why full time ebook

e-book

Why Full Time?

Large Businesses may be able to afford and justify the full time engagement of high quality executives….BUT SMALLER BUSINESSES

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Contact: [email protected] Telephone: 08450 038213 www.nxd.co

Disclaimer: All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the author,

except for the inclusion of brief quotations in a review.

First Edition 2012. Copyright NXD Services 2012. Contact the author: [email protected]

Book design and production by Lean productions. www.leanproductions.co.uk

Contents

INTRODUCTION 3

PART 1 WHY DO BUSINESSES ALWAYS SEEM TO EMPLOY FULL-TIME SENIOR MANAGERS? 4

PART 2 IN WHAT CIRCUMSTANCES COULD PART-TIME EXECUTIVES BE APPROPRIATE? 6

PART 3 WHAT ARE THE BENEFITS OF ADOPTING A PART-TIME STRATEGY? 9

PART 4 WHAT ARE THE PRACTICALITIES OF ADOPTING A PART-TIME STRATEGY? 13

SUMMARY 16

ABOUT THE AUTHOR 17

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Introduction

INTRODUCTION

This short e-book is devoted to the topic of why the business world in the UK seems fixated on employing full time senior

executives.

Whilst it may be appropriate for large corporates to engage their senior executives on a full time basis because they have

the finances to fund as such and the breadth and depth of work to keep them occupied - but for SME’s and smaller listed

companies??!?

If you sit back and think about it, it’s totally illogical for most companies to employ full time senior executives. Business is

very used to employing other types of workforce on a part time basis but not senior executives – yet the benefits to most

businesses of employing their senior staff on a part time basis are much bigger.

What I want to do in this book is firstly explore why businesses always seem to go for full time senior executives, secondly

to look at the circumstances in which part time executives could be appropriate, thirdly to look at the benefits that can be

accrued by adapting a part time strategy and finally look at the practicalities of adopting such a strategy.

One final comment before we get into the detail – this is an important topic, it is in fact one of the most important topics for

most businesses in the UK today. I would confidently estimate that over 95% of British businesses could significantly

improve their financial performance by adopting, at least in part, a part time employment strategy for senior management.

In my line of work I come across SME’s every day and I have yet to come across one that I don’t think could benefit from

this strategy – it is that fundamental, that important and that compelling.

WHY FULL TIME?

Biography Why Full Time?

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Contact: [email protected] Telephone: 08450 038213 www.nxdservices.co

PART 1 - WHY DO BUSINESSES ALWAYS SEEM TO EMPLOY FULL TIME SENIOR MANAGERS?

We’ve always done it that way

I guess the most obvious answer is because that’s what

they’ve always done. It is actually an answer that you can

apply to many things in the business world. Strange,

because most senior business leaders would like to think

of themselves as broad minded people who are capable

of thinking “out of the box” and are always looking for

better ways of doing things. The reality however is that

most of them do not really challenge the status quo -

custom and practice, best practice, competence, tried and

trusted business processes, due diligence and so on tend

to be the most powerful influences in larger business and

tend therefore to form the standard business practice.

Before I go further let me make it clear that I am not

dismissing any of these things as wrong or inappropriate,

far from it because they all have an important place in well

run businesses, what I am however saying is that they can

stifle original thinking and can produce inertia if they are

too dominant.

Let me give you an example, Best Practice is all about

adopting the practices and processes of the businesses

that are most successful in a particular sphere of activity.

Yet if one applies this concept arrogantly and completely

then ultimately everyone will accept the same and no-one

will ever introduce anything better.

If you don’t believe me, let’s apply it back to the topic in

hand. Why do the vast majority of business both large

and small rely on full time senior management when you

read on and realise the very large benefits that can accrue

to a well thought out and sensibly implemented part time

strategy, you can (and I am sure will) only put it down to

custom and practice dictating that full time senior

management is what businesses need.

But this is not the full story there are other factors, some

of which are very genuine and need to be taken into

consideration

What about loyalty and commitment?

There is a view held by many business leaders that it is

Only with a full time employee that you have true loyalty

and commitment and that, especially in management, the

introduction of part timers would risk less commitment,

potential security breaches and conflicts of interest.

Whilst I fully understand these concerns and believe they

should be considerations included and catered for in any

part time strategy I believe they are largely unfounded

concerns for a properly thought out and implemented

part time strategy. Let’s explore them in more detail.

The issues of loyalty and commitment are as much (if not

more) about the personal standards and values of the

person you are employing as they are about whether that

person has any other business interests. In fact, I would

go a step further in today’s business world it is a fact now

more than ever that business managers (at a senior level

even more so) change job and company more rapidly

and more frequently than ever before. So, even if the full

time executive was loyal and committed while he or she

worked for your company, will that be the case when he

or she moves to your major competitor next month? I am

working with businesses all the time where they are

either benefitting from or being damaged by such moves.

