What is an Interim CEO?
An interim CEO is someone who leads a company on a temporary basis during a time of instability.
The interim is hired to provide stability and direction during the transition.
As the most important role in just about any organization, this is a seat that can’t afford to be left open. An experienced, talented individual will be able to come in and have an impact from day one while a long-term solution is identified.
“Every company needs a strong leader – someone to steer the ship and tie all of the business functions together,” says Hannah Welsh, Independent Consultant Manager at BluWave. “Having an Interim CEO alleviates pressure and allows a company to be selective in choosing the right CEO for the company long term.”
Let’s talk in more detail about when and why a company might hire a temporary chief executive, and the benefits of doing so.
CASE STUDY: On Short Notice, Interim CEO Turns Around Construction PortCo
Why Hire an Interim CEO?
There are many reasons why a company might hire an interim CEO. They depend on company size, industry, current challenges, future goals and more.
Whatever the situation, though, this temporary executive’s goal is to be the glue that keeps everything together.
- Unexpected resignation: In this situation, an interim is used as a “stopgap.” The company gets them in the seat as soon as possible – usually within days – while it figures out a long-term solution.
- Fill a short-term gap: On rare occasions, the full-time CEO will take a leave of absence for an emergency or for personal reasons.
- Turnaround: If a company is struggling financially or operationally, an interim CEO can be brought in to help turn the company around. This often happens when PE firms aren’t satisfied with a portco’s performance, or when key stakeholders or shareholders don’t like the way their private or publicly owned company is performing.
- Merger or acquisition: If a company is merging with or acquiring another company, it helps to have someone in charge who has been through that process before.
- Post-close: There are times when a PE firm purchases a founder-owned business and needs a new executive in the corner office once papers are signed and the company has changed hands.
These are some of the more common situations in which an interim CEO is sought.
“You can bring in someone who has been there and done that multiple times before and knows what best-in-class looks like,” BluWave Co-Head of Research & Operations Scott Bellinger says. “You can rent an A player instead of hiring a C player.”
Interim CEO on Standby
Sometimes private equity firms aren’t sure if they’re going to need an interim CEO, but they want to have one on standby just in case.
Perhaps the current CEO is running out of steam, or has come up against an unfamiliar situation. Despite their best efforts, they may get tired of the slog and leave the seat vacant on short notice. Or you may have to make the difficult decision to pull the plug to before things get worse.
In this situation, it’s nice to know you an interim CEO on standby who can step in on extremely short notice. Welsh and the R&O team at BluWave are prepared for this exact situation.
If you’re not sure whether you’ll need a new temporary chief executive, but you want to have the security of knowing there’s a perfect fit waiting in the wings, contact our team to fill us in on the situation. If and when you come up against this situation, you’ll be connected with an experienced, industry-specific option in less than 24 hours.
CASE STUDY: Interim CEO Hired for Glass Manufacturing Company
Benefits of Hiring an Interim CEO
What makes a good interim CEO? There’s no one trait that can answer that question, but there are some that transcend particular situations and are applicable for almost any assignment.
Experience and Expertise
Interim CEOs typically have extensive experience in senior leadership roles. This allows them to get a lay of the land as soon as they start a project, and make difficult but important decisions accordingly.
They shouldn’t just have general executive experience, though. They must also be familiar with the organization’s particular industry, the unique challenges it presents and how to solve them.
Preexisting relationships in that industry can also go a long way to solving key operational challenges.
Objectivity and Neutrality
When things are going wrong at a company and you’re not quite sure why, it’s a huge benefit to get a fresh set of eyes on the situation.
Not only is this interim chief executive officer coming in after the challenges have already arisen – viz a viz they’re not responsible for them – they also won’t be around (in most cases) more than a year maximum.
That gives them the freedom to do what’s best for the company while injecting as little bias as possible during their tenure.
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Ability to Make Tough Decisions
That same built-in objectivity with which a temporary executive is equipped allows them to roll up their sleeves and affect change in a way that would be more difficult for someone with a stronger connection to the business.
This may mean optimizing human capital, refining product or service offerings, reevaluating partnerships or a number of many other challenging choices.
Bring Stability
No matter the impetus for bringing on a short-term CEO, employees and customers will be comforted by seeing a steady hand at the helm.
An effective communicator can be an especially calming force in these situations, providing a vision for the way forward.
How Long is an Interim CEO Assignment?
There are exceptions, but most companies that come to BluWave for help hiring an interim CEO are looking for someone who can be in the seat for around 9 months.
Many short-term CEO stints fall within the 6–18-month range, but others can just as easily turn into a permanent hire.
How To Hire an Interim CEO
Hiring the right interim CEO can be an arduous task, especially since time is of the essence. Companies can’t afford to be without a chief executive for an extended period of time.
Word-of-mouth recommendations can also be helpful, but even a group of individuals have limited networks. You might overlook a great candidate by relying on just a few people’s suggestions.
You could also look within the company, but in most cases, that’s less than ideal. You miss out on the opportunity to get an outsider’s perspective on the challenges the company is facing. That same person may also be a part of the problem, giving power to an individual who will only make things worse.
The best option is to consult with a business builders’ network of highly vetted, niche-specific, exact-fit options that are ready to hit the ground running.
When you work with BluWave, for example, we connect you with two or three candidates who are tailored to your particular situation in less than a single business day.
These are PE-grade individuals who have proven success in turnarounds and high-pressure situations. You won’t waste time scouring through generalized, unfamiliar recommendations.
“As you find yourself in an urgent situation, we can provide solutions really quickly,” Bellinger says. “A lot of times, the people we’re recommending could be the full-time CEO as well. It saves you time and money from going to an executive search firm. We’re way faster, and we get you someone with long-term potential.”
READ MORE: Interim CEO Job Description: Skills, Services
If your portco or private or public company needs an experienced interim executive to help an underperforming business, connect with our research and operations team today.
Before we even get on the initial scoping call, we already know the resource you need. We’ll get in touch with the most qualified individuals on standby in our BluWave-grade network and connect you with them as soon as you’re available.
“Our extensive network allows us to connect with PE-grade CEOs looking to support other businesses,” says Welsh, who speaks with these executives on a daily basis. “We meet, vet, and reference reputable CEOs before our clients even need them, so they are prepared to start as soon as possible.”
