becoming an interim manager institute of interim management in association with association of...
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BECOMING AN INTERIM MANAGER
Institute of Interim Management
in association with Association of Chartered
Certified Accountants
London – 26 March 2009
© IIM 2009 All rights reserved
www.ioim.org.uk
Tony EvansDirector
Tom BrassChairman
Institute of Interim Management
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Agenda
• Taking The Decision
• Setting Out Your Stall
• The Regulatory Side
• Protecting yourself
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Taking the Decision
• What is Interim management?
• Why do clients use Interims?
• The pros and cons of being an Interim
• What makes a successful Interim?
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What is an Interim?What is an Interim?
• A professionally qualified, independent practitioner
• who deliberately chooses to work as a supplier of specific skills, knowledge & experience
• applied with client-agreed, significant line decision making authority,
• on a fixed-term fee basis, for a specific period & scope of work.
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What isn’t an Interim?What isn’t an Interim?
• A Consultant: contracts to provide expert analysis & advice involving skills & perspectives which would not normally be expected to reside within the client organisation & facilitates client decision making
• A Temporary Worker: undertakes specific, usually straightforward tasks, for short periods, under supervision, & paid through payroll.
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What isn’t an Interim?What isn’t an Interim?
• Self Employed: A generic term used to refer to anyone not working for another organisation as an employee. They may or may not operate within a legal organisational framework eg Ltd or LLP
• Contractor: A person or firm who contracts to build things, or provide services, performing a specific task where the client is not liable to others for acts or omissions
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What isn’t an Interim?What isn’t an Interim?
• Parasubordinate or “Economically Dependent Worker”:
• Self-employed, working at their own risk
• Not subordinate to an employer• Yet is economically dependent –• They are more or less reliant
exclusively on just one client enterprise.
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Clients’ Use of InterimsClients’ Use of Interims
• For Projects: 58%
• As a Locum: 58%
• For ‘Change’: 48%
• i.e: undertaking a lot of projects, to restructure and re-engineer, add new technology and implement new systems, often related to the need for change within their organisations.
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Why Do Clients Use Interims?Why Do Clients Use Interims?
Clients say the key benefits of interims are, in order:
• Immediate availability: 80%
• Results focussed: 74%
• Introduce new skills & experience: 61%
• Hit ground running (overqualified): 56%
• Hands on approach to the role: 52%
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Why Do Clients Use Interims?Why Do Clients Use Interims?
Clients say the key benefits of interims are, in order:
• No Long Term Commitment: 39%
• Skills Transfer: 37% (cf 69% by IMs)
• Quantifiable Cost: 31%
• Cheaper than a Consultant(!): 15%
• Less Threatening cf a Consultant: 6%
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Client Industry SectorsClient Industry Sectors
70%+ of assignments were concentrated into 8 sectors
• Financial Services: 17%• Public Sector: 15%• Construction: 8%• Rail/Aerospace/Defence: 7%• IT/Technology: 7%• Manufacturing: 6%• Food/FMCG: 6%• Transport/Logistics: 6%
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Client Role DemandClient Role Demand55%+ of assignments appear ‘Finance relevant’
• General Management: 20%• Finance: 11%• Project Management: 11%• HR: 11%• Operations: 10%• Commercial/Sales/Marketing: 10%• Programme Management: 9%• Distribution/Logistics: 6%• Turnaround/re-engineering: 5%• IT: 4%• Other: 3%
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Interim Earnings 2008Interim Earnings 2008
Boyden Market Research: end 2008
• Earnings: 17% > £150k 30% £100 – 149k 31% £75 – 99k 22% < £75k
• Average Fees: £742 per diem• Average Contract Length:
Initial period – 60 working days Overall – 170 working days
• NB: Top 8 providers delivered c.40% of UK intermediary market
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Client Demand: 2009 ForecastClient Demand: 2009 Forecast
• Projects with Specific Skills/experience: 75%• Drive Change: 41%• Gap Management: 33%• Alternative to Consultancy(!): 31%• Flexible Resource with Tight H/count: 22%• Unique Experience/Skill: 3%
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Being An Interim Practitioner:Being An Interim Practitioner:Factors In FavourFactors In Favour
Master of YourOwn
Destiny
MarketUnderstanding
Client Cost/Benefit
More Regulation
CorporateOutsourcing
MarketGrowth
CorporateSpecialisation
Private EquityFundedM & A
Professional Support
Personal Freedom
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Being An Interim Practitioner:Being An Interim Practitioner:Trials & TribulationsTrials & Tribulations
REGULATION
PERSONALLIABILITY
NETWORKING WHILST ON
ASSIGNMENT
PROVIDERS:THE GOOD THE BAD
THE UGLY
YOURWORTH
CPD
WORKFLOW
EMPLOYED/NOT EMPLOYED
TAXTREATMENT
TRIALS &TRIBULATIONS
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What Is RequiredWhat Is Required 1. Setting Up1. Setting Up
• Limited Company
• VAT Registration
• Professional Indemnity Insurance
• Market Position
• Understand Relevant Regulation
• I.D. Your Company Service Providers
• Application for IIM Membership
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What Is RequiredWhat Is Required2. Professional Skills2. Professional Skills
• What You Trade On
• CPD to Maintain Competence
• Maintain Quality of Performance
• Professional Body Membership
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What Is Required:What Is Required:3. Personal Attributes3. Personal Attributes
• Interims and Permanent Employees Use the Same Range of Attributes
• So: What’s Different?
