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Happy New Year to you from the Financial Services Practice at Interim Partners. I’m sure many of you (myself included) will be delighted to see the back of 2008 which I’m sure will go down in history as the darkest year in our sector for generations.
2008 was a year where the unthinkable became the reality; global powerhouses such Lehman Brothers and Bear Stearns are now bust, the mighty Goldman Sachs running to the US Treasury for a bailout and UK household names such as Northern Rock and Bradford & Bingley nationalised.
So, what is in store for us in 2009? Many of the economic experts’ crystal balls lay smashed on the floor of their offices, their forecasts for last year about as accurate as the value of a stake in Madoff’s hedge fund. Alistair Darling has already hinted that his prediction of a recovery in the second half of 2009 was wildly optimistic and his numbers will have to be revised in the next pre-budget report. All of us with our feet on the ground and heads below the clouds are steeling ourselves for a tough 2009.
So what does that mean for demand for interim management in the FS sector?
Out is the delivery of large scale change programmes, new product launches and M&A reviews which gave rise to demand for interim Programme/Project Managers, Marketers and Strategy Directors. En vogue is a far more defensive client appetite for interim skills with procurement, HR and finance being sought with a view to delivering cost reduction exercises.
The key challenge recently has been (and will probably remain) gaining client commitment to actually spend money and engage interim managers to deliver the business issues that have remained on hold for several months. Also proving a hurdle are the trade unions taking a tough stance on clients’ engaging interims against the backdrop of thousands of their members being made redundant.
I am happy to report recent days to be very encouraging, I placed an interim on the 23rd December and in the first week of 2009 placed two more and received four new assignment briefs all asking for immediate starts. Are these green shoots? Dare I use the “R” word? Here’s hoping….
Questions for 2009 will include:
To what extent will the substantial retail banking integration programmes generate demand for interim managers?
The Government has set up UKFI to manage the Treasury’s shareholding of retail banks, what will the key challenges for the Civil Service be in setting up such a department of and how could interim managers add value?
How much regulatory pressure will the FSA apply to financial institutions given the problems of last year and how will that impact on interim demand?
Will a new cost conscious environment encourage clients to steer away from traditional Big 4 and consultancy firms and look towards interim management as a cheaper alternative?
I would welcome views from all interim managers active in the FS sector and I look forward to working with you in 2009.
January 14th, 2009 at 6:45 pm
I think there will still be a demand for interims, however the skill sets are likely to vary with the downturn in the business cycle. E.g. cost reduction, compliance and risk management will now be more in vogue.
From a regulatory point of view Solvency II, TCF and Risk Management are suddenly becoming much higher profile these skills will be very much in demand
I think clients will still initiate change but will prioritise more only implementing that deemed to directly add value and they may well use temporary resource as this only commits them to a variable as opposed to a fixed cost.
I also think the economic clmate may drive business into decisions they would previously not have made and are probably not adequately skilled, again requiring temporary staff e.g. The Lloyds TSB takeover of HBOS.
In summary I think it will be a challenging year but the volume of work will be out there albeit different to what it was previously.
January 15th, 2009 at 11:25 am
Whilst concurring with all your remarks the most important dynamic in the interim placement market is now, more than ever, the quality, strategy, reputation and relationships of the Interim Provider. Among all major users and potential users of interims, there is a flight to quality and a determination to only engage with the best…and few; those who offer a glorified contractor placement service as an enhancement to a cv bucket-shop will find themselves out of favour…and rightly so…as will those who commodity price.
Basically then, 2008 and continuing well into 2009, marks an opportunity for the primary operators to consolidate their positions in a business and macro environment which is historically “unique”, going to be relatively short-lived (sector and geography dependent) but very well remembered and for those interims who are dependent upon the performance of their preferred Interim Provider, this will be a time to ensure that you are known to and well-regarded by the best.
During 2007 and 2008, the tier one Interim Providers (we all know who they are) have built a welcome void between themselves and the pretenders and this has largely been driven by exemplary professionalism and sheer determination; the result is that your cv may or may not be considered credible based upon which firm has put you forward. Those Interim Providers who develop their corporate relationships to the confidence level of being able to submit one or two cv’s…or even a preferred applicant on a start date…are the ones that will succeed because they are the only ones the clients will want to deal with.
In a market that is constrained by finance, time and resources, the top Interim Providers should see their businesses flourish simply because when you are at the top of your class, the significance of competition dwindles exponentially. Pre-emption and market knowledge are critical here – partnering through a clear understanding of a client’s business and challenges will be a key approach. Those areas that will be most active will be Risk, Re-organisation (cost and efficiency focus) and Integration. New business development and projects work will see growth from mid 2009 but some banks and institutions are already and necessarily active. Rates will be demonstrably lower…but a rate in the hand is better than ten in the FT….and there is a clear and increasing interest in “interim-to-hire”.
