After several years of helping to manage the strong overseas growth of her employer, Sapient Corp., Susan Johnson had to make a choice. As CFO of the Cambridge, Massachusetts, consulting-services provider, Johnson recognized that her finance team could no longer handle all of the work associated with the company’s surging international business, which now accounts for nearly 50 percent of revenues. But she didn’t have time to set up an international finance team from scratch.

“We realized that we were now at a size where it made sense to add some senior leadership, but we [weren’t sure how to go about it],” she says. “Still, we needed to add extra bandwidth quickly.”

Instead of bringing in consultants or gambling on a new full-time hire, Johnson opted for a temporary finance executive. At the recommendation of a board member, she hired Larry Harding, an experienced manager with a background in international business. As interim vice president of international finance, Harding is refining the company’s approach to overseas finance, as well as working to build the UK finance operation and advising Johnson’s team on what to look for in a permanent executive.

Sapient’s experience is not unique. “There has been a fundamental shift over the past 10 years, where companies are now much more comfortable with the idea of using interim finance employees,” says Karen Ferguson, executive vice president of Costa Mesa, California-based Resources Connection. Only eight years old, the company now has more than 1,200 clients. Because companies need seasoned employees to help with Sarbanes-Oxley Act compliance efforts, the past two years have been especially busy for finance-staffing firms, a group that includes Resources Connection, Robert Half Management Resources, Tatum Partners, and Executive Interim Management.

Interim finance executives generally have more experience than the workers supplied by Accountemps (a division of Robert Half); they also typically report directly to a company’s CFO. And although similar to traditional consultants, project professionals differ in one important respect: unlike consultants, they serve as members of the finance staff. Consultants bring in plans and a methodology; interim executives, although they too bring expertise, work under the direction of existing management.

This distinction is important. “Finance people have paid through the nose for consultants in recent years, but they didn’t get the return,” comments Richard Roth, chief research officer at The Hackett Group, a business-advisory firm based in Atlanta. “Now they are looking to get the work done internally.” Bringing in interim finance employees to work under the guidance of company management satisfies many companies’ need for greater control.

Part Time All the Time?

Companies use interim employees for several reasons. Sometimes they are brought in to fill a vacancy until a job can be filled permanently — not surprising, given that finance jobs typically stay empty for 40 days. By finding someone overqualified to temporarily do the work, some companies use the occasion to redesign — and perhaps eliminate — the position. “When someone leaves, you often find that your needs have changed and that some of that person’s work is no longer needed,” says David Lewis, CEO of The David Lewis Co., a Woodland Hills, California-based financial-consulting firm. It’s harder to make the change after hiring a full-time replacement.

At other times, companies use interim managers for specific projects ranging from restructuring and initial public offering preparation to compliance efforts. Paul McDonald, executive director of Robert Half Management Resources in Menlo Park, California, reports that during the past year, Sarbox staff-augmentation projects have been a major source of new business for his company. “With an uncertain economic recovery, there’s a fine line for CFOs to walk,” he says. “If you’re too slow to staff, you’ll fall behind on your compliance deadlines; if you staff too quickly, you won’t improve the bottom line as quickly as you should.”

There is also a more-basic change driving the use of temps — one not limited to finance. In the past decade or so, CEOs have demanded sharply reduced spending from such cost centers as finance, human resources, and procurement. For finance, this has meant smaller staffs. According to Hackett Group data, finance departments have employed fewer and fewer full-time employees (FTEs) in proportion to company revenues since the firm began collecting these numbers in 1996 (with one caveat: in the past year or so, some companies have seen an uptick in FTEs per $1 billion in revenues due to regulatory-compliance efforts).

The predictable outcome is that many finance departments are straining to do more with less. When an additional project comes along — whether an enterprise resource planning implementation or a request for customized financial analysis — CFOs often have no one to dedicate to the new work. For some, this has led naturally to a new model: a smaller core staff of full-time finance employees, supplemented by project professionals as needed.

This is the case at Sony Pictures Entertainment in Culver City, California. “Our parent company has been tightening its belt year over year,” says Irwin Jacobson, controller for the company’s Studio Services division. “The drive is definitely to reduce overhead, and the easiest way to do that is to reduce staff.” Indeed, Jacobson’s staff has shrunk recently from 24 to 15. As a result, when his department’s workload rises — because an employee has quit or the department has been assigned a project — he brings in outsiders. “The company recognizes that there’s no real way to get all the work done with existing employees, so we bring in ‘backfill’ staff.”

