Is it worth investing in an interim CEO?
Interim CEO posts can be a high-impact and effective use of resources for charities of all sizes, but the opportunities are sometimes resisted due to the higher costs of skilled interim leaders.
This may come from a somewhat biased viewpoint, being an interim CEO myself, but I have seen first-hand, time and again, how an interim role can help to transform an organisation, enabling change to take place faster, more effectively and more positively in the long run.
Here are just a few examples of times when an interim management post can really help a charity out.
During a crisis
If your charity is facing a major crisis, you may also have had issues with your existing or previous leadership. This may be because of structural problems, such as joint leadership (which rarely works), the failure to have a CEO at all when you needed one, or because of the inability of your lead staff member to handle the situation effectively.
An interim CEO should be good at getting across the key issues swiftly, identifying the best path through (and out of) the crisis and using their broad skillset and experience to help the charity get back on its feet.
The interim CEO does not have to be an expert in the organisation’s usual day-to-day work, but should be able to understand quickly the context and priorities of the operational activities in order to make the right decisions.
They can speak frankly to a Board, setting out the situation and options in black and white in a way that a permanent CEO may feel constrained from doing. They can also make the trickier decisions that need to be made, taking the brunt of the responsibility for some of the tougher decisions while protecting longer-term staff and Board relationships.
In some cases, a crisis may have arisen from relationship problems between a Board and a CEO, the latter then departing. An interim CEO can identify this and can support and advise the Board on the problems and how best to resolve them. In my experience, Boards are able to listen to and resolve critical and constructive feedback more successfully from an external advisor or interim CEO than they are from a permanent CEO.
When the immediate crisis has been managed, an interim CEO can help to identify the priority skills and experience for a permanent CEO to join the charity. They can help to smooth the path of their permanent successor, ensuring that they have addressed the immediate and trickier aspects of the situation required so the permanent CEO can focus on the long term, and on strong and ongoing relationships with stakeholders.
After a long-term CEO departs
When a charity says farewell to a CEO who has been in post for many years, regardless of how good or not-so-good the CEO has been, an interim CEO can help the transition. They give the opportunity for a fresh review and assessment of the charity from an external perspective that isn’t coloured by their long-term role as its leader. In this situation, an interim CEO can also more closely focus on the Board and help it to improve its own processes and relationships, paving the way for improvements in staff/Board interactions and charitable governance.
As with a crisis situation, an interim CEO is well placed to gain a swift understanding of the charity’s operational perspective and to bring this knowledge to support the Board in recruiting the right permanent person going forward.
When the charity’s future is uncertain
There are times when a charity is in such a tenuous situation that its future is unknown. In such circumstances, it may seem counterintuitive to pay extra for an interim CEO. However, recruiting a permanent CEO is an expense in itself and leaving a charity that is unstable and uncertain without leadership is not an option.
In this situation, an interim CEO will bring their experience of turning around charities on the brink to give you the best chance of success. They will also be able to help you make the necessary decisions to wind up, merge or take other action that represents the charity’s best option at the time, without being affected by the prospect of losing a permanent job.
But can’t a permanent CEO do all of this?
The skills of a permanent and interim CEO tend to be different. Interim CEOs will be expert in internal processes and structures, charitable governance, change management and handling a crisis. They will be adept at solving problems quickly and efficiently and making the harder decisions necessary to keep a charity afloat. A permanent CEO is more likely to bring cause-specific experience and relationships and be able to develop long and productive relationships with staff and supporters.
It is possible to find this skillset in a single person, but the benefits of separating the role outweigh this. If a permanent CEO has to deal with challenging situations, they will also have to rebuild relationships and expectations after having to make the tricky decisions. They are likely to be constrained in interacting with the Board and they will be affected by their own personal interest in their long-term job security. Leave those tricky decisions to an interim CEO and you pave the way for a permanent CEO to make a fresh start when the crisis has passed.
Furthermore, few permanent CEOs would wish to take on a role that could jeopardise their reputation if a charity is in severe crisis, as it could look like the charity’s failure is their responsibility. An interim CEO can help to give your charity its best chance of survival or, alternatively, help with the steps needed to wind things up carefully and professionally, without any fear of damaging their reputation.
Recruiting a permanent CEO is an expensive process that usually takes some months to complete. There simply may not be time to wait for that person to be available, whereas an interim CEO should be able to start quickly in one form or another, even if they have other projects on that they will need to finish up.
So what does an interim CEO cost?
Interim CEOs are usually not employees and are paid on a consultancy day rate, plus travel expenses and VAT. Factors that may affect day rates include the length of the contract, the number of days per week required, the complexity of the crisis or situation and, obviously, the specific experience and expertise of the interim CEO concerned.
However, it is important to note that the charity isn’t liable for national insurance contributions, annual or sick leave, or other employee benefits.
It would usually be expected that the day rate will be higher than the permanent CEO pay scale, unless you are recruiting for a simpler (and likely longer-term) interim position, such as to cover maternity leave or a sabbatical.
The important point is that an interim CEO is not just a ‘mini-permanent-CEO’; they have a different role and different opportunities and – best of all – they essentially work in partnership with your incoming permanent CEO. They identify and resolve issues, lay groundwork, prepare relationships and deal with some of the trickier, more conflict-prone concerns, to ensure that your permanent CEO is able to achieve long-term success.
Just as importantly, they tend to be able to act and speak more directly, getting to the brunt of problems without being quite so limited by considerations of long-term relationships that are essential to a successful permanent CEO.
If you are interested in placing an interim CEO role with Action Planning, please get in touch to learn more about the process and the options we have available.
We can also help you with crisis reviews to help you best identify what you need to take your organisation forward during difficult times – whether or not that involves an interim CEO. Call Action Planning.
Felicia Willow is a Charity Consultant and Interim CEO who specialises in charitable governance, strategic planning and crisis management. She has been the CEO of four charities, taking them through transformational change to achieve success.