January 19th, 2009 at 2:57 pm
Previous comments have expertly addressed trends within the market as a whole, and the role of interim providers, so I thought I’d offer a couple of views about the individual qualities that are likely to be particularly important this year.
As well as having the core skills required for the assignment, interims need to be versatile and able to add value in other areas that might arise during the course of a project. This has always been the case in my experience, but it will be particularly important this year as budgets are reined in, and clients increasingly look for value for money. That’s not to say that you should present yourself as a jack of all trades, but understanding the scope of the assignment, and making clients, and providers, aware of all relevant exerience and expertise, as well as your core skills, can only help support your case.
Secondly, I fully endorse the line about the “rate in the hand…” and would add the need to be flexible in terms of sector. Speaking as someone with 30 years experience in Financial Services and currently working in Marine/Shipping, I know that clients may generally look for relevant sector experience but, paradoxically, they may be more open to the benefits of a fresh perpective in these challenging times.
Finally, continuing the flexibility theme, and with a nod to a certain Mr N.Tebbit, there’s an obvious need to get on your bike and consider pastures new in terms of working locations. Weekly commuting has become standard practice in permanent roles so it seems highly unlikely that interims will always be able to secure commutable roles. (I recently lost a bet that I could manage a fourth year of interim work on the south coast and am currently woking in London!)
Bon chances mes braves!
January 20th, 2009 at 10:00 am
All good comments that succinctly summarise the position we find ourselves in – I agree with all of these thoughts and observations.
During the last few months my chosen sector, Financial Services, has seen a huge increase in the number of good quality candidates. Many of these people view contracting as a necessary distraction while they look for a permanent role, but these individuals will lack the deliver experience of the proven interim candidate and come with ‘baggage’ from their previous role or from redundancy.
This is in contrast to the seasoned interim campaigner who ‘hits the ground running’, delivers, and expects to move on to the next challenge. I believe this distinction is important and will enable the interim community to thrive during the current climate.
Certainly we need to be pragmatic and flexible on rates, but I also believe this could be a period when the value of the true interim will become apparent.
January 22nd, 2009 at 12:47 pm
The elephant in the room is the role of the interim provider. My only assignment gained through this route was my first one. 8 years and 4 major assignments later I still find that my primary source of work is my personal network, and the provider group only fulfils a function of giving general feedback about developments in market sectors, promising to keep in touch and providing nice coffee.
Clients are running scared of being seen to incur the extra costs of using interims when they are releasing permanent resource. I’d very much welcome providers taking on much more of a franchisor role with us interims as franchisees, acting on behalf of the interims just as much as their corporate clients and getting out there with their clients banging the drum that we are part of the solution not part of the problem.
Sadly, my personal network is diminishing as more members of it are experiencing the impact of the recession themselves, so it would be nice to know that the providers are able to fill the gap. To that end we interims owe it to them to help and support them in marketing our proposition in every way we can. So, Andrew and colleagues, what do you want us to do?
Can I now please claim the prize for the first example in 2009 of biting the hand that potentially feeds me ?
January 22nd, 2009 at 3:39 pm
Myles you raise an interesting point that there are many interims out there who generate a significant number of assignments through their own established networks.
Many of the members of the Provider community are relatively young businesses who do not fully occupy their market, although given how fast some of them are growing I suspect that a greater percentage of assignments will be via Providers in the future. Interim Partners for example has grown from Doug and I into a business of 17 people in 3 years.
John Mills commented “the tier one Interim Providers (we all know who they are) have built a welcome void between themselves and the pretenders and this has largely been driven by exemplary professionalism and sheer determination”. As I submitted our quarterly statistics to the IMA Mori poll this morning I know that we placed 54 interim managers into new assignments during quarter 4 of last year and I’m sure those individuals believe us to add greater value than just providing nice coffee!
As a business we have a policy of not placing greater emphasis on clients as opposed to interims because as an intermediary we cannot exist without either. We increasingly find ourselves referred new opportunities from interims that are out working on assignments and our provider/interim relationships are becoming ever more symbiotic.
On the whole, I find that the vast majority of interims highly supportive of our efforts in marketing their skills in the pursuit of finding them work. Offers of tailoring CV’s for specific roles and attending client meetings in obscure locations at short notice are common place. I suspect we will always find ourselves with more applicants than we have roles so we will never be able to help everyone, but with the right client relationships, supportive interims and a little bit of luck Providers will become an increasingly valuable route to market for the professional interim manager.
