in December, 1989. Meanwhile, Merksamer found a permanent chief financial officer with experience in the jewelry business.
A temporary executive costs more than a permanent worker on a monthly basis, said Merksamer. But “when you take into account what it would cost to hire someone and then terminate (him) and then give (him) severance, it is still a savings.” The firms also do not pay medical or retirement benefits.
Unlike consultants, who also work on a project on a temporary or advisory basis, temporary executives often take charge and become part of line management--hiring, firing, formulating and implementing strategy.
Despite their power, temporary managers often try to downplay the fact that they are indeed temporary. In fact, many avoid the word temporary altogether in favor of interim.
“I shouldn’t use the word temporary, “ Thompson said after accidentally using the word in a conversation.
Ross says he feels very little stigma about being a temporary executive. Nonetheless, he does not make his status public to everybody. “It’s best left unsaid,” he said. “You might lose some credibility. For more casual contact, I would tend not to (identify myself).”
Those interested in the life of temporary executives will face plenty of competition for a few openings. “The pool of talent does outstrip demand by quite a bit,” said Taylor of Robert Haft International, whose Executive Corner agency has a file of 2,000 executives but only 60 openings in the San Francisco area.
Of the 4,000 executives a year who send their resumes to IMCOR, about 40% are rejected, and only a few of those selected were matched to the 60 to 70 assignments the firm filled during 1990.
“It takes a great deal of effort on our part to sift the chaff from the wheat,” said Michael J. Hagerthy, who heads IMCOR’s West Coast office, which has placed 15 executives in Southern California since it opened a year ago. “A large percentage never get a call.”
Those who do are screened and matched to meet some highly detailed requirements. In one case, Hagerthy was called upon to find a general manager with experience running a brick factory in the Southwest with $25 million in annual sales. IMCOR found three candidates. However, the client promoted one of its employees to fill the spot.
Many temporary assignments become proving grounds for executives who are eventually hired permanently. That happens in about 40% of cases at IMCOR.
“It’s like a trial marriage,” said Bob Adams, head of Xerox Technology Ventures, who has dealt with two temporary executives, including Ross. “We get to look each other over, day in and day out.”
Ross, however, has decided to end his tour of duty as a temporary executive. He has agreed to take a permanent job as chief executive of a Bay Area software house.
“Having the flexibility and variety is nice,” said Ross. “But I actually felt the urge to get more involved.”
INTERIM EXECUTIVES A profile of a typical temporary executive from Interim Management Corp.:
Average age: 51
Monthly salary: $10,000
Monthly agency fee: $5,000
Years in management: 20 Length of stay: 3 to 9 months
Industry background: 30% from heavy manufacturing and financial services; 33% from consumer good, computers and light manufacturing
Experience: 31% were chief executive officers and chief operations officers SOURCE: Interim Management Corp.
