Interim CEO services are highly coveted in transitionary economies like the ones we experienced during the 2008 housing crisis, the COVID recession and the 2023 bank failures.
What works for a chief executive officer under normal circumstances doesn’t cut it when times are especially tough.
That’s why private equity firms, their portcos, and private and public companies are often on the lookout for a talented temporary chief executive officer to help them come out of recessions not only surviving, but even stronger than they went in.
“Interim CEOs have had the ability and experience to quickly assess a crisis and determine a course of action quickly,” says Hannah Welsh, BluWave’s Independent Consultant Manager. “They have been in several turnaround scenarios and understand the importance of speed and definitive action, while long-term CEOs have often grown up in a company and are less likely to assess and act as quickly.”
The Business Builders’ Network is full of individuals who are born and bred for this.
READ MORE: Benefits of Hiring an Interim CHRO
Interim CEO Job Description
The interim CEO role requires someone who’s intelligent, experienced, a quick learner, a reader of people and who’s prepared to turn around what might be a disastrous situation.
While you can’t summarize all interim CEO positions into a single description, we got some great feedback on what it takes to succeed in this coveted role.
We spoke with two temporary CEOs from our network to get insight into what skills an interim CEO needs, as well as the most common challenges they’ll confront when using them.
Temporary CEO Services
As the leader of an entire organization, there are some important skills nearly every chief executive officer must have. Temporary CEOs are no exception, and often need to bring some unique services and talents to the table that a long-term leader may not have.
READ MORE: Why Hire an Interim CEO?
Understand Financial Distress
Most CEOs, as Welsh mentioned, are not used to dealing with disruptive circumstances.
When a company’s going through financial distress, it needs to make changes to its business model. Michael Pooles*, an interim CEO from the BluWave-grade network, says a lot of companies are not accustomed to doing that.
“They’re used to keeping the dial between nine and 11. But when times are disruptive, where companies come under stress, you need a different kind of leader. Most CEOs don’t have that skillset to drive significant change,” Pooles says. “That’s why you bring in an interim who does.”
In challenging economies, knowing how to deal with supply chain issues and other commercial-related problems are especially important for a temporary chief executive.
Quickly Assimilate Information
The sooner that new leader can wrap their head around the data at their disposal, the more quickly they’ll be able to affect change. In a role that typically lasts less than a year, making decisions from day one is paramount.
“Successful interim CEOs come in with a trust-but-verify mindset. An inquisitiveness,” says Caleb Morrison, another experienced executive from our interim network. “If you walk into a CEO chair, you’re not going to get a pass on a lack of knowledge.”
Act with Speed and Certainty
If a portfolio company recently broke covenants with a bank, or if a private- or publicly owned company is going through a crisis, they don’t have months or even weeks to “figure things out.”
They need someone who understands their industry, has a deep knowledge of how to confront the specific challenges the organization faces, and they need to be able to address them quickly.
If time weren’t of the essence, the company could have found a long-term replacement. But the CEO role isn’t one that can be left open for any significant amount of time. That’s why interim CEOs are expected to not only act fast, but with an assuredness that inspires the rest of the team to follow their turnaround plan.
If a portfolio company or private or public company needs an interim chief executive, more often than not it’s because things weren’t going well with the previous leader.
The last thing the organization needs is someone to come in and point fingers and make excuses.
An interim CEO should be mentally prepared to walk into a messy situation and do everything they can to clean it up. If things don’t work out at the end of the engagement, there’s only one person to blame.
“The buck stops with you,” Morrison says.
“You need to be able to lead a varied group of people. Every situation you walk into, you don’t know what you’re getting into in terms of the talent,” Morrison says. “Being able to read people and understand what motivates them and change your approach accordingly is very important.”
What worked at one company, however, may not work at another. Interim leaders who come in with a cookie-cutter approach aren’t likely to be successful.
“I don’t believe in a one size fits all,” he adds. “It’s very rare that every company is going to have the same culture.”
READ MORE: Interim CFO for a Financial Crisis
Problems Interim CEOs Solve
Within the context of these skills, there are many specific problems an interim CEO might be asked to solve.
Here are just a few of the more common issues we hear about when private equity firms and public and private companies contact us for a temporary executive leader:
PE firms want to accelerate their portco’s growth during their hold period. When things aren’t going as well as planned, they sometimes look for a change in leadership to turn things around.
An interim CEO can be the perfect solution to solve the more specific issues that follow.
“Leaking cash” means more money is going out than coming in. This could be due to lack of revenue from its products and services, and/or because too much is being spent on things like marketing, salaries and overhead.
At a high level, this can be resolved by reducing costs and increasing revenue. But it’s not as simple as it sounds.
That’s why an interim chief executive officer can be an invaluable resource in this situation.
A leaky supply chain can also be a major downfall for a company. This can happen during packing, shipping as well as in-store handling, depending on the nature of the business.
An experienced temporary executive will know how to root out and address the cause of the shrinkage problem.
“Margin compression is when input costs rise faster than the sale price of the product,” according to the University of Minnesota. “As a result, margins decline over time. Margin compression commonly occurs in most industries.”
This can happen due to increased competition or decreased demand – both of which drive down prices. It can also occur when the cost of parts and labor goes up, thus lessening the organization’s margin on its product or service.
An interim CEO could choose to address this in a number of ways, including by reducing costs, increasing prices or improving operational efficiency.
Crisis or PR Disaster
These are the kinds of situations that get a company in the news for all the wrong reasons: product recalls, employee misconduct, fraudulent or illegal activities, natural or environmental disasters and more.
Restoring trust and confidence in the company by communicating effectively with employees, customers and the public is key here. The right leader will also implement specific tactics to prevent similar disasters from reoccurring, when possible.
Finding interim executive talent that truly knows how to get the job done can be a time-consuming and expensive process.
When tap into the invite-only, PE grade network of exact-fit interim CEOs, you leave all the guesswork behind.
Welsh is in contact with the temporary chief executive officers we provide on a daily basis. That’s why we already knew the leader you need before you even contact us.
READ MORE: Private-Equity Grade Interim CFOs
When you need an interim CEO to fill that vacancy “yesterday,” BluWave is ready to help fill the void the the best of the best for your specific industry and situation.
*Privacy is important to us. While the source and company name have been changed, these are real quotations from a real service provider in the BluWave Business Builders’ Network.