Printer Friendly

Temporary financial executives: who are they and who use them?

Temporary financial executives: who are they and who uses them? Arun Deva worked for Touche Ross & Co. for about a dozen years, before its merger with Deloitte Haskins & Sells. But as a partner in the large accounting firm, he found the work had become fairly routine, and he yearned to get more involved in the operating end of the company's business.

Today he's working with the kind of challenges he enjoys, helping smaller businesses handle their rapid growth or troubled financial situations--filling in on an interim basis. He jumps in and makes the financial decisions needed, sometimes in the role of chief financial officer, and then it's on to the next project.

He is one of a growing number of financial executives formerly with large corporations who are now working temporarily for smaller companies in need of their expertise. Some, like Deva, plan to continue that interim work indefinitely. Others, perhaps forced out of previous jobs by mergers, takeovers, or the downsizing of staffs during the '80s, are accepting such positions only until they can land suitable permanent employment.

For the temporary worker, the arrangement offers the possibility of constant new challenges with freedom from many of the political in-house battles confronting the permanent workers fighting for promotions and raises. And it provides the potential for a more flexible lifestyle, giving workers free time for family and other outside interests. For the unemployed in search of a full-time position, it offers a way to pay the bills and make contacts. And for those who have retired from the race, it's a chance to keep a hand in their profession and share the expertise they have gained over the years.

Employers of temporary financial executives can gain from the arrangement, too. Lower benefits costs and more flexible use of workers are among the advantages. Individuals can be hired as needed, eliminating salaries during times when they aren't needed and reducing the possibility of layoffs. Temporary staff can fill in for employees on leave or can handle new jobs until the company decides whether a full-time position is warranted. Startup companies and corporations facing special problems, such as Chapter 11 bankruptcy proceedings, can draw upon the expertise of temporary financial officers who have in the past worked for some of the country's most prestigious corporations.

The use of temporary executives is part of a trend, begun during the past decade, that involves the increased use of the "contingent" workforce, which includes part-time employees, consultants, and subcontractors as well as temporaries. Richard S. Belous, an economist with the National Planning Association, reports that 52 percent of new jobs created in the 1980s were contingent positions, and these have increasingly been high-level jobs.

Of course, interim executives have been used in the past but generally without the formal job-matching arrangements now available. In response to the new emphasis in the United States on a flexible workforce, services have been springing up to match temporary workers with an array of highly paid jobs. Now, financial executives, as well as doctors, lawyers, chemists, graphic designers, and computer experts, can turn to specialized organizations to help them locate temporary employment in which they can use their high-level skills.

Most of the demand for rented financial executives has been from smaller companies that don't have the needed talent in-house. Larger corporations confronted with the need for such skills often borrow someone from another section of the company. But Ronald J. Diorio, president of the Drakewood Company, a New York executive search firm, expects that may change in the future as employment rolls of larger companies become so lean that firms find themselves with no human resources to free up for special needs. In fact, he says his company, which a year ago began a division specializing in interim executives, has been asked by one of the Big Three automobile makers about providing executives to help it close down plants.

Troubled companies, such as those embroiled in reorganization under Chapter 11 of the Bankruptcy Act, are especially good candidates for high-level temporary financial expertise. When a company's chances of surviving are poor, financial officers often flee, leaving the firm with the difficult job of hiring new financial specialists who are willing to hitch their fortunes to a company that appears to be folding. The answer for many is a temporary employee.

Some seasoned executives especially enjoy taking on such a challenge. "In a turnaround, you need hard-hitting experience," says Diorio, or what he calls "a firefighter."

"Once somebody's done turnarounds," he continues, "it gets in his blood. . . . It's exciting."

They're available

Though the number of temporary positions is growing as companies respond to cost concerns by adding contingent workers, firms locating interim jobs for financial executives report they receive many more applications for such positions than they have openings to fill.

Richard T. Azar, president and founder of CFO Resources Inc. in New York, a firm that specializes in placing financial professionals in temporary and permanent jobs, says placement of temporary financial specialists is now "a fairly low-volume business." But, he predicts, "the whole area of executive rentals is one that is going to grow over time because of demographics." He cites companies' efforts to lower overhead costs and a shrinking pool of highly skilled labor as factors that will lead to the growth.

In the meantime, he warns financial executives not to leave a permanent job with the hopes of making a living through jobs arranged by temporary executive services. "This is something they should view as only a stopgap measure until permanent employment is found," he says. "At this point in time, it's simply not a viable alternative to permanent employment."

But some view it as a good way to secure permanent employment. Norman Klivans, vice president of Klivans, Becker, & Smith, a temporary and permanent placement firm located in Cleveland, says it offers advantages to both the potential employee and employer involved in the hiring process. "When most people are being interviewed for a job, it's like a big dating game," he says. "They are on their best behavior." But with temporary assignments Klivans believes each party gets an opportunity to see whether a permanent assignment would work out--and, indeed, it often does lead to a permanent position.

How can a financial specialist land a temporary job? Drakewood's Diorio says in the past financial executives have often been "buy-side people," accustomed to having people come to them, but he says job hunters should "put themselves in the sell-side mentality." He urges them to contact a lot of people--more than they might think necessary--being as creative as they can.

"The focus has got to be on what skills they have to offer as opposed to what jobs they've held," says Cecile J. Klavens, president of the Pickwick Group Inc. in Wellesley Hills, Massachusetts. The firm specializes in a wide range of temporary and part-time placements of executives, managers, and professionals. For instance, according to Klavens, someone who has been a chief financial officer might emphasize skills like raising outside money.

