From time to time almost every business will encounter a situation that requires outside support – extra resources and/ or expertise from external individuals or businesses. This could be legal advice on a specific matter, a freelance marketing consultant, ad hoc temporary resource to cope with busy periods or multi-billion-pound outsourcing deals and everything in between.
These flexible external resources, sourced and used correctly, can be of enormous benefit to businesses, allowing them to adapt to and overcome new challenges far more quickly than if they relied solely on internal staff and their knowledge. This might sound contentious but imagine if every small business had to have its own fully-fledged accounting function rather than using an external practice, or if every enterprise needed to have top tier legal talent in-house, at all times, just in case they found themselves in a serious litigation situation. It simply wouldn’t work.
In my experience these external resources fall broadly into three categories – contractors, interims and consultancies. The first two are clearly individuals (our temporary staff or freelance marketing consultant in the examples above) the latter an external business (the legal firm or Business Process Outsourcing (BPO) provider).
For many situations a potential buyer of external support and expertise can turn to more than one of these categories – legal advice could come from an independent consultant or an established firm, seasonal staff could be hired as individual contractors, or a business could be engaged to provide them en masse.
Which route is chosen, and a proper understanding of the benefits and disadvantages of each, can have a significant impact on the outcome, cost incurred, and value provided.
Contractor and Interim Manager – are they the same?
In short, no.
Broadly a contractor is an individual that has similar skills and experience to existing employees within an organisation, but that applies them either on a temporary basis, on an hourly or daily rate basis, or via a fixed term contract. Good contractors are highly delivery focussed, will pick up ways of working quickly and begin delivering value from day one.
The best interims have all the delivery focussed attributes of contractors and also bring skills and experience missing within the permanent population. This gives them the ability to advise clients and shape solutions to business challenges – how to select and implement a new system or operating model for example.
These definitions are more important than ever with the changes in IR35 legislation. It is far more likely that contractors will be deemed to be inside IR35, and interims outside.
Choosing the right external support
Whilst there will always be exceptions to every rule, we tend to find that engaging with consulting firms is more expensive than engaging interims, and both are more expensive than bringing in contractors. As ever, the most benefit is gained by balancing cost and benefit, so it is important to understand both the requirement of the business and the capabilities of each resource type.
As a prospective buyer there is a relatively simple framework that can be followed:
- Do we know what do we need to do?
- Do we know how to do it?
- Are we capable of doing it?
If the answer to either or both of the first two questions is “no” then advice or thought leadership is required, and the answer is either interim or consulting. Both will have the skills and experience to recommend the right solution for their client, based on numerous previous clients and a full understanding of all viable options, as well as the ability to deliver the solution.
If the only negative answer is around capability, then it is most efficient and cost effective to engage contractors to provide the extra resource to deliver whatever it is that the client dictates
Interim or Consulting Firm?
Assuming that we are committed to the interim or consulting routes there are a few other nuances to consider; alignment to client need and knowledge transfer.
The world of interim is relatively small, and everyone thrives or fails based on their reputation. Their only goal in every assignment is to deliver maximum value for their client, as failing to do so can limit or end their interim career.
This is not necessarily the case with many consulting firms, where partners and senior individuals are under pressure (and rewarded) to sell more work/services to clients which makes it tempting for consulting firms to place client needs secondary to generating revenue.
Secondly, whereas an interim professional’s reputation is based not purely on delivering a solution, but on how much value that solution delivers after the interim has left, they have a significant interest in ensuring that the client is fully capable of operating without them once they have finished their assignment – fully completing their knowledge transfer.
This is not necessarily so for consulting firms, and the commercial rewards of repeat business can make it tempting not to complete knowledge transfer, creating dependencies that allow the firm to continue to charge to support the client.
It would be unfair of me not to point out that there are areas where, for reasons of size, complexity and risk profile of the solution required that the interim path is simply not capable of delivering, making consulting the only option.
I hope this guide has provided some useful insight into how to engage the right type of resource to support your business.
In many cases, and especially in the world of CFO sponsored change in which I operate, the best solution is a blend of employees, contractors, interim professionals and consulting firms. Managed correctly this model can deliver sustainable, impactful transformation in a cost-effective manner.
If you would like to discuss anything in this blog further or explore how Eton Bridge Partners’ network of tried and tested interim professionals could support your business, please do reach out.
Table below: Capability matrix for external support models
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