John Alich of Carmel, Calif., was brought in as president of a
50-plus-year-old company in the Toronto area in April 2002. His duties have
included hiring and training other executives there, including a vice president
of marketing.
Yet you won't see Mr. Alich's name on the Toronto company's payroll. It never
hired him. Instead, it contracted for his services with Executive Interim
Management (EIM), a multinational firm that describes itself as "a company
that runs companies."
Mr. Alich is among a small but growing group of executives employed by staffing
firms. Staffing-industry payrolls have grown more than eightfold since
1991 for temporary professionals, including accountants, attorneys, sales and
marketing pros and managers, reports the American Staffing Association in
Alexandria, Va.
Interim executives are also known as executive temps or, sometimes,
consultants. But Mr. Alich doesn't liken himself to a typical consultant.
"Consultants write a report or make recommendations and leave," he
says. "I'm signing every check and actually running the company, as opposed
to telling someone how to run it."
Why Hire a Temp?
Companies looking to restructure or make major changes sometimes find that
outsiders can get things done better than insiders. "I bring objectivity
and have no vested interest in saving my job," says Mr. Alich, who
previously served as president of a different company going through a
restructuring.
"Our clients are most interested in bringing in an interim executive if
they have a crisis situation or a special project," says Paul Dinte, chief
executive of Dinte Resources Inc. of McLean, Va., which does interim placements
and retained search. "Their preference is someone who rolls up his sleeves
as though he were doing it full time, as opposed to a consultant."
Corporate scandals of 2002 have made finance and accounting a growth area for
executive temps, says Shel Hart, vice president of Spherion Corp.'s Professional
Recruiting Group in Boca Raton, Fla. He credits the Sarbanes-Oxley Act of 2002,
which provides for new internal audit procedures and stipulates that accounting
firms can't consult for their external audit clients. The latter provision makes
it harder to find experienced people, Mr. Hart explains.
Robert Half Management Resources, a division of Robert Half International
Inc. of Menlo Park, Calif., which also places temporary financial executives,
has seen greater demand in the wake of Sarbanes-Oxley, says the division's
executive director Paul McDonald. "As corporations get tighter on permanent
staffing, they're looking to get the same amount of work done," he says,
"so they're utilizing our staff to fill peak project workload
requirements."
Pros for Small Companies
Some clients are too small to be able to afford an experienced senior
financial executive, Mr. McDonald says. "They want to gain knowledge in a
certain arena," he explains, "but they don't want to hire an executive
full time. They bring in someone to work on a project for four to six months, to
train their staff and share knowledge."
Vern Illingworth of Louisville, who was a " financial
troubleshooter" in his corporate life, now works in large part through
Robert Half. "I'm flexible," he says. "If the client wants a
report [to] implement, I can do that. If the client wants me to handle
day-to-day activities, I can do that. I can be a temporary [chief financial
officer] with one client, be a part-time adviser with another, and do reports
for a third."
For some clients, Mr. Illingworth returns periodically to do follow-up work,
such as analyzing subsequent reports, or to make sure his solutions have
succeeded. "When I go into a situation that's going to require a
significant amount of day-to-day face time, I make certain those clients
understand that I have [such] other commitments. Generally, if you discuss that
up front, it's not a problem."
The second-largest growth area for temps is general management, Mr. Hart
says. Venture capitalists who want to turn companies around quickly before
selling them typically hire temp executives for this purpose. But in the past
three to four years, Mr. Hart reports, more corporate employers are using
executive-temporary services. Typical engagements last six or seven months, he
says.
Filling the Pipeline
Executives who need more money for retirement and those who want flexible
lifestyles often seek work as temps, says Joseph Daniel McCool, editor-in-chief
of Executive Recruiter News of Peterborough, N.H. He notes that many
executive-search firms have started temp divisions to take advantage of the
trend.
"We've seen a 40% increase in candidates since the beginning of the
current recession in March 2001," says Mr. Hart. Of those, 30% have
lifestyle issues -- down from 60% before the recession. And 30% are postponing
retirement and temping due to shrinking portfolios. Before the recession, only
5% of candidates fit this category. A constant 40% seek permanent employment but
"want to dance with the employer before signing on the dotted line,"
he says, adding that about one-fifth of engagements become permanent --
including 80% of those that started as temp-to-hire.
