“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.
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. (For more, read “/a>The Ephemeral Finance Executive.”)