Interim CEO

What is an interim CEO?

An interim CEO (Chief Executive Officer) is a temporary CEO appointed to lead a company. Typically, this is during a period of transition or crisis. This role is different from a permanent CEO in several key ways:

• Temporary Assignment: They are typically appointed for a short-term period. This could be during a time of leadership transition, such as while searching for a permanent CEO, or in times of crisis where immediate leadership is needed.

• Specific Skills or Experience: Interim CEOs are often selected for their specific expertise or experience that is particularly relevant to the company’s current challenges. For example, they might have a track record in turning around companies, managing mergers, or navigating financial difficulties.

• Focus on Immediate Goals: Unlike a permanent CEO, who is responsible for long-term strategy and growth, an interim CEO’s primary focus is often on addressing immediate issues and stabilising the company. This might involve making tough decisions to cut costs, restructure the company, or manage a crisis.

• External Perspective: they are usually (if not always) hired from outside the company. This means they can provide a fresh perspective and are not influenced by the company’s internal politics, which can be beneficial in making objective decisions.

• Transition Management: Part of the role of an interim CEO can be to prepare the company for the next permanent CEO. This might involve setting new strategies, changing company culture, or making other significant changes that will make it easier for the new CEO to take over.

• Limited Scope of Authority: In some cases, the interim CEO might have a more limited scope of authority compared to a permanent CEO, particularly if they are brought in during a period of crisis management.

They play a crucial role in ensuring that a company remains operational and on track during periods of uncertainty or change.

How does an interim CEO work?

An interim CEO operates within a company in a unique way, primarily due to the temporary and often urgent nature of their role. Here’s a breakdown of how they typically work:

• Assessment and Understanding: Upon appointment, an interim CEO first assesses the current state of the company. This involves understanding the company’s financial position, operational challenges, company culture, and market position. They might conduct meetings with key stakeholders, review financial reports, and analyse operational processes.

• Setting Immediate Priorities: Given their temporary tenure, they prioritise critical issues that need immediate attention. This could involve addressing financial instability, resolving management conflicts, or steering the company through a crisis. Their focus is often on short-term goals that stabilise and prepare the company for future leadership.

• Implementing Changes: Interim CEOs are known for making swift and decisive changes. This may include restructuring the company, implementing cost-cutting measures, or realigning business strategies. They often have the authority to make significant decisions and can do so without the burden of long-term consequences that a permanent CEO might consider.

• Communication: Effective communication is key. An interim CEO keeps employees, shareholders, and other stakeholders informed about changes and the reasons behind them. This helps in managing expectations and maintaining morale during a period of transition.

• Building a Transition Plan: Part of their role is to pave the way for a permanent CEO. This involves creating a transition plan that might include hiring new talent, developing new business strategies, or changing company policies. The goal is to leave the company in a better state than they found it.

• Flexibility and Adaptability: they must be adaptable, able to quickly understand a new business environment, and make decisions with limited information. They often have to navigate unfamiliar company cultures and adapt their leadership style accordingly.

• Expertise and Experience: They usually bring a wealth of experience and a track record of handling similar situations. Their expertise allows them to identify problems quickly and apply proven solutions.

• Short-term Focus with Long-term Impact: While their decisions are often focused on immediate issues, they can have long-lasting impacts on the company’s future direction and health.

In summary, an interim CEO acts as a catalyst for change, addressing immediate challenges while setting the stage for sustainable growth and stability. Their ability to make tough decisions quickly and their experience in managing transitions make them invaluable during periods of uncertainty.

What do interim CEOS do?

Interim CEOs play a pivotal role in guiding companies through transitional or challenging periods. Their primary focus is on crisis management, especially in situations where a company faces financial difficulties, reputational issues, or operational setbacks. They are responsible for assessing and possibly redefining the company’s strategic direction, which may involve altering business strategies, restructuring operations, or implementing new business models to secure the company’s longevity and growth.

In addition to providing decisive leadership, interim CEOs manage day-to-day operations, ensuring smooth functioning during times of change. They also oversee the company’s finances, making critical decisions regarding budgeting and cost management. A key aspect of their role is to maintain transparent communication with stakeholders, including employees, shareholders, and the board, keeping them informed about the company’s progress and strategies. Preparing the company for the transition to permanent leadership is also part of their remit, often involving the implementation of new systems or processes and the mentoring of internal talent. Ultimately, the goal of an interim CEO is to leave the company in a stable and improved state, ready for the next phase of its evolution.