Let me ask the question, would you rather have

someone who for a period of time is 100% committed

and loyal to you and then is 100% a competitor, or

someone who remains long term loyal and committed to

you, but does have other businesses that he or she also

has loyalties and commitments to?

Let’s also look at the whole issue of “security breaches.”

This isn’t just potentially passing on secrets, it is much

more generally the worry that many businesses have that

someone could be feeding inside information to another

party or could be using their experience with you to

benefit another business.

I believe, and my experience backs this up, that worries

about secrets or inside information being passed on are

unnecessary concerns. Any appointment of a part time

manager should be accompanied by a legally binding

agreement on confidentiality and unless someone is

involved in industrial espionage then it is no more likely a

part timer will pass anything on to others than a full timer.


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The point about the part time manager using their

experience with you to benefit another business is

however very real. It is real, but unless there is a conflict

of interest it is actually beneficial rather than detrimental.

If the part time executive is using his or her experience

with you to benefit other businesses, then, equally he or

she can use their experience with other businesses to

benefit yours. Indeed this is one of the side benefits of

employing a part time executive who has built a portfolio

career. The key is to check carefully upon appointment

that there is no conflict of interest with other roles the

executive is currently performing, and to ensure in the

legally binding agreement that the whole issue of conflict

of interests is properly covered for regarding any future

appointments he or she may take on.

Where can I find one?

Another major factor is that of where does one go to find a

suitable part time executive. Because, as already noted,

the business world is geared to full time executives there

is no obvious place to go to find a part timer. That

certainly has been the case up until recently. However a

few specialists in the provision of part time support

especially for Finance Directors now exist such as the FD

Centre or Secantor. Additionally we at NXD are now

offering a free of charge service to find the right quality

part time executive for your needs across all sectors and

all functions. Whilst I don’t want to make this e-book an

advertisement for the services we can provide, I will

nevertheless provide further details of what we can offer

later in the book because it does answer the question

about where do you go to find a good quality part time

that’s right for your needs.

The wider answer to this question is that the

demographics of executive employment in the UK have

changed. These days senior executives seldom stay in

their full time role until retirement age – most leave with far

too much energy, enthusiasm and life to live to just do

nothing, so most end up wanting to use their experience,

skill and knowledge working with other businesses and

look to build a portfolio career for themselves. The key

here is that these people, unlike the rest of the business

world actually want to work part time and don’t want full

time roles. Thus there is a ready-made source of

excellent quality part time executives and it is this that

NXD is trying to make available to the SME world and

smaller listed companies initially offering non-executives

but now offering part time executives also.

What if they are better than me

One of the other concerns people have when appointing

either a full time or a part time executive is that they don’t

want to appoint someone who is too good, dare I say it,

better than the business owner or the MD making the

appointment. This is particularly relevant to the

appointment of a part time executive because as we shall

see when we deal with the benefits that can be gained

with such a strategy, one of the key benefits is the ability

to engage a top quality part timer at the same cost as a

“mediocre” full timer.

This issue is actually the most difficult to deal with

because it is no longer about fact and logic; it is about

perception and emotion. All I can do is provide some

words of advice, common sense and experience. There

should be no shame and no feeling of inadequacy

engaging someone of a very high calibre, someone as

good as or even better than you. You remain the boss,

you remain in charge, you are just being clever enough

to realise that you can’t do it all yourself and the best

chance of making your business a success is to ensure

you get the best possible management team in place.

Throughout my career, and still today, I surround myself

with the best possible quality of managers – any really

successful business leader will say the same thing their

success is largely down to their management team and

their individual skill has been to assemble the best quality

team they can. In short, providing the personal chemistry

works (a point we will cover later), then don’t shy away

from quality- embrace it with both hands, that’s what will

make you truly successful.


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PART 2 – IN WHAT CIRCUMSTANCES COULD PART TIME EXECUTIVES BE APPROPRIATE?

The simple answer to this is that part time executives in

some way, shape or form could be appropriate and

beneficial to the vast majority of PAYE based businesses

in the UK today. In total there are about 4.5 million

business enterprises in the UK of which nearly 1.2 million

have employees. You can see from the table below the

split between micro (1-9 employees), small (10-49),

medium (50-249) and large (250+).

Whilst I think part time executives can be applicable to

large listed businesses as well, it is the SME sector that

we are particularly interested in and where part time

executives can be of unquestionable value. It is interesting

to note that, whilst one always considers the business

world to be dominated by large corporates, actually the

SME sector accounts for nearly 50% of total business

turnover and employs nearly 60% of all workers – so the

potential application for a part time strategy is enormous.

