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Outraged by office politics? Frustrated by frozen pay? It may be time to be your own boss.
Jason Karaian, CFO Europe Magazine
May 11, 2009
"I had been on the corporate ladder for a while. I wanted more variety in life." And thus, ten years ago, John Stallabrass left his life as a finance director at listed companies for the more exciting, uncertain existence of an interim manager. He will probably keep at it for ten more. "I'm still doing it and still enjoying it," he says.
Although current financial conditions could be described as anything but boring, the prospect of being their own boss is enticing more finance executives. Rising pressure, pay freezes, investor ire and a bulging workload are just a few of the reasons they choose to step off the traditional corporate ladder. (Widespread restructuring, of course, is also giving many a push.)
For finance executives, the most obvious route to professional independence is interim management. In recent months, Alium Partners, a London-based placement agency, has been receiving three to four times the volume of applications than in the past, according to Kate Mansfield, a managing consultant at the firm, specialising in finance. "In a recession, people often turn to the world of interim management as a stop-gap," she says. Yet the agency prefers candidates who commit to interim work for at least two years, otherwise "the mechanics of it don't tend to work," cautions Mansfield. Nonetheless, "a lot depends on a person's background and experience."
Indeed, left to their own devices, independent contractors, consultants or entrepreneurs have unique tales to tell about life beyond the well-worn corporate path. Some rely entirely on their own network of contacts for work, while others mainly source assignments through agencies and other service providers. Some relish the freedom to work whenever they like, while others dread the prospect of any time off. Some are open to a return to the corporate world, while others are adamant about keeping control of their own destiny.
All By Myself
Stallabrass, for example, quickly found his first interim assignment and subsequently has sourced around two-thirds of his work through agencies, typically with little downtime between projects. Although other finance executives may also experience the ennui that motivated his move, the latest wave of managers stepping off the corporate ladder may have more in common with Geoff Dunn and Patrick Voorman.
As finance director of a UK IT services company struggling through the dotcom collapse around 2000, Dunn described the tension among board members and stress from issuing a series of profit warnings as a "scarring experience." After resigning in 2003, he was "determined not to go back to a regular career," he says. "I have managed my own destiny ever since." He is comfortable with months off work at times, which he sees as necessary to "recoup, recover and refresh" after assignments.
Voorman speaks of a similar reason for leaving his last CFO role, in 2002. After hitting "bad weather" at a Dutch telecoms company, he no longer wanted to "give my all so that others benefit more than me." He reckons he's earned about as much money as if he'd remained permanently employed as a CFO, and relishes the independence that comes from "not being bound by rules or politics, and saying whatever you want, whatever you think is right."
Nonetheless, Voorman's experience as an interim has been "up and down." Without a concerted, prolonged effort, a finance executive's network is probably not robust enough to provide immediate opportunities upon leaving the corporate world, and agencies can help only so much. When he was a CFO, he ran a "lean and mean" department, with "everybody up to their eyeballs in work." Given the increasing demands on finance functions, he — like many others — reckoned that the need for interims would rise accordingly. Now out of work for five months, he is "surprised that the market for finance interims is so difficult," he says. "I have buffers to get through tough times, but I didn't expect it to be this tough."
In a survey last year of 1,900 finance and HR managers in Europe, recruitment agency Robert Half found that more than 60% thought the use of interim managers would rise in the near future. But "that's not to say it's easy to get an interim job," says Ian Graves, the agency's managing director for continental Europe. Candidates simply looking to ride out the recession with an assignment or two "will quickly be found out," he says.
That presents a problem for those now going solo. "In this market, an employer is more likely to opt for a seasoned interim professional than someone recently made redundant from a permanent role," says Ashton Ward, a partner at recruiter Archer Mathieson. "If you're a new kid on the block, you've got to be extremely impressive to make it on the shortlists."
Some have found it easier not to try. When Patrick de Montferrier was looking for a permanent position last year, an agency unexpectedly brought up the prospect of an interim finance director assignment at a Nordic unit of French engineering group Alstom. Given his "old-fashioned" finance career, he was attracted by the offer to "redesign and reshape" the company, something he would never have been able to do at the companies he had worked for before. Six months later, as the project approached its end, another assignment — for another French group in Norway — came to his attention via LinkedIn, the professional networking website. He starts this month, and plans on another two or three years of project-based work before he resumes the search for a permanent CFO role.