• Relative Strengths of Key Attributes
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What Is Required:What Is Required:4. Personal Attributes4. Personal Attributes
Successful Interims Require:
• FLEXIBILITY & ADAPTABILITY• INDEPENDENCE & INTEGRITY• RISK TAKING & JUDGEMENT• PERSONAL CREDIBILITY & RAPPORT BUILDING• LARGE LEARNING CAPACITY & STRESS TOLERANCE• EXCELLENT COMMUNICATION SKILLS &
PERSUASIVENESS• VERY HIGH WORK RATE & OBJECTIVES DRIVEN• BE AT EASE WITH ACCOUNTABILITY & RAPIDLY
BUILDING EFFECTIVE WORKING RELATIONSHIPS• PRIORITISATION, PLANNING & ORGANISATION
IN VERY LARGE MEASURE
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Setting Out Your Stall
• Defining your value proposition
• Routes to market
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Defining Your Value PropositionDefining Your Value Proposition
Marketing: Arrgh – The 4 P’s
• Product (you)
• Position
• Promotion
• Price
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Product/ServiceProduct/Service
• What are you offering? FD/FC/Mgt A/C Sector expertise? Particular Experience?
• How do you keep/enhance your Product Value?
• It must be clear for the client
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Position
• What market segment? PLC; PE; SME; PS?
• What client Layer? Board; one –off;
departmental; specialist?
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Promotion
• How are you going to make yourself known to the client? Last employer stakeholders Own network: Personal; Electronic Personal contact Materials Message Format: electronic; hard copy ‘Contracting out’?
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Price
• What terms do you seek?NB Contractual terms crucial• How flexible are you?
Variables such as situation; contract length; days per week; sector; skill required; geography..
• What are your MOPs & MAPs?
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Route To Market
INTERIM
PRACTITIONER Co. Ltd.
PERSONAL NETWORKING
PROVIDERS“Outsourced”
S. & M.
CURRENTCONTACTS
NEW CONTACTSVIA
THIRD PARTIES
NEW CONTACTSVIA
COLD CALL
IMAPROVIDERS
OTHER QUALITY
PROVIDERS
MARKETCONFUSERS
SPECIALISTS
GENERALISTS
SPECIALISTS
GENERALISTS
c. 70% c. 30%
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The Typical Interim?
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Being A Professional Interim Practitioner
IF your priority for a career giving:
Personal Freedom & Control Work Situations Holding Most Job Satisfaction More
Frequently Overt Sense of Value Added to Your Client Increased Sense of Personal Worth No Glass (or any other material) Ceilings Independence of Company Politics (but not ignoring it)
Is clear to you:
See us, the IIM, and meet practising Interims for informal discussion and start networking today.
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The Regulatory Side
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The Regulatory Side
• Setting up in business – company or sole trader
• IR 35
• Employment agency regulations opt out
• Money Laundering Regulations
• Directors
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Company or Sole Trader?
Company:• Chosen by 90% of Interims• Decision largely driven by Providers• Providers prefer PSCs rather than MSCs• Usually more tax efficient to take a mixture of salary
and dividend• Some limitation of liabilityBut• Compliance cost• IR35• Income shifting
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Company or Sole Trader?