Source: BIS Department for Business Innovation &

Skills – Statistical Release Business Population

Estimates for the UK and Regions 2011

Having stated that most businesses could benefit from at

least some form of part time strategy, I think it will be

helpful to look at some specific examples of when part

time executives could work well. But before doing so I

want to just detail some general characteristics to help

you assess whether your business is likely to be an ideal

beneficiary of a part time executive(s) – if you answer

“Yes” to any of the questions below it would be well worth

your time exploring the topic further:

1) Is your business subject to an actual or a

planned period of serious growth and expansion?

2) Do you have a workforce of between 25 & 250

heads?

3) Do you have a Board of Management and if you

do is it 3 people or less?

4) Does your business own valuable Intellectual

Property and/or is involved in high value complex

contracted agreements

5) Do you currently or will you have the need in the

foreseeable future to raise investment funds?

6) Do you have any plans for mergers or

acquisitions?

7) Are you intending to commence or expand your

export activity/internationalise your company?

8) Are you intending to introduce new products or

open up new markets?

9) Do you have any issues with your business that

you don’t have an answer for and that keep you

awake at night?


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Serious about Growth

We come across lots of businesses with serious growth

ambitions. Typically such businesses already have one or

more sales person (s), but decide that they need someone

at a more senior level to take responsibility for the sales

and marketing function. So again, typically they go out

and recruit a full time sales manager/director within the

budget they have for the role.

The contention is that they have just embraced mediocrity!

Almost by definition they cannot afford a top quality sales

and marketing director with great knowledge, experience

and contacts – so they have to settle for the best they can

attract. They also move from a position on a Friday of

having no sales and marketing director to the following

Monday having one full time. Any sales growth will be

achieved gradually over a period of time, yet the resource

is going in all at once. The alternative is obvious – take

on a top quality sales and marketing director with great

knowledge, experience and contacts but only employ him

or her for a day or two a week, maybe even less to begin

with – then as the sales start to grow and the income

increases, slowly increase the time element. At some

point, you may want to go out and recruit someone full

time, but wait until you can justify it and can afford the

right calibre individual.

We are currently working with a number of companies

where we are providing people who are doing exactly this

part time Sales and Marketing role to great effect.

Worried about compliance?

Most very small businesses have neither the need nor the

time to keep up to date on all the legal obligations and

compliance issues related to employing staff. However,

as they grow the risks and exposure associated with the

mishandling of staff issues increases disproportionately.

Again, most businesses look to upgrade their HR

capability and appoint someone who has some kind of an

HR background or at least is good with people – but not

normally a HR professional who is properly up to date,

with and understands all the HR obligations and almost

certainly not someone who can help you develop and

manage a HR strategy including pay and reward,

management development, succession planning etc. etc.

We again work with a number of companies in this

situation and strongly encourage them to take on a part

time HR Director often just 1 or 2 days a month – may be

even less, but always available at the end of a phone.

Building the Board

Many of the businesses we work with have owner

managers who have built the business from scratch.

Sometimes they may have built a small ‘Board’, but often

they still take every important decision themselves; and

however good they are or their one or two co-directors

are, they cannot cover every function to the highest

standard. So when a function starts to become more

important within the business it’s important to bring on

board a sufficiently skilled ‘owner’ for it.

Let me give you an example, a manufacturing business

in the construction sector, £3m turnover with ambitious

development plans. Two key players, one operational

and one commercial, identified that they needed to

strengthen their sales and marketing and finance

capabilities. They have already taken on a part time

sales and marketing executive a day and a half a month

to begin with but with the ability to flex time upwards as

required. They are now in the process of taking on a part

time CFO working a day a week again with the ability to

flex if required. In both cases they have taken on people

they couldn’t possible afford on a full time basis, but are

now represented by people that give them a new level of

credibility in the market place; people who can play an

important part in board discussions and strategy for the

business based on real first hand experience of having

been there and done it before; people with amazing

contact networks; people with real gravitas. Even though

it’s early days yet the effect has been significant and one

can already see the business shaping up to achieve its

objectives and more.

“Whilst we engaged our NXD member to look

at sales and marketing she quickly identified

that before doing that we needed to get some

basic processes in place. We have made a lot

of progress in this area.

Our NXD member has kept us on course with

achieving our goals. She has helped us to

realise that regular contact with our existing

clients can result in extra sales and these are

the easiest sales to achieve. However we do

now have a working sales pipeline and we are

now winning new business.”

DEB GREAVES; OPS DIRECTOR –

COREWARE LTD


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Protecting Intellectual Property

We work a lot with university spin outs and generally with

‘Tech’ businesses so we get heavily involved in the whole

issue of intellectual property and more specifically

protecting IP. As anyone involved in this area knows, it’s

not just about patents not only are patents very expensive,

they often don’t end up protecting you the way you want

and often do alert the competition to what you are doing.

The fact of the matter is the whole issue of ownership and

protection of IP is extremely complex and full of potential

traps and pitfalls.

So what to do? Most people do one of two things: either

take little or no professional advice, do the best they can

and hope; or they engage a firm of IP lawyers to provide

advice and solutions. Typically the first is highly risky and

the second highly expensive.

