Does Your Interim Management Smell Fishy?
Peter Angerhofer and John Napiewocki
Colburn Hill Group
In managing a revenue cycle, it often becomes necessary to invite in an interim manager. Prolonged illnesses, delays in filling vacancies, or short term projects can create the need for additional managerial experience. When that need arises, an internal candidate may not be available and if the need is great enough, many organizations look outside for short term help.
The primary responsibility of an interim manager is to take direction and execute the goals of an organization’s leadership: often that will mean staff scheduling, time cards, staff reviews, regular reporting, and communication with outside stakeholders.
However, an interim manager should also be frank about the state of the organization. When there are other organizational priorities that need to be high on the list, it is critical that those goals are clear, communicated, and that the interim role is given the necessary flexibility and authority to accomplish these tasks.
Writing in Poor Richard’s Almanack, Benjamin Franklin is credited with coining the phrase, “Fish and visitors stink after three days.” Like fish that begins to rot, having a houseguest for an extended period can be a challenge. New patterns of activity, sharing bathrooms or the TV remote, and just having somebody else puttering around in your kitchen gets old, and quickly.
In managing a revenue cycle, it often becomes necessary to invite in an extended houseguest – an interim manager. Prolonged illnesses, delays in filling vacancies, or short term projects can create the need for additional managerial experience. When that need arises, an internal candidate may not be available and if the need is great enough, many organizations look outside for short term help.
Like any houseguests, interim managers bring baggage, but they can also bring fresh perspectives and can inject new energy into an organization. In case you have the need for interim management, we’d like to offer some thoughts about the responsibilities of the houseguests who are about to set up shop in your spare room, about the downsides of interim management, and about how you can maximize the benefits you might get from an interim management role. With the right approach your interim director can come out smelling like a rose!
The primary responsibility of an interim manager is to take direction from leadership and execute those goals faithfully. Most often, that will mean just keeping the trains running on time. Staff scheduling, time cards, staff reviews, regular reporting, and communication with outside stakeholders will often tie up a large portion of the manager’s time. But there may be other organizational priorities that need to be high on the list as well. As long as the communication of those goals is clear, the interim role should be focused on executing the tasks assigned by the leadership.
But an interim manager should also be frank about the state of the organization. It is certainly not always the case, but organizational turnover can be a sign of instability or disarray in the organization. If performance was poor under the now departed manager, there is no reason to expect it will magically get better under an interim and both sides in an interim relationship should be prepared to provide clear and honest evaluation, prepared to both speak and hear potentially hard truths.
And in that sense, the interim manager should be identifying opportunities for improvement. Recommending a multi-year implementation of a new system may not be feasible, but a good interim manager will identify opportunities that are within the scope of the role and within the timing of the role (or at least close to it.) Too many organizations largely promote from within, which creates a stale pool of ideas. A good interim manager can stir the pot of ideas and provide insight from other organizations.
Finally, whether it is related to a performance improvement effort or just day-to-day operations and whether it is imminent or at some unknown point in the future, an interim manager should be preparing for transition. For example, documenting processes during an interim period can provide a huge head start for the next permanent manager. Where specific decisions are made, capturing the thought process for the decision, perhaps along with alternatives considered, helps create an institutional history that can be passed along to future managers.
A good interim person will faithfully execute your priorities and perhaps add a few of his/her own, but bringing in an interim manager is change, and change can be a traumatic. Without a doubt, interim roles come with costs.
The first and most obvious downside is financial cost. Chances are an interim person will cost significantly more than the person they are replacing. If you can find local talent with the flexibility to work in an uncertain role, you may minimize that difference, but in any case the incremental cost is likely to be material.
Those costs may not come just in direct outlays of cash. An interim manager is likely to need support and training in your processes -- some from the managers and staff below him/her, but also from executives above. A new houseguest won't know where you keep the sugar or the lawn mower and a new interim will likely come with little institutional knowledge or memory, only a shallow understanding of the politics and culture, and a set of priorities that may not match with other preferences across the organization.
The good news is that if you have chosen your interim manager wisely, those costs can be more than offset by the benefits. As a purchaser of interim services, there are a few ways you can improve the cost/benefit relationship.
As mentioned above, the interim manager is likely to come with his/her own ideas and initiatives, informed in part by successful operations in other organizations. Unburdened by institutional inertia (“But that’s how we’ve always done it...”) or past failures (“We tried that once...”) an interim manager may be able to break through in ways a permanent manager would find difficult. Giving him/her the approval and standing to bring those ideas to life – to identify opportunities and pursue them – can greatly enhance the return you get from your investment.
For example, department budgets often get stale. A budgeting process often consists of "take last year's budget and add 5%." Or perhaps more often, cut 5%. But an interim manager affords an opportunity to revisit the budget with fresh eyes. In one recent interim role, we decided to review every line item in a departmental budget. We identified not only poor invoice approval/retention processes and overpayments, but also highlighted quick insights into cost saving opportunities, potentially improved contract terms, and previously undetected performance concerns. As a result, the client realized over $100k in annual budget reduction, $75k in returned overpayment and pointed to internal performance issues costing the client $48k annually in additional eligibility services. These savings alone more than paid for the interim costs.
But new ideas and perspectives are just one source of performance improvement. In addition to the day-to-day management, make certain a handful of improvement opportunities are part of his/her core goals. Not only will these improvements help finance the additional cost of bringing an interim resource on board, but will also help the interim manager integrate into the permanent team – nothing breaks down barriers and builds relationships faster than work toward a shared goal.
If you have chosen an interim manager through a consulting firm or placement agency, you may be able to leverage related resources above and beyond the actual interim manager. That might mean formally engaging more resources, but it can also take the form of asking for advice or for some specific expertise. In most cases, if the expertise exists in the organization, the firm will be happy to provide a few free hours, either in the hope of selling more work or just as a way to sweeten the existing relationship.
Finally, a hard to quantify, but very real, benefit is executive leverage. A high caliber interim manager is likely to bring experience working at a strategic level. Executive experience means they may be able to offer insight and take on responsibilities that a permanent manager might find more difficult to handle, either because of competing demands on time and attention or internal politics. A high caliber interim manager may be well suited to represent and/or take on assignments previously reserved for more senior staff.
A managerial vacancy is never an easy situation, but too many organizations approach it as a rough patch that they “just have to get through” instead of seeing it as an opportunity. Bringing in an outside resource to fill a role can bring new ideas, can break down historical barriers, and can provide even greater coverage for the executive team. But organizations need to prepared for all the costs of such an effort, including the need to support the individual as they integrate with the rest of the organization.
If the individual is seen as a resource, and not an interloper, and if they are given the opportunity to make real change, rather than just seen as a caretaker, interim managers can provide significant benefits and even a positive ROI during a period of transition that otherwise might just be seen as a stretch of higher than normal costs. No matter the length of their stay -- whether for 3 months, 3 weeks, or 3 days, an interim role doesn't have to stink.