Examples of interim CEO assignments

Here are some examples of interim CEO assignments, showcasing the diverse situations in which they are typically engaged:

• The Financial Turnaround: A century-old manufacturing company in the Midlands is teetering on the brink of bankruptcy. An interim CEO with an experienced hand in corporate finance is engaged. Within months, she navigates through the financial storm, renegotiating debts and streamlining operations. Her decisive actions not only save the company from collapse but also lay a foundation for future profitability.

• The Sudden Leadership Gap: A thriving tech start-up in London suddenly loses its visionary CEO due to unforeseen circumstances. The board quickly appoints an interim CEO, known for her tech industry prowess. She steps in seamlessly, maintaining the momentum and keeping the team focused. Her leadership during this critical phase allows the company to continue its growth trajectory while the search for a permanent CEO is underway.

• Merging Giants: In the world of pharmaceuticals, two industry giants decide to merge. The integration process is complex, involving thousands of employees and multiple product lines. An interim CEO with a background in pharmaceutical mergers is brought in. He skillfully manages to merge the two cultures, streamline the product lines and retain key talent, effectively navigating the companies through one of the largest mergers so far this century.

• Revitalising a Retail Chain: Consider a well-known retail chain struggling with outdated practices and diminishing sales. An interim CEO with a flair for retail innovation is appointed. She quickly implements a digital transformation strategy, revamps the in-store experience and explores new market segments. Her initiatives rejuvenate the brand, attracting a new generation of customers and reviving sales.

• Navigating Regulatory Hurdles: A financial services firm in Edinburgh faces regulatory scrutiny over compliance issues. An interim CEO with extensive experience in regulatory affairs and systemic change takes the helm. He not only addresses the compliance issues head-on but also reforms the company’s internal processes, reinforcing a culture of transparency and accountability.

• Leading Digital Transformation: A traditional publishing house in Bristol, struggling to keep up with the digital age, brings in an interim CEO with a digital-first approach. He leads the charge in transforming the company’s digital presence, introducing e-books, and digital subscriptions, thereby opening new revenue streams and modernising the brand

What is the difference between an acting and an interim CEO? 

The difference between an acting CEO and an interim CEO is that an acting CEO is more about continuity within the company, and an interim CEO is about bringing specific skills and leadership to guide the company through a period of change or challenge. While subtle, the difference is significant in terms of their roles, appointment reasons, and expected tenure within a company. 

Role and Purpose:

• Acting CEO: This role is typically filled by an existing senior executive within the company, such as the CFO or COO, who steps up temporarily. The acting CEO’s main responsibility is to maintain continuity and stability in the CEO’s absence. They are often a familiar face within the company, providing reassurance and consistency to employees and stakeholders.
• Interim CEO: An interim CEO is usually brought in from outside the company and is selected for their specific expertise or experience in dealing with the kind of challenges the company is facing. Their role often involves implementing change, managing a crisis, or steering the company through a significant transition.

Reasons for Appointment:

• Acting CEO: This position is generally filled in unplanned or emergency situations, such as the sudden departure of the CEO due to resignation, illness, or other unexpected circumstances. The acting CEO steps in until a more permanent solution is found.
• Interim CEO: The appointment of an interim CEO is often a strategic decision made by the board in response to specific business needs or challenges. It could be part of a planned transition, during a search for a permanent CEO or when the company requires specialised leadership to navigate a particular situation.

Expected Tenure:

• Acting CEO: The tenure of an acting CEO is usually short and undefined, lasting until the company appoints a permanent CEO or until the existing CEO returns to their role.
• Interim CEO: Although also temporary, interim CEOs often have a predefined tenure, which can last anywhere from a few months to a couple of years, depending on the company’s needs and goals.

Scope of Authority and Decision-Making:

• Acting CEO: The scope of authority for an acting CEO can be limited, as they are expected to maintain the status quo rather than implement major changes.
• Interim CEO: Interim CEOs typically have a broader scope of authority and are empowered to make significant decisions and changes, as they are brought in specifically to implement a particular strategy or manage a transition.