If you have valuable IP and you rely on guesses and

hopes you may well get your fingers badly burnt, it’s also

the case that if you need funding at some stage the first

thing a potential investor will want to know about is the

ownership and protection of the IP. If you go to a

reputable IP lawyer you will pay handsomely for the

advice and normally the advice will include further work for

the lawyers themselves – and once you start down the

track it only gets more expensive.

There is however another alternative and that is to engage

someone on a part time basis with the necessary

background and skill set who works for you and is

interested in the success of your business, but

understands the world of IP ownership and protection and

can talk and negotiate with IP lawyers on a level footing.

Wanting to export

Whilst I could go on indefinitely with scenarios and

circumstances where a part time executive is particularly

appropriate, I will give just one further example. This one

is particularly topical and has received lots of attention

from the Government and the UKTI. It relates to the whole

area of export and internationalisation of businesses.

The Government is keen to get more and more SMEs to

export, especially to the BRIC countries where economic

growth is much more exciting than in North America and

Europe. In principle I wholly agree that this strategy

makes sense for ‘UK Plc’ and I do think that British SMEs

provide some great products and services that could be

really successful in other territories. But, and it is a big

but, any idea that it is easy to expand business beyond

these shores and that one should just get on with it, is

completely wrong and under-estimates the challenges

and the difficulties involved.

I always liken it to when I brought a property abroad, I

learnt the hard way and got ripped off on a number of

occasions, not because I am stupid but purely because I

didn’t understand the way of doing things in another

country – and believe me quite little, seemingly

innocuous things can be very important. But now, I could

advise anyone else on what to do and what not to do if

they were looking to buy in the same country – I’m no

more intelligent than when I bought my property, but I

have one hugely important thing now and that is

experience.

So with anyone considering exporting to a new country

or indeed outsourcing manufacturing to a new country,

my first piece of advice would always be the same,

unless you already have the experience on board go out

and engage someone on a part time basis who has good

experience in that country and preferably has the

appropriate language skills as well.


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PART 3 – WHAT ARE THE BENEFITS OF ADOPTING A PART TIME STARTEGY?

The first thing I want to do is explain what I mean by a part

time strategy. I am not suggesting that all your senior

executives should be part time, indeed whilst occasionally

it may make sense normally I would not recommend that.

Normally, I would recommend that there should be a core

(which might only be one or two) of full time executives.

What I mean by a part time strategy is that there is no

fixed view that all roles have to be full time and that at any

point in time there is an openness to some of the roles

being part time.

So now let us look at the all important question of what

you can expect to get out of adopting such a strategy and

this is what makes it really exciting because there are

significant cost, quality, flexibility, risk and credibility

benefits that no other strategic policy is likely to be able to

match, added to which it is a great strategy to support the

growth and development of an ambitious business.

Cost

When we place part time executives we normally put them

into businesses on a part time interim basis, recognising

that unless and until one is absolutely certain they will be

appropriate in the long term, it is better not to tie oneself

into a long term arrangement. This is also fine with our

members who go into such roles because unlike most

people who are looking for long term full time roles, all our

people have made the decision to build portfolio careers

working to add value to a number of different businesses

simultaneously.

The cost benefits are multiple: firstly you only need pay for

the time you actually need the individual so there is no

wastage, it allows you to match your resource much more

precisely to you needs and workload so you can avoid the

dreaded step increase in cost against a gradual increase

in activity/revenue. Clearly as your activity levels and

revenues grow you can increase the hours of your part

timer and eventually you may reach the point where it is

sensible to replace the part timer with a full timer.

Secondly providing you do not wish to employ the part

time executive directly you can (via NXD anyway)

normally source a part time executive without any

placement fee or up-front cost. Because NXD has the

dual objective of helping SMEs achieve their objectives

and helping NXD members build portfolio careers, its

main source of revenue is from its members and so the

matching service can normally be free of charge to the

SME. So in short you can gain a top quality resource,

only pay for the time you need and not need to pay a

head hunters fee.

Thirdly, whilst you should take guidance from your

accountant and again providing you do not wish to

employ the part time executive directly, costs such as

employers NI, holiday pay, any pension costs and other

costs such as cars, medical cover etc can be avoided.

Perhaps even more importantly, if the time comes when

you no longer require the individual or you want to

replace them with someone else, you don’t have all the

normal issues and costs associated with laying someone

off.

Quality

The reality is that cost and quality always need to be

taken in conjunction with each other because what we

are all really interested in is value for money; so all the

points I have made above regarding the cost advantages

of adopting a part time strategy assume an excellent

standard of executive – but not only excellent, relevant

also.

“Impressed with NXD’s common values

and commitment to help clients, I have

found my first role a delight. The advice I

am providing has already started to show

benefit and the business is moving

forward with clear vision.”

