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Interim Management

Published on July 2nd, 2014 | by Scott Hutchinson


Why Are Interim Management Contracts So Important?

Agreeing an interim management assignment with a handshake is a risky tactic for any interim executive. With over 10 years experience in the interim industry, Alium Practice Head Scott Hutchinson discusses the importance of interim management contracts and the risks of getting it wrong.

Let’s start by saying that the contract should be the cornerstone of the interim business relationship, not an awkward bit of admin or afterthought.

I’ve spent enough time surrounded by interims and interim users, to know that there are two types of company – those that have had contract problems and those that could have a contract problem.

By all means work without interim management contracts (I’ve seen some very successful independent interim assignments done on a friendly handshake), but be aware that in doing this both parties leave themselves wide open to potential disaster. Things go wrong in business and friendships quickly evaporate under the weight of litigation or investigation from HMRC about employment status (particularly relevant in the context of IR35). In addition, the quickest way to lose a friend is often going into business with them. It’s better to formalise things properly, that way everyone knows where they stand.

What Do Interim Management Contracts Look Like?

Generally speaking an interim contract will consist of two parts – the “commercial provisions” and the legal documentation. The commercial provisions will generally take the form of a schedule – containing the basic details surrounding dates, fees, expenses and the requirement for the assignment. The legal background will be the framework under which the interim agrees to supply and the client agrees to engage the services specified in the schedule.

Whether you are working directly or via an agency as either a user of interim services or a provider, then you need to ensure that the contract is not only fair and equitable but legal as well. Perhaps worse than “no contract” is the contract which is hopelessly out of date or protects one party without parity.

A good interim contract should protect both parties and be balanced. Although it should be created by a legal professional, the contract should be easy to interpret -  as Einstein famously put it “If you can’t explain it simply, you don’t understand it well enough.”

In summary, anyone providing an interim contract, be they a provider, a client or an interim, should be able to answer at least the following questions positively:

  • Is the contract up to date on all relevant legislation?
  • Is it fair to both parties?
  • Is it easy to understand?

What is your experience of interim management contracts? Have you ever agreed terms with just a handshake? Please share your thoughts and experience using the comments box below.

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About the Author

Heading up the FMCG Practice, Scott and his team are responsible for finding the very best leaders and transformational teams across all disciplines, including the provision of board-level executives and professionals in Operations, Technical, Supply Chain, Engineering, Commercial and Development/Innovation.

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