Traditionally, interim providers are judged on their ability to provide the right interim executive for a given situation. Customer service levels, personal relationships, pricing and so on all play a part, but ultimately the key metric is whether they deliver the right people.
Of course finding the right interim manager is vital – and I don’t mean to devalue this part of the process – but it’s not the whole story. Instead, should we not be measuring the business value of the outcomes delivered? And if so, should we, as the interim provider, not be measured in the same way?
Transforming the model would unlock the true potential of the interim market
In the majority of situations, the value of an interim executive to a business can be measured as a return on investment. The financial cost of an interim is transparent and easy to calculate.
Typically, Interims are brought in to deliver major change and transformation programmes. This can come in many shapes and sizes, and the business case should provide the tangible financial benefits that will be achieved as a result. If we can attribute financial value to the outcomes on an Interim’s work, we can measure this against their cost to calculate the return.
At NSCG, we have developed ROI (Return on Interim). The concept and the technology that support it take the first step in transforming the model. Rather than focusing purely on identifying the right interim executives for our clients, we also measure the outcomes delivered, meaning the client can measure the return and be sure that they are spending wisely.
We work with our clients to understand what good looks like for each interim assignment. We then benchmark what great looks like and consider the difference between good and great in terms of tangible value to the business.
The key objectives are broken down into specific time-bound milestones, each with a weighted importance. Our ROI system then enables the client and interim manager to quickly and easily monitor performance against target over the course of the assignment.
Could we take this further so that everyone has skin in the game? Should we, as interim providers, develop a business and a pricing model that deliver more value to all stakeholders?
Bonuses for permanent executives are commonplace as an incentive to drive results. Should we build an equivalent Interim model that ensures all parties benefit when outstanding results are achieved?
How it can work
To give a real life example, I previously supplied a team of interims for a Fortune 100 company that was embarking on a five year global transformation programme. A key requirement was to ensure continuity of resource. The client could not afford to lose leaders or managers during the programme, as they would lose critical knowledge from earlier phases. We took ownership of team bonding and ensured continuity throughout the programme.
To drive the right behaviours and ensure the success of the programme, we agreed a pricing model that incentivised us and our Interims to deliver. Our interims sacrificed a percentage of their daily rate. Then, each stage gate approval came with a bonus (paying out more than the original rate reduction). Finally, when the transformation completed successfully, the client paid out a significant sum to us as the provider, as well as our interims. Risk shared, reward shared.
Why this model worked
The total cost to the client came in at 40% less than the management consultancy alternative. It also meant our client had flexibility of cost in that they only paid a premium if we (both the interim and the interim provider) were successful. The model ensured the client and the interims were all focused on one goal – delivering the necessary outcomes to achieve value for the business. It drove us to work collaboratively and continuously with our client and interims to ensure continuity. It incentivised our interims to work harder and deliver better.
Is it time to look at an outcome and value based model rather than one simply based on a number of days? Does this move us into the world of consulting? Are there just too many variables client side to warrant the risk of rate and margin erosion for interim and interim provider alike?
I believe ROI is a critical step in the development of outcome based models for interims and interim providers. Could it help transform an industry that has not changed much in the last 10–20 years? I think so, and I’d love to hear your thoughts.