DAVID HARDING – NXD MEMBER


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So let’s explore this a bit further and let’s imagine a

scenario. I own and run a business, I’ve grown it from

scratch and it has now gone beyond a lifestyle business

and we have a dozen or so employees. My expertise is in

the operational side of the business and we produce an

excellent product at a competitive price. We supply both

businesses and the general public, our customer service

is first class and virtually without exception we have great

relationships and testimonials from our customers.

Our problem is that we are not particularly well known and

we are always struggling to get more business which we

need in order to provide me with a proper return for my

efforts. I really don’t have the budget to take on a sales

and marketing director but I know unless I do something I

will continue for the next few years to scrape by as I have

done for the last few.

I finally take the plunge and put out an advert for a sales

and marketing director offering a salary of £40k plus car

and normal executive benefits, I budget for a total cost for

the individual of £60k. My gross margin is 30% so I need

that individual to bring in £200k of new business over and

above what we would typically generate in a year just to

break even. The problem is, it will take a while for the

individual to settle in and then there is normally a lead

time to bringing on new business so it is likely to be at

least a year before I can form a clear view of the

performance and value of this individual. If after a year it

doesn’t appear to be working I will then have to go

through a process to remove the individual which will in all

probability include payment for a notice period. The up-

shot is that I am probably putting at risk in excess of

£100k by making this appointment which is an amount of

money that could seriously damage my business,

potentially put it under – that’s why I haven’t done it

before.

I start to receive the application forms, I am not

experienced as a recruiter, certainly not at this level and

all of a sudden (actually they come in over the period of a

month) I’ve got 250 responses and CVs to go through. It

takes me 2 weeks just to go through them and decide

which ones are of potential interest, during which time I

am neglecting the business, just doing the bare

necessities. Eventually I draw up my shortlist of 8 people

and start to make arrangement to interview them, a

month later I am down to my last 3 – during this time I

have failed to give sufficient time and focus to the

business and there are now a number of cracks showing,

worst of all we are failing to win our normal amount of

new business so our pipeline is looking a bit sick.

Following second interviews I finally decide upon the

successful candidate, it’s a good step up for the

individual involved and whilst not all the boxes were

ticked it was the best I met for the type of money we

were offering. In the end I had to go for a salary of £45k,

the car including fuel will cost about £1k per month,

pension and NI a further £1k per month, and whilst I was

hoping for a 3 month notice period I ended up agreeing

to 6 months. The £60k pa budget has now become £70k

and I have also increased my notice period cost from

circa £10-15k up to circa £25-35k.

The successful candidate is on 3 months’ notice at the

moment but manages to negotiate leaving in 6 weeks’

time but then wants to take a 2 week break before

joining. I get back to focusing on the business and trying

to build the sales pipeline again. 5 months after I placed

the initial advert my new sales and marketing director

starts.

6 months on I am starting to worry, the new sales and

marketing director talked a good talk but doesn’t appear

to be quite so good at delivering results. The pipeline that

took a hit while I was distracted during the recruitment

process hasn’t even got back to its historical norm let

alone shown the increase it needs. The director keeps

talking about discussions with potential new customers,

but actual orders don’t seem to materialise.


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12 months on I am really worried, new business has

eventually started to come in although not to the level

needed, but worst still the business is not of the type we

want. It’s being won primarily on price so our margins are

under threat, and the type of customer is very aggressive,

doesn’t seem to value quality. The lead times being

offered are also too optimistic so we are on occasions

failing to deliver on time which is allowing our aggressive

customers scope to make claims. I am spending more and

more of my time fire fighting. I decide to sit down with the

director and have a straight conversation – now attitudes

change and the director is only interested in protecting his

(but could equally well be her) job. Now both of us, the

two most senior people in the business are locked in a

battle, sales start to suffer even more ……… and on and

on.

I am sure you get the picture, and whilst this is a fictitious

case, it is loosely based on situations that I, and I am sure

you, know of. So what’s the alternative? Well you can

always do nothing which is where many businesses are

today, scraping a living because to change the fortunes of

the business and grow it into something exciting is too

risky. But the other alternative is to take on a quality part

time executive, someone who doesn’t just talk the talk but

also walks the walk.

So if we go back to the example, my alternative is to talk

to someone like NXD who provides part time executives

and explain about my company and what I am trying to

do. We agree that to begin with we will work on just a day

a week with the option of increasing this once there is

evidence of the sales coming in. The next thing I know is

that I have 3 CVs in front of me for top quality individuals,

all have extremely strong sales and marketing experience

and qualifications, all have previously been at MD/CEO

level, all have direct experience of operating in the broad

market sector in which I operate and one very specifically

in exactly my market sector, and all to differing degrees

have contacts at a very senior level with customers,

suppliers and service providers in my sector.

