If it seems that executive turnover is on the rise, you're right. Recent examples include United Airlines, Dupont, and Twitter. (With respect to the latter, interim CEO Jack Dorsey officially returned as full-time CEO late last year.) In many cases and for all sorts of different reasons, boards of directors appoint interim CEOs.
I was curious about what interim CEOs actually do. To this end, I recently sat down with Richard Lindenmuth, author of The Outside the Box Executive. He's been an interim CEO in a number of industries and serves as the Chairman of the Association of Interim Executives.
PS: What are some the basic functions on an interim CEO?
RL: It's critical to hit the ground walking, no matter where.
In his book In Search of Excellence, Tom Peters coined the phrase "management by walking around." Whatever company we join as an interim, we immediately start learning how it functions on all levels. No time to warm that nice office chair: we get out there and make our presence known. We walk around, learn the daily flow, meet employees and listen to what they have to say. This type of fact-finding is critical to forming personal impressions, and can lead to successful problem solving. For example, when I was looking at Styrotek's manufacturing challenges, the solution came from spending time out on the floor. Robinson-Nugent's shipping glitch was solved after joining the shipping team for a day.
PS: Are interim fixers just "fixers" à la Michael Clayton?
RL: Yes, but they are also there to manage change. We may not have the specific domain experience, but our experience is applicable across the board. We interim CEOs count on the people making the toasters (or telephones) to know about successful toaster manufacturing.
In other words, we're there because we know how to make a company successful. That encompasses critical skills accumulated over years such as financial savvy and manufacturing experience. The domain of the interim CEO is focused on business growth, corporate improvement, restructuring, and acquisition integration. We deal with Wall Street, ERP installations, and new strategies and objectives. Not toasters.
PS: Should interim CEOs make short- or long-term decisions?
RL: Regardless of the length of the appointment, the interim CEO must make the same (or more extreme) strategic decisions as a long-term leader. We're there to take action, not write a nice report. We have to leave things in far better shape than we found it.
There's nothing passive about being an interim CEO, and there's no such thing as an interim action or decision. We're solving problems that have already hit a critical stage, and everything we do has long-term consequences. Styrotek's nonstop manufacturing schedule during grape season meant that any breaks for maintenance or repairs were devastating to its bottom line. Production couldn't slow to train new hires either. I shifted to a 365-day schedule at a lower rate of production with scheduled maintenance and training programs. Over the long term, the move increased productivity, improved quality, and reduced costs by 20 percent.
PS: Any other tips for aspiring interim CEOs?
RL: Always bring your A-game.
Interim CEOs are sharp, seasoned executives focused on speed and execution. There's no sleeping on this job. We're not just climbing out of a sales slump, we're tackling issues of cash flow, payroll, and bank credit that can put a company out of business. At the Association of interim Executives, applicants have three successful documented interim stints before joining; the industry standard is high. But members have accomplished major corporate turnarounds that save investors millions, spearheaded acquisitions in the billions, launched new divisions, and steered hemorrhaging operations back into black.
These are anything but seat warmers. They're more like superheroes.