Australian employers are now engaging interim executives more tactically and for longer contracts, with team engagements predicted to soon replace management consultants for some purposes.
Shortlist asked four specialist recruiters to share their views on current supply and demand, as well as the opportunities and challenges in the interim search market.
Where is current demand?
Omera Interim Management partner Danny Hodgson: In the past 12 months there's been a bit of an acceleration, and that's more from candidates starting to market themselves as interim executives. We've also seen a growth in people electing to work only as interim executives, and are setting up their own companies to market themselves as such.
Watermark Search International interim management partner Caroline McAuliffe: We see demand for CEO general management – very experienced C-suite executives who have broad industry but also functional expertise. CFOs are always in demand, as well as program directors from any function. Program directors have traditionally been in IT and technology, but change and transformation are covering every function of an organisation. IT and digital specialisations are busy across the board, as disruption extends to whole business models and products and services.
HR and organisational development is another area of demand, as organisations are looking at their workforce structures and post-industrial hierarchies are dismantling, and we're moving towards an ecosystem of workers and activity-based work.
Odgers Interim managing partner Adam Kyriacou: Successful placements have increased anywhere between 15–30% year-on-year, depending on the sector, although it is tricky to say whether that's due to the market, or the maturation of our business.
Where are the skills gaps?
McAuliffe: Health and human services sectors are generally areas of high demand, especially with the NDIS coming into play. Any organisation that has a human services, disability or aged care business now has to think more broadly around consumer-directed healthcare (which is new to Australia) and will need to be looking overseas for talent.
Kyriacou: Some project demand has enabled clients to bring in expertise from overseas, especially the UK and Canada, particularly for rail and infrastructure projects. In terms of the candidate supply, I think Australia is an incredibly underutilised country for interim. There are many fantastic candidates who could be great interims; the challenge that we have is getting the message out that they can do a great job as an interim.
Partners at the large professional consultancy firms are forced to retire between 55 and 65 years of age, which is the perfect interim market, and they are underutilised.
Interim Executive Search managing director Phil Tuck: There is a change towards more engagement of interim candidates as what I call 'special project directors', as opposed to just filling gaps in executive leadership teams.
Interim skillsets most in demand include those for driving growth initiatives (new products, markets, channels or geographies); project managing an acquisition strategy; improving customer engagement or operational efficiencies; mentoring and coaching high-performing talent; and leading change and transformation.
McAuliffe: Rates have held up. Executive interim pay ranges are somewhere between $1,000–2,000 per day. According to our recent salary survey, about 40% of interims in the market are commanding between $1,000–1,500 per day. About 20% of placements are at the upper range of $1,500–2,000, and there are very few below $1,000.
Kyriacou: Pay rates are stagnant, mostly somewhere between $1,500–2,500.
Hodgson: Day rates have largely stayed the same. Most candidates keep a range between $1,500–1,800 per day in mind, and what they seek depends on factors such as the reputational risk they perceive by entering a certain sector or role, or how long the contract is, for example.
Tuck: As the current wage growth climate remains stagnant, the effect on the interim executive market has meant relatively stable daily rates. Some organisations will also consider incorporating a performance fee to align the remuneration for their interim with their existing C-suite executive performance incentives.
Challenges and opportunities
McAuliffe: We've moved from what were three-month assignments for 'caretaker' roles – while an organisation goes through a permanent search mandate – to a longer-term deployment of executives into interim roles of six, nine, 12, even 18 months, because change and transformation doesn't happen overnight.
Tuck: Sometimes clients can take too long to make the decision to engage the interim, who often will have more than one opportunity in front of them. The client can miss out if they don't act in a timely manner. There needs to be a sense of urgency and interest on both sides.
Kyriacou: The big psychological issue in the Australian market is too many clients still operate on the assumption their professional consultancy can help them. In many instances they can, but they do need to stop and think about what they do need from an interim. If it's a leadership issue, then that's for an interim role – it's not for consultancy.
McAuliffe: With the rise of the 'portfolio professional', my prediction is we'll move from single interim placements to teams of interim executives, and that will take the place of traditional management consulting.
Hodgson: Historically, the biggest users of interims in Australia have been medium-sized enterprises, and government organisations looking to bring in private-sector skills. But I've certainly seen in the past 12 months more of the ASX 100 starting to use interims tactically, in the same way they do in Europe. Previously, they might have just seconded somebody internationally or used a management consultancy.
Tuck: Many organisations over recent years have reduced the number of direct reports to their CEO, and their core leadership teams have shrunk by one or two people accordingly, leading to some combined roles. These trends indicate companies do need to support and supplement their leadership with interim executives.