I meet all 3 candidates on the same day just 10 days after

the initial contact. All 3 are good, but one stands out as

exceptional, interestingly not the one that is directly in my

market sector but one of the others. The interviews were

on Wednesday and we agree he (or she) can start on

Monday, we agree that the part time sales and marketing

director will work 2 half days a week but will also be

available by phone whenever I need him. It will cost me

£3k per month inclusive of all but travel costs which will

be reimbursed at cost and are estimated to be less than

£2k per annum. There is no contract length so I am free

to cease the arrangement whenever I want and for any

reason, all I have to do is pay up to the point I want to

cease.

I am not going to go on and say how wonderfully well the

whole thing went as that would be a bit too sickly, but I

am sure you get the point. The big point is that a real

quality executive will deliver more in a day than a

mediocre executive in a week, and if for any reason he or

she doesn’t you are not tied in to something that you

can’t easily get out of. Moreover a quality executive will

not try to sell to the wrong customers, they will ‘get’ your

market and concentrate on attracting the right customers.

Flexibility

I have covered much of the topic of flexibility earlier so

will not dwell for too long on this point, but there are

some further things to draw out.

Anyone who has operated on a formal board during a

downturn will know that what one always seeks is to be

able to flex one’s resources/costs directly in line with

one’s activity levels/sales. The problem is that a business

is made up of both fixed and variable costs, it is difficult

enough to reduce one’s variable costs directly in line with

a reduction in activity mainly because productivity tends

to suffer with lower activity levels; but it is by definition

not possible to reduce fixed costs in line with a fall in

activity – the key with fixed costs is to either eliminate

them completely or to translate them into variable costs.

This is why during this latest economic downturn you

hear so much about corporates ‘downsizing’ what they

are doing is downsizing their workforce predominantly –

and many people believe, myself included, that even

when things do pick up they will not be looking to ‘upsize’

again quickly if at all.


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One of the other examples of the benefits of using a part

time executive in the way we are suggesting is that you

can view it as entirely a variable cost and flex the

resource/cost up or down at a moments’ notice, and when

it suits to replace it with something else you can just go

ahead and do it. Now I’m not suggesting you treat the

individual badly and without care or respect, but you can

have all the flexibility benefits and still be fair to the

individual because they will both understand and work

with you on developing the best solution for your

business.

Risk

Again the topic of risk has to a degree been covered in the

scenario detailed in “Quality” above, the first approach put

the entire business at risk if it failed, the second approach

of using a part time executive did not. Either way you don’t

want the approach to fail, but the seriousness of the

implications of failure must be taken into account when

making decisions. One often hears the term ‘calculated

risk’, we all take calculated risks where we effectively

weigh up the potential upsides if something goes well

against the potential downsides if it doesn’t. People also

often talk about not risking more money that you can

afford to lose.

Corporates in fact pay much more attention to the whole

issue of risk than do SMEs. If you ever sit on the board of

a large corporate you will find the topic of risk on every

board agenda, indeed plc’s need to be able to

demonstrate that they are carefully evaluating risks to the

business on an on-going basis. As an aside, it does lead

you to wonder what was going on in the financial sector

and particularly the big banks when most of them

effectively exposed themselves to complete ruin with their

practices over recent years, and but for the tax payer

some would no longer exist today – it also questions

whether some of the individuals concerned should have

been prosecuted as tends to be the case in the US rather

than paid off with generous pension provisions.

The upside of asking the question “can I afford to lose the

money I am putting at risk if things go wrong?” is that you

go through a very healthy check process that I would

recommend for any business. The downside is that it can

stifle creativity, innovation and an entrepreneurial spirit if

the whole approach becomes too cautious – one of the

main reasons that corporates are not as good as SMEs

at creating and innovating is that corporates are too risk

averse whereas SMEs will take more risks. So as with

just about anything in life, there needs to be a balance,

avoid unnecessary risks and be aware when you are

taking a risk that could seriously damage your business;

and in its own little way, the adoption of a part time

strategy can reduce the risk when engaging people at a

senior level.

Credibility

The final thing to mention is that engaging very high

quality part time executives increases your credibility as

a business. Other businesses will take the view that if

you have so and so on board you must be good because

they wouldn’t associate themselves with a business that

wasn’t.

Clearly however this draws out another important point

which is that you will only be successful in engaging a

quality executive if you can live up to your claims – the

engagement process is therefore very much a two way

process, you will need to sell your company to them just

as much as they need to sell their value to you.


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PART 4 - WHAT ARE THE PRACTICALITIES OF ADOPTING A PART TIME STRATEGY?

It’s all very well having good ideas and good strategies but

they are completely worthless unless they can be

translated into reality, and one of the big problems with

the idea of a part time strategy for senior executives is

how to do get hold of the right one(s) for your business

quickly, efficiently and cost effectively? The answer is that

it was probably very hard to do until recently, but now

NXD has added this service to its core offering along with

providing non-executives and investing directors.

