Executive 'temps' cut costs

Nation's Business, June, 1997 by Stephen Blakely

Small businesses looking to control project.management costs--or to "test.drive" a new manager before making a full-time offer--may be able to do so by using temporary executives.

"Accessing interim executives allows companies to minimize fixed costs, maximize profitability, and maintain the nimbleness required by today's global marketplace," sws Paul Dinte, president of Dinte Resources, Inc., a McLean, Va., firm that specializes in executive searches and interim-executive appointments.

Known by various names--rent-a-boss, just-in-time executives, executives for rent, or, more commonly, interim executives--the concept extends the use of temporary employees from the secretarial pool to the head office.

The temporary-executive idea grew out of the tidal wave of corporate restructurings and layoffs that flooded the labor market in recent years with highly skilled and formerly high-level managers.

The downsizing trend created a new niche for executive-search firms and a new way for small companies to get affordable senior-management talent.

Dinte, who used to specialize in recruit. ing financial executives, saw the opportunities for an interim-executive practice in the aftermath of the 1987 stockmarket crash. Nearly half of his interim placements ultimately are hired full time by his client companies, and he markets his "try-before-you-buy" approach as a way for firms to "minimize the costly risk of hiring the wrong person."

Douglas Reiter, president of Douglas Reiter Co., Inc., an executive-search company in Portland, Ore., SWs thai "most of the interim executives we place are with small businesses" that have clearly identified needs for specific projects. Placements include high-tech and computer-related positions, financial jobs, and plant.manager positions, he says.

Pay scales for interim executives vary, he says, but the standard fee is 150 percent of salary, with the search firm getting a 30 percent commission. The interim executive's pay, taxes and benefits are handled by the search firm--not the employer.

Paul Coco, chief financial officer of Bamberger Polymers Inc., in Lake Success, N.Y., hired an interim information-systems manager through Dinte Resources about a year ago to oversee the redesign and installation of a computer system.

"This kind of project is not something that companies do every day. Once you do it, it's over," Coco says. "We looked at com suiting firms, which were much more expensive. Going with an interim executive was the best bet for us."

To draw the best results from the use of an interim executive, carefully define the required skill level of the executive and the scope of the project, and get company officials involved in the search.

To find an executive-placement firm with rent-a-boss services, look in the Yellow Pages under "Executive Search Consultants" or "Interim Executives." Another useful resource is The Directory of Executive Temporary Placement Firms, available for $25 from Kennedy Publications in Fitzwilliam, N.H.; 1-800-531-0007.

--Stephen Blakely