Mr. McDonald says his candidates divide into two categories. The first
consists of people who have been laid off, where "we fulfill their interim
needs." The second has chosen consulting as a career. Of the latter
category, he says, "They like working for us because we give them variety
and challenge. They have more control over their work schedules. They get a
change of scene two or three times a year. They're always learning new
things."
Mr. Dinte estimates that about 40% of temporaries are hired permanently.
"They can look at a company from the inside and do 'due diligence' without
any competition," he says. Temping is a better way for both parties to
screen each other than the typical hiring "courting process," where
employees sign on after meeting three or four times. That's "like meeting
in a bar and deciding to get married," he says.
Flexibility Is Key
Jess Atwell of Midland, Mich., recently returned from a two-year Spherion
assignment in Argentina with an exporter. Mr. Atwell, who normally goes in to
companies as a chief executive officer or chief operating officer, has been
working through Spherion and its predecessor, IMCOR, for several years. "I
didn't set out to have this as a career, but it turns out I'm suited to
it," he says. "I'm adaptable and goal-oriented, and I don't like the
corporate political problems that usually come up in permanent jobs."
Assignments can be unpredictable. Roberta Maneker of New York City left a
position as senior vice president of marketing and corporate communications at a
leading auction house after nearly eight years, she says, "because I was
tired." Executive Interim Management placed her in an interim position as
marketing director of another auction house. "I bought in to a three-month
assignment," she says. She remained for another year while a new CEO
settled in and the company's parent spun it off. Still, she feels the assignment
was a perfect fit. "It was interesting, energizing and extraordinarily
challenging -- for a defined period of time."
Nicole Geller, a Booz Allen alumna, founded GCS Inc. of McLean, Va., six
years ago to provide high-level executives for government contractors. "We
tend to draw people who have retired or just want a change," she says.
"People who have been running a department decide they don't need to do
that any more and consulting is the way to go."
Often executive temps don't want -- or need -- to work full time, she says.
"When you bring in a senior resource, you may not need it for a 40-hour
workweek. If they work nine to three and they're good, they can figure out what
needs to be done." Some executives want to take breaks between four- or
five-month stints. "One person loved to go hunting and fishing so we worked
around that," she says.
Staffing firms advise would-be temps to find more than one source for
assignments. "The market is such that no one of us will have enough to keep
everybody busy, so we encourage people to use as many resources as they
can," says Kris Swanson, managing partner of Chicago-based Flex Execs
Management solutions, which does placements in human resources, finance, sales
and marketing, and operations. Many interim executives find that they have to
keep networking, often to locate their own jobs. They'll usually contract for
them through an agency to avoid pay hassles.
Hidden Costs
Pay rates generally compare favorably with full-time equivalents and temps
usually go on a staffing firm's payroll. "The [Internal Revenue Service]
doesn't like 1099s," which are pay statements independent contractors
receive, says Mr. Dinte. The staffing industry has grown from companies'
reluctance to hire people that they may lay off later, coupled with IRS
restrictions on the use of independent contractors. When temps are put on the
staffing companies' payrolls, objections go away. Some staffing firms offer paid
vacations, health insurance and other benefits, although they rarely compare
favorably with corporate perks.
For this reason, "you have to go in at a high enough level so you can
pay for the perks you used to take for granted," Mr. Illingworth says. He
points to medical insurance, Social Security contributions, life insurance and
401(k) plans as items that may have to be replaced. Then there are costs of
doing business, including travel and home-office expenses. "You need better
computer equipment, higher-speed Internet connections, additional software, and
maybe more training because you have to maintain it yourself. You have to pay
for your own printer cartridges; and if all of a sudden the software has a fatal
error, you have to pay someone to fix it or fix it yourself," he says.
Sometimes, lengthy stays at distant locations are required, but clients
typically pay for living expenses and frequent trips home for faraway temps.
"I've moved enough times that my wife and I concluded we'd locate ourselves
somewhere, and I'd travel to jobs," says Mr. Alich, who rents an apartment
and a car when he's away from home for a long time. "I've never had a job
where I wasn't traveling half the time anyway."