I really don’t want to turn this book into a promotion of

NXD, but for this section I don’t have much option but to

use NXD as the example because the key reason that we

got involved in providing part time executives was

because no one else was doing it in a comprehensive

manner and to the right standard – so please excuse the

rather frequent reference to NXD.

So let’s look at the steps involved in adopting this

strategy. The first thing to say is that it must be a part of

your wider business strategy – if you don’t have a wider

business strategy then get one, if it’s not yet that well

defined then you can use this process to start better

defining it especially in the short to medium term (next 2 to

3 years). Step 1 – define where you want to be in 2 or 3

years’ time; step 2 – clearly understand where you are

now; step 3 – work out where you need to be in 6 months’

time in order to achieve your 2 or 3 year goal; step 4 –

detail what you need to do, including the changes in

management time and skill you need, in order to achieve

your 6 month target; step 5 – implement; step 6 –

measure results and review.

Where do you want to be?

Now I don’t want people to start worrying or feeling

inadequate because they haven’t got a fancy business

plan 50 pages long with 5 years’ worth of forecasted

figures attached to it – neither do I want to give the

impression that there is anything wrong with having such

a plan. The fact however is that such a plan will be

produced at a point in time and usually for a specific

purpose (typically for bank funding or investment or exit),

it is a document that is too big and complex to be

updated every 5 minutes and therefore gets out of date.

What I am however saying is that every business should

have a reasonably clear idea of where it is heading, so

you should have an idea of how you want to develop

your range of products and services, what markets you

want to serve, why your customers buy and will continue

to buy from you, what turnover and profit you aiming for,

what activities you wish to keep in house and which you

will outsource, and what your ultimate purpose for the

business is.

From this overall strategy/direction you can now start to

define where you want the business to be in a definitive

time period – I always recommend 2 years or 3

maximum, I believe that is as far as you can look ahead

with any degree of accuracy, personally I think detailed 5

year plans are a nonsense and usually end up being

pure fantasy. It is however possible to have a sensible

stab at the realistic turnover, margin and profit targeted

for 2 years’ time.

Where are you now?

Now that you know where you want to be in the future,

the next step is to clearly understand where you are now,

warts and all. This requires and honest view of your

current status, often it can be helpful to use the format of

a SWOT (Strengths, Weaknesses, Opportunities and

Threats) analysis to carry out this part. It is also usually

very valuable to get someone to help you with this who is

not completely immersed in the business. If you have a

non-executive this is an ideal thing to involve them in,

one of the main roles of a non-executive is company

strategy and so involvement in the whole process would

be recommended. If you don’t have a non-executive then

it’s worth trying to involve someone who is independent

just to give you an unbiased, uncluttered view of your

company – NXD can help you find someone to do this if

necessary.

Now that you know both where you want to be in 2 years’

time and where you are now, the next step is to work out

what you need to do in the next 6 months in order to be

on track to achieving the 2 year target. This step will at

times result in you going back and adjusting the 2 year

target (either up or down, but usually down) because you

realise that the progress required in 6 months is either

too demanding or too cautious.


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What do you need to do?

Now comes the interesting bit. With a realistic view of

what you need to do in the next 6 months, you can start to

plan in real detail how to get there and the key facilitator

will always be management skills and resources. This is

where you work out whether you need more or less

management in particular areas of the business and

ideally the quality/seniority of the role(s). By including part

time executives in the mix, you take away the need to

work in whole number and open up the use of decimals.

So your need for the next 6 months might be for example

1.0 Production Director, 0.2 Finance Director and 0.4

Sales Director.

How do you implement?

Once you’ve decided what you need to do the next stage

is implementation, so now you need to go out and get the

right people. The following tips may be helpful:

do be mindful of time, ideally you need the people

quickly so it’s important that you use a process

that is not longwinded and you ‘fish’ for people

who are available immediately. Where you have

decided to take on board someone full time as per

the example above or a Production Director, you

may decide to take on a part time interim

immediately while you search for the right person

to take it on a full time permanent basis;

do beware of paying up-front placement fees for

finding the people, there are times when it might

be the right thing to do, but you can waste a lot of

money this way and especially so if you are

regularly ‘tweaking’ your executive team;

do have a clear budget for each of the roles and

don’t wander too far from your planned spend.

