Jason Atkinson, chairman of The Interim Management Association (IMA) and Managing Director, Russam Interim

Banking and finance accounted for 53 per cent of all interim management assignments in the UK’s private sector during the first quarter of 2012, up 14 percentage points from the previous quarter.

This finding comes from the latest Ipsos MORI survey, conducted on behalf of the Interim Management Association (IMA), the industry body representing the leading UK companies that recruit interim managers.

The survey reveals that interim managers are fundamental to driving the huge changes in the UK banking sector following the economic crisis.

Interim managers
Interim managers are top-level executives or project managers capable of adapting to new environments and delivering results before moving on to the next assignment. Available immediately, they are experts in their field with drive, energy and a track record of quantifiable achievement.

Interim managers provide a flexible and strategic labour force, which can be turned on and off to suit an organisation’s exact requirements. They are hired by businesses on a project basis to solve problems, and can fill gaps or take on strategic roles.

The UK’s interim management sector
The UK has the most established interim management sector in the world, worth £1.5 billion per year, according to the IMA’s Ipsos MORI quarterly survey. The sector has grown by 93 per cent since the pre-recession levels of 2006 and up to 15,000 interim managers work in the UK.

An increasing number of business leaders are seeing interim managers as a cost-effective solution to their problems. The survey revealed that the number of enquiries for interim managers increased by 18 per cent in Q1 2012, while the number of new assignments jumped by 20 per cent in the same period.

Interims working in banking and finance – where does the need come from?
There are several reasons for the large numbers of interim managers working in banking and finance in the UK.

The sector has always attracted interim managers because the management of programme costs and the structure of the work requires specialists for short periods.

In the current climate, the demand for interim managers has increased because the transformation of the sector, through the regulatory changes and the new banking environment, has brought a requirement for high level project management skills that are not always found within the sector.

The management of programme costs
At the beginning of each financial year, banks prioritise their critical programmes and assess how they will manage their costs.  Temporary labour can be written off against the cost of the project whereas employees are an on-going cost to the business, and banks will usually want a mix of the two.

Work structure
The overall programmes need programme directors to oversee them.  In addition, there are smaller projects that require specialists.  Meanwhile, analysts and testers will sit between the commercial team and the IT team.  All these roles can be filled by interim managers.

Regulatory changes
Banks need to respond to regulatory changes imposed by the UK government or European Parliament and there is an on-going need for skilled managers to work on short-term projects to deliver changes.

The new banking environment
Following the economic crisis, a new banking environment is developing that requires managers with specialist skills.  New systems are being put in place and banks are having to divest branches to satisfy European commission and competition laws.

Meanwhile, we have seen new banking models, with the launch of Tesco Bank, Metro Bank and One Savings Bank, and branches in Marks and Spencer.

The miss-selling of Payment Protection Insurance has also led to the need for managers to handle huge numbers of cases and write off billions of pounds.

Threats from Government
Whilst we cannot ignore the fact that increasing numbers of banks are benefiting from the use of interim managers, the sector is now being threatened by the Government’s plans to force short-term workers to go on to the payroll of a company.

The talent drain
Many interim managers will be extremely reluctant to be employed for a period of six to 12 months, rather than operating as self-employed experts who invoice directly to clients.

This is partly due to the changes creating a negative perception of the individual’s professional status as he or she could be seen as a potential tax avoider.  Although much has been made about individuals being unwilling to go on the payroll because, by invoicing from a limited company, they pay less tax and national insurance than if they had them deducted at source, in truth, the savings are often small.

But there is a bigger picture, interim managers will see their independence withdrawn, and their effectiveness reduced, if they are forced to become an employee.  As a permanent member of staff, it is more difficult to make the tough, but necessary, decisions that affect employees.

If the changes are implemented, many interim managers will see little benefit in taking a short-term contract and instead opt for a permanent job in the UK or interim assignments abroad.  Executives who were considering a career in interim management will also be deterred.

Wider implications
If interim managers are driven away from the sector, banks and other businesses will lose the ability to deploy independent executives who are able to make strategic, dispassionate decisions that benefit the companies hiring them.

In the banking sector, programmes and projects will be slowed down without interim managers, as recruitment for employees takes longer.

In addition, filling the gap left by interim managers who have taken long-term posts will bring greater cost to the public and private sector.  Organisations will need to hire permanent or short-term employees and incur costs, such as employee benefits and pensions.  Alternatively, they will have to hire management consultants, often at considerable expense.

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