February 20th, 2009 at 2:38 pm
The financial services sector has continued to dominate the headlines for the past few weeks, all for the wrong reasons. The markets were rocked by news of larger than expected losses by HBOS which has thumped the already embattled share price of Lloyds. In the fullness of time I believe the merger will prove to be a strategic masterstroke for Eric Daniels and the Lloyds board as they will emerge from the wreckage in position to dominate the retail banking sector, they will just have to grit their teeth in the meantime.
The nation watched the formerly mighty Messrs Hornby and Goodwin squirm under the cross examination of MP’s who quite understandably want some answers. There has also been a huge media outcry against Banks bailed out by the taxpayer paying bonuses to staff. Given that the state of the banks is the responsibility of the decisions of a few hundred people, denying tens of thousands of rank and file workers their modest annual bonus would have been a shocking decision. Now that the taxpayer has an enormous vested interest in driving those businesses forward, making sure that our investments are run by the most talented and motivated people has never been more critical. Not paying promised bonuses to key business people for political reasons may in time prove to be a costly mistake.
Bernie Madoff must be delighted that Sir Allen Stanford has joined his unique little club, even if it just diverts some media attention away from him for a while. The real problem is, just how unique is it? Booming markets are historically excellent breeding grounds for fraud, ponzi schemes and sharp practice, it is only when the bear markets arrive that they all come out in the wash. I have a suspicion that Modoff and Stanford will have some more company before the year is out.
However, difficult times are not bad news for everyone. Interim management within the financial services sector is enjoying a renaissance and the number of client instructions is getting stronger. My clients have a genuine appetite to deliver change within their businesses and I predict that interim risk and compliance professionals will have a very busy year. For example, I have placed several interims in the last few weeks to tighten credit and operational risk processes, an interim file review specialist in a pensions provider to investigate allegations of mis-selling and an interim lending specialist into a retail bank. At the other end of the spectrum I have just received a request from a client for an interim Head of Sales to ensure the top line does not fall in the downturn.
The last few weeks have been a very busy blur, long may it continue!
March 6th, 2009 at 12:30 pm
A few years ago, whilst my friends and ex colleagues were off setting up Mortgage and Loan Brokerages, chasing the “easy money” I sensed the unsustainability of that sector and rolled the dice towards additional investment in training. I enrolled in a Distance Learning MBA, completed CeMAP exams and PRINCE2 foundation course.
I started being involved with more and more aspects of the FSA handbook and EU regulation.
I now sense that I probably rolled the dice at the right time as I am seeing more work advertised in the Regulation and Compliance sector than ever before and I think this is just the start as organisations realise that the artificialness of the past 30 years has caught up with us and radical change in business models will be required.
What I am seeing are clients interested in Interims who not only have a Regulation and Compliance skill set but also a wider Operational knowledge which indicates a more holistic perspective to assignments.
March 11th, 2009 at 3:30 pm
Donald, I quite a agree, there has been an unchecked swing towards pure capitalism in recent decades all driven by a “fast buck” bonus culture. It’s now clear that the short term nature of operating in that way cannot be sustained and had it not been for Governments many banks previously considered immortal would have gone to the wall. It remains to be seen what sort of capitalism will emerge from the wreckage in years to come although I have a feeling that later in the century we will be referring to 2008 just like we are currently referring to 1929.
Just like yourself Donald I am finding that risk and compliance is dominating the interim landscape in the financial services sector at present, coupled with a healthy dose of financial controls assignments. I am expecting sign off of a large number of financial controls positions in the next few days, have just picked up an assignment for financial operations manager to identify how a secured lender can head off increasing arrears and have booked interviews for an assignment to build a new UK call centre from scratch.
In the morning I fly out to Val d’Isere to enjoy the slopes for a few days, if my Blackberry will let me that is!
April 2nd, 2009 at 1:29 pm
The end of a very eventful first quarter in the financial services has now been and gone. There are some encouraging signs from the sector although it is still very early days and banking is still in intensive care. Barclays stood up to scrutiny by the FSA who said they would not need additional funding, the FTSE is back over 4000 this morning and the G20 summit currently going on in London will hopefully yield some positive developments; even house prices rose this month according to the Nationwide’s Chief Economist, although one month does not a trend make. Hopefully we have taken the first few steps on the long march of recovery although I wouldn’t be so brave as to forecast it given the unprecedented events of recent times.
Demand for interims within the sector has held up well in the first quarter and we are well placed to have a good year although there is evidence of downward pressure on rates from clients and many interims are taking a flexible view in order to maintain continuity of work.
A key challenge for Providers at the moment is to ensure that they continue to forge relationships with experienced interims and those new entrants to the market who are committed to interim management for the long term. There are high numbers of candidates in the market looking to fill gaps between permanent roles with some “contract work” and it is more important than ever for us Providers to remember what our core offering is.