That is not saying be inflexible, in fact quite the

reverse, it is saying be flexible but remain within

your overall budget. For example if you spend

more on one role than you planned, spend less on

another and as a general rule adjust the time you

have someone rather than the quality of the

person to make it fit within your budget, quality

ahead of quantity. So in the example above, if you

can’t afford the Sales Director you want for 2 days

a week, start off with a day and a half. Another

way of handling the issue of getting the right

quality of person and making it fit within your

budget is to have an element of the fees you pay

the person as ‘success fees’, ie with the Sales

Director example, pay a reduced daily fee that

fits within your budget but offer an additional

success fee which is contingent on achieving

sales above forecast and is thus self-financing;

do look for attitude and outlook as well as (in fact

I always look at them ahead of) their background,

experience and skill-set. I always view meeting a

candidate as being primarily about trying to

understand what makes them tick, ie their

attitude and outlook, because I have already

filtered the CVs to make sure I only meet people

who have the right kind of background,

experience and skill-set;

do not look to clone yourself, but at the same

time make sure that you bring on board people

who you can work with, personal chemistry

matters;

do not be afraid of taking on board people who

are better than you, you will learn from them and

they will help your business but don’t be

overawed by them and always remember you

are the boss;

do not look to maintain the cultural status quo,

businesses need to evolve and develop and the

culture of the company needs to change as it

grows, nevertheless it is equally important to

avoid a complete culture clash because that will

be damaging;

do not abdicate your responsibility and

accountability for taking on the right people. By

all means take sound advice and guidance, but

don’t let anyone else make the decisions. I know

of people who use reputable, expensive

recruitment consultants mainly so that they can

effectively leave it to them to make the decision.

By all means use a recruitment consultant or a

company like NXD to put a shortlist of people in

front of you and save you from doing all the

legwork yourself – this is good efficiency and will

help with the point about needing to be a quick

process – but you need to decide which from the

shortlist is right for you and if it comes to it and

none of them fit the bill then you need to say so.


15


Measure and review

The final stage of the process is to measure and review.

As with any business activity, you not only have to plan to

do something, you need to check that your planned

results are achieved, take into account any over or under

achievement, and then set about planning the next stage.

It is just as important to recognise the things you have

achieved as well as the things you haven’t achieved.

The two most common pitfalls at this stage are either a

failure to properly measure and carry out the review at all

or a fixation with the aspects of the plan that have not

been achieved or fully achieved which can be

demoralising.

The failure to properly measure and review is purely down

to discipline. The danger is that if you miss this step your

business will tend to just meander along and you won’t

have the sharpness and the awareness of what is working

and what isn’t working to deliver the full potential of your

business. The fixation with the failures can often ignore

the fact that great and profitable advances have been

made in other key areas, the reality and we need to

remember it is that very few plans are achieved in their

entirety, and on the occasions they are it is normally

because they were soft plans in the first place.

The review phase then leads back into the next planning

step and we are back at Step 1 reviewing and updating

where we want to be in 2 to 3 years’ time.

Before we leave this topic I want to make one thing very

clear, I am suggesting the 6 step cycle outlined above

because your part time strategy (if you adopt one) must fit

within your Human Resources strategy which in turn must

fit within your Company strategy, in other words you

shouldn’t do things in isolation or in a vacuum. The danger

is that people get put off because it starts to become too

complicated and too bureaucratic – so let’s be clear it

doesn’t and shouldn’t have to be, certainly not in a small

business. For example, when you define where you want

to be in 2 years’ time, you can put as many or as few

objectives in there as you wish, you may simply want to

define the turnover and profit you wish to be achieving.

There are 2 golden rules: firstly, don’t make the process

more complicated than you can handle, keep it simple;

and secondly don’t run before you can walk, start off

planning and measuring just the few most important

things and as time passes and you become comfortable

with the process, start to add more specific objectives.


16


SUMMARY

So to summarise my answer to the “Why full time?”

question – it is a nonsense to concentrate solely on

employing full time senior executives; virtually every SME

in the UK will have circumstances where a part time

executive would be advantageous; the benefits of using

part time executive are compelling not just from a cost

point of view but also from a quality, flexibility and risk

point of view; and the practicalities of adopting such a

strategy need not be complicated or difficult.


17


ABOUT THE AUTHOR

Stephen is the founder and managing director of NXD,

having taken it from an idea back in late 2007, to reality in

late 2009, to its current state of being a significant and

growing national presence in the area of providing non-

executives, part time executives and investing directors

into the SME sector.

NXD is a membership organisation comprised of current

and former Managing Directors and Chief Executives who

are committed to building portfolio careers helping small

and medium sized organisations achieve their goals and

realise their full potential. It is an organisation committed

to creating value rather than exploiting value and is

capable of providing support to any SME in any sector in

the UK and on occasions beyond.

Stephen’s background before NXD was in supply chains

and logistics where he has many years of practical senior

level experience. He has been on the boards of large

retail businesses and managing director of 2 national

logistics companies. He has provided logistics and

supply chain solutions to many leading companies both

in the UK and Europe.

Stephen continues to devote some of his time to the

logistics sector, but through his activities with NXD has

really enjoyed working across diverse sectors with small

and medium sized organisations generally and especially

with second, third and fourth generation family owned

businesses.

To contact Stephen – [email protected]

Stephen Barter Founder & Managing Director of NXD

why full time ebook

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