Armin Woerle occasionally entertains the thought of permanent employment, but after 13 years as an interim manager, there may be no going back. When he left Arthur Andersen, it was difficult to land a corporate role because "I never had a line-management position," he recalls recruiters saying. Now, after many years and many assignments — he can't remember off-hand just how many — recruiters argue that a permanent role may not be a good fit because "I have never held a line-management position," he says. At any rate, Woerle now sources most of his interim assignments through his own network, and the lessons he takes from each project — he likens it to a "benchmarking exercise" — have made him particularly effective in turnaround and M&A situations.
But even with a big headstart on those now entering the interim job market, Woerle is feeling the competitive pressure. When he first started, the daily rate for an interim manager was some 40% higher than it is today, he says. A survey of German interims published earlier this year by Ludwig Heuse, a placement agency, didn't paint quite as bleak a picture. But it still wasn't welcome news that respondents said their average daily rate had risen only 4.5% over the past five years.
To differentiate themselves in this increasingly crowded market, some former CFOs-turned-interims are blazing new trails. Robert Prince moved from the US to Amsterdam in 1980, working his way up the finance ladder until he became European CFO for IT firm Unisys. Having "been there, done that" at big companies, he says, he set out on his own, picking up hands-on interim assignments at increasingly small firms. At a software company, Prince realised that what it needed wasn't help with a short-term assignment but ongoing financial direction. "They needed a CFO, but only part-time," he says. This was a service he could offer the company, and others like it: a CFO with "all of the professionalism at a fraction of the price." Though part-time jobs don't earn as much as interim assignments, the work is steadier and he can juggle up to five at a time. "It gets hectic," Prince admits. "I know what I'll be doing this week, but next week is sketchy. You have to be flexible, adaptable and able to live with uncertainty."
Some former finance chiefs go even further, forgoing work as contractors in favour of using their skills to create something entirely new. After rising through the finance ranks of UK advertising agencies, Stephen Broderick set out on his own and founded a company that helps advertisers audit their agencies "with the knowledge of how agencies really run their finance," he says. (See "Mad Men" at the end of this article.) He's since recruited 30-odd former agency finance executives to his cause. Though he initially thought it would be difficult to woo executives from the pay and benefits that big companies offer, "we found it easy to encourage people to step off the normal finance ladder and do something different," he says.
"We plan well financially." At a company founded entirely by former CFOs, that should go without saying. As Stephen Broderick, managing partner of Firmdecisions ASJP explains, the company has grown from two employees in 2000 to more than 30 today, in six offices, on five continents, with clients in 60 different countries. And all of this without ever borrowing money. "We take calculated risks that we are 90% certain we can achieve," Broderick says.
The company was borne from the frustration of a finance chief confined to the back office. Contrary to the advertising industry's trendy image, the sector's finance executives often find themselves "sitting in boxes and crunching numbers," says Broderick. What's more, from his vantage point, which included a stint as European CFO for ad agency Young & Rubicam, he saw how advertisers often engaged advisers who "didn't understand much about the vagaries of the industry" when they audited their clients' marketing spend. While exploring the idea of setting up his own agency audit firm, Broderick found out about a like-minded finance executive in Australia. They founded the firm at their first meeting.
"We had a big client in the first couple of months," Broderick recalls. "Word of mouth spread very quickly about an audit firm made up of ex-finance people from the industry." Today, the firm handles 16 of the world's 20 largest advertisers, including Coca-Cola, Nestlé and Sony.
For the partners — all ex-CFOs or finance managers — leaving the "protective barrier" of a big company can be difficult at first. Nonetheless, Broderick hasn't found it hard to recruit finance executives itching to unleash their inner entrepreneur. "We don't work to set formulas so you're encouraged to think on your own," he says. Formerly banished to the back office, partners who are now thrust in front of clients to pitch for business get an "incredible buzz," he says.
Jason Karaian is deputy editor at CFO Europe.