Sole Trader:• Risk under Demibourne case removed by Income
Tax (PAYE)(Amendment) Regs 2008 : Under Demibourne HMRC must assess client even where
someone else in contract chain has already paid tax, and no credit given for that tax payment
Regs allow HMRC discretion – the norm unless deliberate collusion to avoid payment of PAYE and NI
But• Employment Agency Regs opt out not available• Unlimited liability• Usually less tax efficient
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IR 35
CLIENT
JACKEMPLOYEE
JACKSELF-
EMPLOYED
PROVIDER
JACK LIMITED
JACK
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IR 35
• Depends on employment status
• ‘Badges’ of self-employment:
Undertake projects not roles Carry risks (non payment of fees; rectification of
errors at own cost; liability for negligence) Mutuality of obligation? Determine what needs to be done, when and how Supervision and control? Right of substitution/sub-contractors ‘Own tools’ No notice period
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Recent Cases (1)
• Dacas v Brook Street Can look across a three-sided
arrangement
• Cable & Wireless v Muscat Arrangement artificial
• James v Greenwich Council Control, but no mutuality of obligation
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Recent Cases (2)
• Dragonfly Consultancy Limited v HMRC Substitution Control Intention of parties Worker status
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Lessons (1)
• Get the right terms in the contract Record statements of choice Use the right language Address mutuality of obligation Address right of substitution Address right to work for other clients in
parallel New contract on extension/renewal, not
rollover Try to ensure ‘upper’ contract (contract
between client & provider) mirrors your contract with provider
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Lessons (2)
• Make sure reality = words Ensure client operates the contract
terms in practice Avoid integration – Interims to be
treated differently: supervision, presence/absence, holiday/sickness, discipline, canteen, staff events etc
Carry employer’s liability insurance (to give reality to right of substitution)
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Employment Agency Regs 2003Opt Out
• Provider can only protect ‘Interim to Perm finders fees’ if the Interim operates through a limited company and opts out of the Regulations
• If Interim does not opt out, his/her remuneration must be paid even if Client does not authenticate a timesheet or fails to pay the Provider
• For the opt out to be effective, it must in place before work is offered to the Interim by the Provider. Therefore requires a document separate from any formal contract for services
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Money Laundering Regs
• Effective 15 December 2007
• All transitional periods for registration with a regulator have now expired. So: It is a criminal offence to start or carry on
regulated activities without a regulator already in place
Regulator = ACCA or HMRC Practising certificate required?
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Regulated Activities• Providing accountancy services and/or tax advice• Acting as a freelance director if:
acting on nominee basis
client operates in a high risk jurisdiction or a high risk sector and is not
• already supervised under the MLR or • a public authority anywhere in the EU or • a firm authorised by an EU public authority to act
on their behalf where the only customers are also public authorities
• Arranging for another person to act as a director
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Regulatory Requirements (1)
• Maintain registration current• Establish & communicate your risk-based
policies & procedures• Customer due diligence
Normally risk-based Be reasonably satisfied that clients are who they
say they are = identity and verification Know who they are acting on behalf of – eg
beneficial owners Simplified due diligence Enhanced due diligence
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Regulatory Requirements (2)
• Ongoing monitoring of client’s transactions• Document / record
Policies and procedures Customer due diligence Monitoring
• Report suspicions to SOCA Making reports Obtaining consent
• Beware “tipping off”
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Further Sources of MLR Help• ACCA – Search for money laundering on
www.accaglobal.com/• CCAB – MLR Guidance for the Accountancy Sector
www.ccab.org.uk/.• HMRC – www.hmrc.gov.uk/mlr/
MLR 9 – Guide to registration (esp Chapters 3, 6, 7 & 8. See 6.1.14 & 6.1.15 for meanings of ‘high risk jurisdiction’ and ‘high risk sector’)
MLR 8 – Guide to implementing the requirements of the MLR
• SOCA – Report suspicions via www.soca.gov.uk/CCAB and HMRC documents have force of law
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Directorship (1)
• S 288 directors• De facto directors
“any person occupying the position of director, by whatever name called”
• Shadow directors“a person in accordance with whose
directions or instructions the directors of a company are accustomed to act”
(but professional advice exemption)
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Directorship (2)
Duties of directors: General duties of directors – Part 10,
Companies Act 2006 (ss170 onwards) Statutory duties (health & safety,
competition law, filing accounts, tax returns etc)
Insolvency
Must exercise reasonable skill (measured by reference to peer group)
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Directorship (3)
Companies Act 2006 identifies seven duties:• Act within powers (s171)• Promote the success of the company (s172)• Exercise independent judgment (s173)• Exercise reasonable care, skill and diligence
(s174)• Avoid conflicts of interest (s175)• Not to accept benefits from third parties
(s176)• Declare interest in proposed transaction or
arrangement (s177)
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Insolvency
• Directors Wrongful trading (IA 1986 s214) Personal contribution to assets Disqualification
• Officers (directors and managers) Misfeasance (IA 1986 s212) Personal contribution to assets
Personal not collective
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Insolvency Act 1986
“…knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation…” (IA s214(2)(b))
“…has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company…” (IA s212(1))
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Protecting Yourself
• Professional Indemnity Insurance
• Directors’ & Officers’ Insurance
• Keep your own minutes - ICON
• Suspect all non-routine transactions
• Watch your back – and everywhere else!
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A Final Thought!
“It's only when the tide goes out
that you learn who's been
swimming naked”
Warren Buffett
