For the last 18 months, there have been numerous discussions on the future of interim management. This has mainly focused on IR35 and whether the market will ever be the same again…
As we emerge from the pandemic we wondered if anything had changed. We spoke to several senior interims, in our network, to find out if things had changed and what it looks like on the ground at the moment.
So, how is the market at the moment?
Melanie Steel, Career Interim, People Change Expertise, discussed with me how the whole interim market has been pretty confused with Brexit, then IR35 and of course the pandemic to contend with.
Ian Williams, senior people practitioner, of Infocus HR consulting, said there are fewer roles on day rates because of IR35. He’s found it a struggle to get organisations to think outside IR35. They are being ‘safe’ and want to stay inside IR35, from a risk perspective.
Carolyn Fox, Interim HR, OD and transformation specialist, thinks that large organisations are continuing to be risk-averse. She said there are a lot of assignments are inside IR35, permanent or on an FTC basis.
Simon Brown, of Simon Brown Associates has been an interim for 11 years. He said the market is just beginning to pick up following the pandemic because a lot of businesses play the ‘wait and see’ game – when there is uncertainty, they hold back. The same way that the financial crisis slowed the market down.
Sharon Green, a people change, tech & comms interim for over 15 years, said ‘we are still in choppy waters, things are a bit slow, and clients are cautious, but there is a bit more hope in the market.” Sharon also runs the LinkedIn group HR Interim Networking and the feeling from the community is that there is a lot more optimism now than there has been over the last 18 months.
And how has the pandemic changed things?
As we come out of the pandemic, we can see a clear need for strategic experts and change managers, at a time when a lot of businesses are going through huge change programmes. Organisations really need strong leaders and if they don’t have them, they may need an interim to step in to bridge the gap while they find one.
Melanie has found from working closely with HRDs, that the pandemic pushed people into thinking very short term. This had a knock-on effect on the interim market as change projects were ‘turned off’. Although these projects got turned back on, it was at the same time as Brexit was bubbling away in the background and IR35 has come in, adding extra layers of complexity. Some businesses were prepped and ready to handle the changes, but some weren’t. Those businesses are going to be slower at getting up to speed with the changes in the market, and therefore slower at getting those interim projects going again.
For some contractors, the pandemic led them to lose their role. Ian thinks that these people may have had a rethink on whether they’d prefer a perm role, for the security it offers. This could lead to fewer interims in the market going forward.
With the capacity to bring strategic focus, crisis management and project delivery during uncertainty; professional interim managers have a key role to play in helping businesses to ‘ride out the storm’, facilitate recovery, and lead businesses through transition and change.
As we come out of furlough and into winter, businesses will be looking at budgets and headcount. Carolyn said she thinks that the demands for change in organisations will create more opportunities for interim OD work. Plus, senior people who haven’t been moving around much will start to move again. This creates new change programmes wherever they go, and therefore more opportunities for interim work.
Simon discussed how the trend following the pandemic to ‘change or switch’ is bringing about lots of opportunities for interims. Organisations are going through a change – for example, tech companies are in growth mode as we rely on digital more than ever. Or they are in switch mode, like retail and hospitality, who have had to switch their services to online, as the high street reduced dramatically. Clearly, the high street can’t fully switch to online, so they’re having to look at restructuring, downsizing or M&A.
The big difference brought about by the pandemic was the move to remote/hybrid working. This is a positive thing for everyone and especially interims, who have much more flexibility to work on projects because they can work remotely.
Sharon commented on this change but said it was strange it was to go from the pitching stage, through to completing, without ever stepping into the client’s office. “It made it very challenging to get work in and similar to the financial crash in some ways. It was difficult to pull levers you’d normally pull to get work. Most people’s mindsets were in a different place, which made it difficult for the whole interim community to do ‘our thing’”. Sharon said her community – HR Interim Networking – really bonded during the pandemic, pulling together, asking questions, learning and supporting each other. The support requested in the community was also very different during the pandemic, as there was much more HR generalist work – furlough/redundancies/org etc, so everyone learnt from the questions being asked.
What about IR35?
It’s what everyone is talking about now! If I think back to 10 years ago, there was a real divide between interim managers and people looking for a job. Those lines have become blurred since, due to the gig economy and skills shortages, but it seems as though that might be changing.
In the short term, it may feel challenging for interims because of things like businesses imposing blanket bans. But longer-term, I think IR35 will make for a better interim market. It will remove interims that were on the margin, as it’s no longer viable for them. Yes, that will shrink the market, but it will be left with more senior interims, with more skill focused on transformation projects and M&As. This is exactly what Interims should be hired for – their niche skillset, which is missing in the organisation.
Businesses use interims when they need flexibility in a period of change and this requirement will not change. I think it will make the market smaller and more professional, but businesses will still need to utilise a highly skilled, flexible workforce.
The impact of IR35
Carolyn said she thinks IR35 is misunderstood, which in turn creates a ‘blanket approach’ from businesses, to make it easier for them. This approach is – “don’t use interims”. However, it doesn’t need to be like this. She explained when the objectives, deliverables and skill set are clearly defined and it’s clearly outside IR35, it doesn’t need to be difficult.