When should you hire an interim CEO?

You should consider hiring an interim CEO in the following situations, reflecting the unique circumstances and strategic needs of a company:

• During a Sudden Leadership Vacuum: If a CEO unexpectedly leaves due to resignation, illness, or other reasons, and there is no immediate successor, hiring an interim CEO can provide much-needed leadership and stability while the search for a permanent replacement is conducted.
• For Managing a Crisis: In times of crisis, such as financial distress, reputational damage, or legal troubles, an interim CEO with specific experience in crisis management can be invaluable. They can implement rapid changes and strategies to navigate the company through the crisis.
• During Major Restructuring or Turnaround: If a company is undergoing significant restructuring or needs a turnaround due to poor performance, an interim CEO with expertise in these areas can lead the necessary changes. They bring a fresh perspective and specialised skills to revitalize the company.
• To Oversee Mergers and Acquisitions: Mergers and acquisitions are complex processes requiring specialised leadership. An interim CEO with experience in successfully integrating companies can ensure a smooth transition and maximise the benefits of the merger or acquisition.
• For Bridging a Planned Leadership Transition: In cases where a planned transition is occurring, such as a retiring CEO, an interim CEO can serve as a bridge, maintaining continuity until the new, permanent CEO takes over.
• When Specialised Skills are Needed: Sometimes, a company may require leadership with specific skills or industry knowledge that is not present within the existing management team. An interim CEO can fill this gap, bringing the necessary expertise to address particular challenges or opportunities.
• To Implement Specific Strategies or Projects: If a company needs to implement a specific strategy or project, such as digital transformation or entry into new markets, an interim CEO with relevant experience can lead this initiative effectively.
• To Inject Fresh Perspectives: Companies sometimes benefit from an outsider’s perspective, especially if they are stuck in traditional ways. An interim CEO can provide this fresh outlook, challenging the status quo and driving innovation.

What is the difference between an acting and interim executive?

An “acting executive” and an “interim executive” may appear to hold identical roles within a business at first glance. However, the board’s expectations of each are far from identical. An acting executive is there to maintain the status quo. An interim executive is expected to change it. You can read more about the difference in our article “what is an interim manager“.

Why choose to engage an interim CEO?

An interim CEO offers a blend of immediate leadership, external expertise and flexibility, which can be particularly advantageous. The choice between an interim CEO and other alternative options depends on the specific circumstances and strategic needs of your company.

Interim CEO vs. Promoting an Internal Candidate:

• An interim CEO brings an external perspective and specialised skills, particularly useful in crisis or transition situations. They can make tough decisions without internal biases.
• Promoting internally ensures continuity and leverages an understanding of the company culture and operations. However, internal candidates may lack the specific expertise or experience in handling certain complex situations that an interim CEO possesses.

Interim CEO vs. Hiring a Permanent CEO Immediately:

• Engaging an interim CEO is faster and allows the company to take the time to find the right permanent CEO without rushing the decision.
• A permanent CEO provides long-term stability and vision but may take longer to find. The recruitment process for the right candidate can be lengthy and complex.

Interim CEO vs. Board Members Stepping In:

• An interim CEO is a dedicated resource focused entirely on the CEO role, with specific skills for the task at hand.
• Board members have other responsibilities and may not be able to dedicate full-time attention to operational management. However, they bring in-depth knowledge of the company’s strategy and long-term goals.

Interim CEO vs. Rotational Leadership:

• An interim CEO provides a consistent leadership presence, which can be more effective than rotational leadership where there is a lack of continuity.
• Rotational leadership allows for diverse perspectives from within the company but can lead to inconsistency in decision-making and strategic direction.

Interim CEO vs. External Management Consultant:

• An interim CEO assumes full executive responsibility and accountability, making operational and strategic decisions.
• Consultants offer advice and expertise but do not typically take on executive responsibilities or decision-making. Their role is more about guiding existing leadership rather than leading themselves.

Interim CEO vs. Delaying the Decision:

• An interim CEO fills the leadership gap immediately, ensuring that the company continues to operate effectively and address any immediate challenges.
• Delaying the decision to appoint a CEO can save costs and might be viable if the company has a strong senior management team. However, it risks a lack of clear leadership and strategic direction.