Landing challenging temporary work can offer a refreshingly flexible lifestyle. Jack R. Morley was in his mid-fifties when he decided to take early retirement. He had been a senior vice president of Bank of America and was named chairman of a subsidiary finance company. He has found the temporary work to be a satisfying challenge. "It's not doing the same thing all the time," he says.

Morley has een impressed with the quality of the temporary workers he encounters through The Corporate Staff, the San Francisco firm with which he is registered. He says greater use of such personnel will depend upon making management aware of the availability and quality of the people willing to work temporary jobs, adding that they're not just people doing it because they can't get permanent jobs.

Linda Plevrites, formerly controller of the magazine division of Time Inc., decided to leave a permanent job after 24 years with the same company and is delighted with the flexible opportunities a temporary position has offered her.

After working for Time all those years, seven of them in the controller's position, "it was time to do something different," she says.

For 10 months she didn't work at all. Her husband had sold his restaurant about a year before she quit, and the couple enjoyed having free time together. She took classes, practiced the piano, and headed to the gym. "It was all for me, that was sort of the mindset," she says of those months of free time.

She tried donating her time to volunteer work, but the experience proved unsatisfying because she wasn't given tasks that took advantage of her talents.

And then the opportunity came along to work in a temporary position that was a perfect match with her skills. It was through John Thompson, chairman of Interim Management Corp., a New York firm that places interim executives. Working for Saatchi & Saatchi in a temporary position let Plevrites "make a really good salary and feel like I'm contributing a lot." The salary she receives as a temporary worker is about the same as it was at Time, just without the benefits or bonuses.

For her, the temporary situation is ideal: "I work, make good money, make a contribution, and then vacation."

Like these examples, interim executives generally have had a lot of years of experience. The Corporate Staff, for instance, only works with individuals with at least 10 years of experience and the average is about 20 years. The average age of their clients is in the low 40s.

The length of the stints worked by temporary financial specialists varies from a few weeks to a couple of years. And the extent of their responsibilities also varies. Some are instructed to avoid management roles. Corporate Staff associates, for instance, many not hire or fire, sign checks, or unilaterally establish company policy.

Paying up

Temporary executives may be able to earn as high a salary--or perhaps even higher--working on an interim basis as they did as permanent employees, but generally they do not receive benefits. Financial executives placed through Executive Corner of Accountemps, a subsidiary of Robert Half International Inc., for instance, generally earn $50 to $75 per hour. The staff at Executive Corner, located in San Francisco, specializes in the temporary placement of high-level financial professionals.

In addition to the cost of interim employee's salaries, the companies using the services of executive placement firms are charged a fee that is typically about a third to a half of the salary. The percentages may vary depending on the length of employment.

Methods of payment of interim financial workers differ. The Corporate Staff bills the client biweekly for the hours worked plus expenses. The company pays the employment firm, which then pays its associates. Drakewood gives the client company a choice of whether the executive is paid directly by the company or through Drakewood. Many prefer it to be done through Drakewood, which then handles payroll taxes.

Steven W. Saulten, president of Robert Half and Accountemps of Northern California, says the Internal Revenue Service's crackdown on companies failing to withhold taxes for individuals misclassified as independent contractros has caused many companies to reconsider the use of such contractors. He believes the concern over the issue "many be a contributing factor to the growth of the use of executive temporaries."

Though, in general, rented executives don't receive benefits, experts predict that situation may change in the future with an increased demand for temporary workers. And some are even pushing for legislation that would require benefits be provided to temporary employees.

For interim financial executives, the lack of benefits may not be a problem. Saulten says most of the temporary executives his firm places have coverage from other sources such as spouses and companies they worked previously as permanent employees. When surveyed about whether they would prefer benefits or more cash, Saulten's temps overwhelmingly selected cash.

Even if it pays higher salaries to temporary employees than permanent ones, a company may save money because of the difference in benefit costs. According to The Corporate Staff, 40 hours of a temporary executive's time will cost the company about the same amount as 30 hours from a similarly skilled permanent employee, considering the normal cost of a benefits package for permanent workers.

Placement service representative Klivans, however, says he doesn't know whether using temporary workers to avoid keeping larger permanent staffs in place really saves money in the long run. He expresses concern about the lack of company loyalty and emphasis on the short-term bottom line and thinks executives should be doing a better job of building their own staffs.

But some believe that, as more company representatives become aware of the role temporary executives can play and the quality of the talent available, their use will continue to increase.

"In effect, we're affecting the market ourselves," Interim Management Corporation's Thompson says of the educational role that placement services are playing in promoting the use of interim managers." I think it's becoming more acceptable."

Adds William Crandall, president of The Corporate Staff: "This is kind of a creative approach and the American spirit of 'let's get the job done.'"

Margaret Davidson has researched and written several articles about temporary executives.
COPYRIGHT 1990 Financial Executives International
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Davidson, Margaret
Publication:Financial Executive
Date:Mar 1, 1990
Previous Article:The changing workforce - and its tug on your bottom line.
Next Article:Are child care assistance programs a crucial investment?

Related Articles
Implementation of FAS 96: temporary differences - scheduling and reversals.
Comments on T.D. 8257 and INTL-304-89: interest allocation - transition rules, March 16, 1990.
More companies using temporary help.
A worksheet for accounting for deferred taxes.
Managing a temporary workforce: to get the best from contingent employees, don't treat them like 'temps.'
The temporary executive.
CFOs for hire: the rewards and pitfalls of being an itinerant executive.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters