As a Managing Director who has launched and developed 6 different businesses in Africa I have worked with EiA in several different capacities. I have been a potential candidate, I have worked for CEOs they have placed and I have been on the client side a number of times. While I would wholeheartedly endorse their ability to provide the right long-term executive talent given a retained search mandate, I would like to focus on what happens in the meantime. Can Interim assistance really provide value or does that way madness lie?
To be candid, even as an owner Founder in South Sudan where management capacity was our rate-limiting factor with plenty of growth runway, I was sceptical. I was not convinced that a costly short-term resource would add more value than finding the right long term management team and incentivising them well.
However, more recently, I was asked to take on an Interim COO role to help a fast-growing and innovative Asset Finance business in Uganda to deliver more than 100% annual growth. That first-hand experience redefined my view on how direct and immediate assistance can deliver real value short term. My goal here is to give you an overview as objectively as possible.
If your business is mature with a steady growth rate and you have already developed a stable and well balanced management team with plenty of spare bandwidth then it is less likely that additional resource will generate marginal output.
However, if your growth has a operational rate-limiting factor – lack of funding, supply chain constraints, competition, lack of marketing initiative or effectiveness, lack of scalable sales tools, management capacity or experience or any other – then it may well be far more appropriate and far more valuable than you thought.
Fundamentally, any one of those limiting factors can be translated back to lack of Human Capital in your business; you either don’t have the ability to address these issues; you don’t have the relevant experience or; you don’t have the bandwidth to get there. As a business, you don’t have the people and skills you need to overcome the challenges you have today.
“Lets recruit to attract and retain those skills” – yes but that is only the second half part of the solution. A Retained Executive Search, which will likely deliver the right long-term solution, involves many hundreds of hours of professional search expertise over many weeks, followed by multiple interviews and assessments around your already busy schedules not to mention notice periods and possible time to relocate. In most cases this means at least 6 months until your new hire is up to speed and delivering real value.
There are risks, and Interim resources are not for everyone. However, where there are high opportunity costs of not maximising growth while a retained Executive Search is undertaken and where the right experienced Interims can generate significant tangible value, there are some compelling reasons to accelerate your growth right now. Here are some of my other top tips if you are considering bringing in Interim Resources or should be;
- Check that this makes sense for your business
- Is your rate-limiting factor not bandwidth where simply adding resource may not help?
- Will injecting specific skills to help alleviate your challenges increase output?
- What is your short term priority? Focus on the immediate skills and experience you need
- Is your untapped potential worth more than the cost of some immediate assistance?
- Top 5 reasons to work with Interims
- To provide capacity to solve problems and drive growth now, not later
- To inject experience, specific skills and management bandwidth to kick start change
- To capitalise on your growth, revenue and margin potential ASAP
- To provide an objective independent professional review of your business
- To provide a different set of skills short term to your long term talent pipeline
- 5 further advantages of Interims in Africa
- Available much faster on a flexible basis – usually in less than 2 weeks
- A low initial commitment with fixed costs
- No HR precedents enabling faster internal approval at your end
- Seasoned Expats experienced in deploying quickly and focusing on ‘low hanging fruit’
- How to choose your Interim
- Favour those with multiple experiences of Interim projects for ease and quality of integration
- Identify and interview against a required short term skillset and experience
- Interview and test track record of results of execution not just theoretical activity
- Check for cultural fit through experiences in similar environments and companies
So what is the cost of not making any progress against those rate-limiting factors mentioned above for 6 months whilst you hire a permanent Senior manager? What is the real opportunity cost of Growth Later vs Growth Now?
Basic economic theory provides that at a micro level, every employee must provide more value that they cost in order to justify their employment on a pure cost-benefit basis. At an Executive level one would hope and expect at least to double the value relative to the total cost in order to provide for an internal profit on the creation of the role and to cover the additional externalities.
In an inverse sense, once you have made the decision to create a new position, every month that goes by without that person in situ must have an opportunity cost to your business of at least double their total monthly cost, otherwise you wouldn’t want to recruit for that role.
Additionally, the real opportunity cost of not having the bandwidth to drive towards your goals for a period of 6 months is the commercial value of the difference between your current growth rate and what the growth rate could be with your rate limiting factors alleviated. Where a marginal 50% growth might be possible on turnover of some $2.4m with gross margins of 50%, the opportunity cost is $50,000 per month, which would otherwise go straight to the bottom line.
It is worth noting that the marginal growth available is not related to your current growth rate which may be high or low but rather how much additional growth could be achieved by replicating senior management skills and doing so quickly. Regardless of whether your company is growing at a steady 10% YOY or more than 80%, how much more value could you generate tomorrow if you could clone your best executives instantly?
This valuation rationale might not sit well against your normal pay-scale or even your usual sense of what is good value. However fundamentally, if the additional value created by acting now is greater than the cost to begin acting now, then there is a strong economic argument to bring in some additional direct assistance, especially when considering not just the bottom line but the overall effect on enterprise value from the marginal performance.
Can Interim assistance in Africa deliver real value?
Given the potential we see across the continent, the opportunity costs of inaction or delayed progress are commercially significant and usually far greater than the modest costs of the immediate assistance that can unlock the value in your business.
Even as a former sceptic, I would strongly urge anyone who would benefit from additional experienced capacity to get in touch with EiA for a discussion on how to source the right blend of skills and experience to inject in the short term.
About The Author
John Agnew has spent more than 12 years building and scaling more than 8 different high-growth ventures to profitability and beyond in his native UK market, Cameroon, Tanzania, Kenya, Uganda and South Sudan. He has enjoyed broad functional experience as an MD, COO, Commercial Manager, Interim Finance Director, Interim IT Manager, Supply Chain Co-ordinator, Security and Risk Management and many more.
John has also undertaken multiple short-term direct assistance projects in Africa and most recently a 12-month Scaling Consultancy and Interim COO position. He now offers Consultancy, Project Assistance and Interim support to companies operating in Africa.
Please contact Sarah Fitzgerald, MD at Executives in Africa at firstname.lastname@example.org if you would be interested in speaking to John about an opportunity to drive growth in your business.