The last couple of years have been a steep learning curve for managers. It’s been so long since we’ve suffered a recession of this magnitude (well, 1921, technically speaking), many haven't experienced such tough conditions first-hand. So perhaps it’s no surprise to hear from interim providers that their older generation of managers – the ones with first-hand experience of the lean years of the late 1980s – have been in particular demand in recent months...
‘Very few management teams have had to operate in combat conditions,’ says John Bloor, who’s a director at Alium Partners. Even the so-called turnaround specialists haven’t had quite the right experience, he argues: ‘Effecting turnarounds in a generally benign economic climate is a world apart from trying to effect them in a general recession, where the options for achieving it are so much narrower. You need people around who can bring the benefit of their experience – people who have been there, done it and got the scars.’ Not surprisingly, these 'battle-scarred execs' are apparently particularly useful for private equity firms – their financial whizz-kids may be great at cutting deals, but they know rather less about actually running companies.
So what exactly are these grey-hairs doing when they get into a company? Well, Bloor reckons priorities have shifted a bit lately. Last year the focus was survival – so companies wanted interims with a strong financial background who could (for instance) haggle with the banks over loan covenants and restructuring terms. But at the back end of last year, operational skills started to take priority. This is basically the second phase of the turnaround job: now the finances are control, companies are looking for organisational efficiencies – cost savings that won’t make them fall over as business picks up. (After all, lots of firms typically go bust just after the end of the recession.)
We imagine incumbent managers will see this as a mixed blessing. On the one hand, the arrival of an interim with this kind of remit might be seen to undermine their authority (indeed, these interims must need an awfully thick skin, since they’re never going to be universally popular). But at the same time, it means they can leave all the dirty work of cost-cutting to an outsider – which might make it easier for them to maintain good relationships with whoever’s left.
Of course, even these battle-scarred execs won’t have seen it all before – much has changed in the last 20 years, and some aspects of this particular recession (notably the problems lenders are having) will presumably make life more difficult this time round. Equally, there’ll be lots of younger managers who are perfectly capable of delivering this kind of change. But experience is clearly a virtue at the moment...
In today's bulletin:
Sterling pounded as euro plummets and deficit widens
Snow blamed for 'awful' January sales
BSkyB swallows £350m loss on ITV stake
Graduate jobs down just 9% in 2009
The value of battle-scarred execs