For lower-level accountants, Sony uses Corestaff Services, a Houston-based temporary-services firm that maintains an office on-site. For higher-level finance managers, it uses such firms as David Lewis. Sony doesn’t always use the interim workers to staff the projects. Instead, Jacobson will often shift his full-time employees over to the project and use the contract workers to perform the department’s ongoing work.

ACNielsen, a market-research giant, also relies heavily on project professionals. According to Monica Sowers, director of financial reporting, the company routinely brings in outsiders for activities such as process-efficiency efforts and work on the function’s reporting database. Someone from Sowers’s group manages the project, and the interim finance workers do the legwork. “Outside professionals bring a best-practice perspective,” she says. “They aren’t tainted by having worked inside one company for too long.”

Like ACNielsen, CPS Human Resource Services, an HR consulting firm based in Sacramento, uses interim finance staffers to take advantage of their expertise, but also as a hedge against uncertainty. A year ago, the company won a large, five-year federal-government contract. The government’s complex procurement rules made it necessary for CPS to hire finance employees familiar with government work. But because the contract allows the government to back out at any time after the first year, CFO Fili Gonzalez decided that hiring interim workers from Robert Half made more sense than having full-time employees. “We needed people right away, but didn’t want to make a long-term commitment,” he says.

The Price of Flexibility

Such a heavy dependence on interim finance employees does pose some problems. Not surprisingly, the best interim executives are costly — hourly fees can range from roughly $80 to $350. And temps, by definition, are motivated by short-term rewards — maintaining a large contingent of outside workers might dilute efforts to get all employees working toward a company’s long-term goals.

And then there is the effect on the full-time staff. “People development is a concern,” admits Sowers of ACNielsen. “If all the best projects are going to outsiders, how do you give your full-time employees enough interesting opportunities? We try to mix things up and get our regular employees involved with the projects where possible.”

There are also knowledge-management questions. Can the organization retain the expertise of the interim managers after they leave? And how much of the organization’s own knowledge will walk out the door with the manager? John Boudreau, a professor of management and organization at the University of Southern California’s Marshall School of Business, argues that CFOs should first determine which finance activities give the company a competitive advantage, and hesitate before using outside resources in these areas. “You run the risk of your project work being similar to what everyone else can get,” he says. “And because others can hire [the project professionals], what they learn in your organization can be transferred to another organization.”

Of course, the staffing companies have ready answers for many of these concerns. For example, they argue that the hourly cost is offset by flexibility. Traditionally, when a company had a pressing five-month project, it would hire a full-time employee and then try to find something else for that person to do at project’s end. Since they leave when the work is done, temps can be cheaper in the long run.

As for concern about the commitment of a short-term employee, Dennis Powers, managing director of Executive Interim Management in New York, says that because of the need to maintain a strong reputation, interim executives tend to be even more motivated than full-timers. And to address some of the knowledge-management worries, companies like Robert Half arrange a formal transfer of information from the interim manager to the full-time staff, often through a training session.

For better or worse, it looks as though the elastic workforce is here to stay. According to the American Staffing Association, the total number of professionals on staffing-company payrolls has almost doubled in the past decade, from 21 million in 1994 to 41 million in 2003. And if finance departments continue to be slim relative to the size of the companies they support, they will have to replace with temps what they’ve lost in full-time staff. “I just don’t see fatter times on the horizon,” says Sony’s Jacobson.

But in the process of adjusting to a leaner diet, CFOs may find an unexpected benefit: the ability to hire employees with the exact skills the company needs for only as long as the company needs them. As CPS, ACNielsen, and others are finding, elasticity can be a virtue.

Don Durfee is research editor at CFO.

Where To Find Them

Ajilon Finance
2 Park 80 Plaza West, 9th Floor
Saddle Brook, NJ 07663

The David Lewis Co.
6303 Owensmouth Ave., 10th Floor
Woodland Hills, CA 91367

Executive Interim Management
450 Park Ave., Suite 2000
New York, NY 10022

Heidrick & Struggles Interim
233 South Wacker Dr., Suite 7000
Chicago, IL 060606

Resources Connection
695 Town Center Dr., Suite 600
Costa Mesa, CA 92626

Robert Half Management Resources
5720 Stoneridge Dr., Suite 3
Pleasanton, CA 94588

Tatum Partners
4501 Circle 75 Parkway
Atlanta, GA 30339