Simon agreed that companies are nervous about IR35 – because they’re liable if they don’t do it properly. When they’re cautious, they tend to just avoid it. He said, “Some companies are learning and looking into IR35, so they can make the most of interims. We can help them, by giving as much information as possible and being clear and transparent.”
The ‘blanket ban’ was also mentioned by Melanie, who discussed the responsibility that recruitment agencies have, to push back on clients where necessary if the blanket ban isn’t the right decision. She said that rather than doing what is easier, the client, the agency and the interim all need to be disciplined in their approach and do things for the right reasons, and not for ease.
Sharon said that IR35, along with Brexit and the pandemic, has “rocked the market” – clients are confused about what’s in and outside of IR35 and are making some ‘interesting’ decisions. “It’s about risk and opportunities, but hopefully it will lead to a differentiation – between true interim roles and those who should be on a permanent or fixed-term basis. Some interims are thinking about going perm or taking an FTC. It really depends on their specialism and what work they do. I still see a place for professional interims in business.
The future for interims
With all of this in mind, what does the future look like for interims? Is it positive? I think so and Ian agrees – he said there’s lots of work out there and he doesn’t think they’ll be a shortage of interim work, but he does think the contracting market will shift. “Certain industries always had high levels of contractors, who were kept on for years, when they shouldn’t have been. I think we’ll see fewer contractors’ roles as interim HR directors or IT directors, where the role can be a perm or FT contract. The change and transformation driven roles will be more popular – the true specialist interim roles. This should push rates up in the shorter term too.”
He also mentioned that he thinks it will be another 12-18 months before companies get comfortable with IR35, as they’re still in risk mode. But skills shortages from not going inside IR35 will change that and confidence will build.
There is also a focus on education. Ian mentioned line manager education and ensuring they are clear about what interims are for. And the fact that HR needs to be educating the business about risk around IR35 and what’s expected.
Carolyn added to this, and made a good point, that interims have a responsibility to be part of the education and change the way they operate. “Interims need to become more of a consultant – they need to produce a statement of work with deliverables, timescales and how it will be resourced. If you’re clear about setting out objectives and deliverables and the fact that you’re doing an ‘activity and not a job, then it will make things a lot clearer. Interims have not always done the planning piece of exactly what is going to be done, with a timeframe to review against, but by doing this it mitigates risk and makes everyone feel comfortable.”
Melanie agreed saying, “we all need to play our part in the educating and questioning – ‘we’ meaning interims, recruitment agencies and HRDs. I think IR35 will flush out the market – so becoming an interim will be a deliberate career change – and not just a stop-gap. You need to be sure and clear on what you will need to do as an interim, as there’s a lot to set up and think about, as well as a mindset shift! And on the other side of the coin, businesses will need to use interims in the right way, for the right projects. As we move out of the ‘greyness’, there’s going to be change. Businesses pay a premium for skills shortages that interims have.”
Melanie also highlight next year’s Budget and how that may cause an issue for interims – we will see.
From Simon’s perspective, the future is looking bright for interims. “It will help that you can recruit people from anywhere, as it will open up the opportunities and widen the talent pool.” He also rightly pointed out that the increase in change across industries gives more opportunity for specialist interims. “Big system implementation has been put on hold, this will need picking up again in the new year, which in turn will create more work. Interim opportunities will increase particularly for those interims who specialise in Organisational Change and Business Transformation where businesses are looking for fast-tracked expertise from experienced change catalysts. Interims can support organisations either as ‘skin in the game’ PMO work-stream leaders -offering a blended solution to source change programmes, or as seasoned executive advisors providing a sounding board to the C-suite Leadership Team as a coach or mentor.”
Sharon said she thinks things are still going to be ‘choppy’ – they’ll work out, it depends on what work you want, what quality and what rate. “There will always be new people entering the profession, perhaps trying it post redundancy, which can make the market crowded at times. I am an optimist. Getting a clearer definition of the roles and types of work needed in the workplace, considering all stakeholders, could be a good thing for everyone. It’s also important employers consider what interims want – we want to run our own business; we don’t necessarily want the security of FTC.”
She thinks there will be clients who get educated and start using interims for the right projects and some that have a fixed mindset on their workforce and don’t want to take the risk. They would rather use the ‘blanket approach’ and stick to it, especially if they see themselves as a big player in the market. But skills shortages are being discussed, which might impact that mindset.
“It’s down to us to ‘own’ what we do – ‘I run a business, this is how I run it, this is how I work’ and make it easy for the client to understand”. This comes as part of the education piece to help the client realise it’s possible. “There is space for interims and need for us, it’s just whether we can carve it out.”
Some really valid points here – in my opinion, I think in the longer term, the future will be bright for interim managers. If I think back to pre-2008 there was a clear divide between ‘proper interims’ and people who happened to be in the market. I am hoping that this distinction may become apparent over the long term and will inevitably lead to more interesting projects and higher rates for professional interims.
A huge thanks to Ian, Melanie, Simon, Sharon, and Carolyn for your views on the interim market.
If you would like to find out more about re:find and how we can support you and your business, with IR35 or anything else, please get in touch.
We work with IR35 Shield, an independent assessment tool that can accurately assess your contractor workforce IR35 determination. It helps both interims and the client organisations to cut through the mystique and ambiguity which often surrounds perceptions of IR35.