"Think about interim management whenever you have a staff member drop out, need to take over a project, make a company change or have a crisis situation on your hands."
Few people like change. It's our natural human trait to want certainty. Change hurts. But change in a company comes from time to time. For whatever reason. We have to reconfigure old routines, set up new processes. We change not only our thinking, but also the thinking of our colleagues.
Managing change in society is a challenging business. And we can do it ourselves or hire an interim change manager. And that is Petr Ševčík. He will take the company through the change from A to Z. It's always a several-month mission. From six months to two years.
You may be thinking, why hire someone from the outside? Simply put: repetition makes perfect. An interim change manager has experience and experience. He or she can implement change faster while working with your people.
I discussed the topic with Peter from all sides and he answered my questions ...
🔸 How do people react to change and what to do about it?
🔸 What is the change curve and what does it look like?
🔸 When to hire an interim manager and when to leave the change to your own people?
🔸 What can be the negatives of interim management?
🔸 How to choose an interim manager?
Do you feel your business needs a change? Then check out the bonus to this episode. Peter has put together a short checklist to help you get clear. And then it's up to you to decide whether to go it alone or with an interim change manager.
TRANSCRIPT OF THE INTERVIEW
Martin Hurych
Hello. I'm Martin Hurych and this is Zazeh. As you know, we share our B2B business experience in Zazeh. Today it's going to be about interim management, change management, crisis management and everything related to it. I welcome here Peter Shevchik, an interim change manager who works on his own. Hello, Peter.
Petr Ševčík
Hello, Martin. The pleasure is mine.
What does drumming metal bring to change management?
Martin Hurych
I'll start off a little unconventional. You're the first person who admitted to not only listening to metal, but also drumming metal. So tell me what you take away from drumming to interim change management.
Petr Ševčík
Drumming was actually my first startup. We started at 14 with absolutely nothing, I was drumming with pillow cookers and after 10 years I had Metallica type drums, 2 pedals and drums from left to right. As a band we had all the stage equipment, the equipment, the lights, our own bus, so that was kind of the first lesson that you can build something out of nothing. We were called Mapp and because I'm from Ostrava, we played mostly in Ostrava and the surrounding area. But we toured the whole country.
Martin Hurych
That's great. What are you listening to?
Petr Ševčík
I'm a metal loyalist, but I've mellowed with age, so I've got a wider range. My favourite metal band is Iron Maiden, they've been around recently and since I grew up my defining band was Kiss and I'm still stuck with that.
What is interim management?
Martin Hurych
So we have similar tastes. My bubble is not quite used to the Anglicisms we both know from our corporate past, so I thought I'd start with a very simple definition of interim management and change management. Let's start with interim. What do I actually mean by interim management?
Petr Ševčík
We can think of it as management that is provided as a service. It's a contractor service provided for a fixed period of time, you don't hire a manager as an employee, you hire a manager as a contractor, as a business partner. It may be worthwhile to take a little historical excursion into how interim management actually came into being. It was sometime in the seventies in the Netherlands, when, as a result of the oil shock, free managers appeared on the market and they started to provide their knowledge in the form of contractors. The very first application of these interim managers was so-called substitute management, temporary replacement. You have a manager go out and you quickly hire someone who is available and who will go do the job. Gradually that span of interim management moved into other areas, into project management, into change management, into crisis management. Today we know that in Europe, for example, change management is the dominant application of interim managers. So going back to the beginning, interim management is management provided as a service by an external experienced partner for a fixed period of time.
How widespread is interim management in the Czech Republic?
Martin Hurych
Personally, I've been observing interim management here for some time. I know you have an association that advocates or lobbies for you. So what is your reputation and how popular is interim at the moment in the Czech Republic?
Petr Ševčík
I say we are 10 years behind Germany in this. In Germany, interim management was in phase 0 in 2000, 10 years ago it was already developed and today it is a regular industry with thousands of interim managers and associations. In our country, 10 years ago it was state 0, an interim management association was created, gradually Interim managers started to come on board and awareness of what interim management actually is started to build. Today, most clients have some idea of what interim management is, even though it is still not an obvious concept. It's a huge shift from 10 years ago, because I went through that in the early days when I was doing a lot more outreach about what interim management was than I was selling my services at all. It is fair to say that the Czech Interim Management Association has done a tremendous job in this education. Today we are at a stage where interim management has some awareness, but it is still very much about explaining.
What is change management?
Martin Hurych
Now we can move on to the second part of your job description, which is change management. You said it's also the largest part of interim management in the market at the moment. So what do you mean by change management?
Petr Ševčík
Change management, implementation and change management. When a company needs to make a change, they typically don't have an expert to do it. Change management, like project management or crisis management, is a discipline of its own with methods and procedures. When you have a company that's been running for 10, 15 years in a business as usual, business as usual system, you don't usually have people there who have those particular skill sets and experience. To give an example, change management can be the implementation of a new ERP system. You hire people who have experience with it, who are on your side, who negotiate with the vendor, who control and implement the whole system. They don't just have to do the implementation, but all the activities around it. It's actually a person on your side, on the client side. My clients over the last few years have been a lot about the fact that a company founded 10, 15 years ago has grown, but internally the growth hasn't been as fast and their internal structures haven't been as fast as the growth in turnover. So they needed somebody who knew what a larger firm looked like and who could set up the processes, the systems, the workings of the firm, clean it up, get the strategy in order, and at the same time find the people to take that firm forward on a sustained basis.
What is the difference between crisis and change management?
Martin Hurych
Already at the end of the nineties, at the beginning of the noughties, the first crisis managers with a reputation for being strange appeared. A lot of people around me still sometimes have a bubbling distrust of this type of person. Come and tell us what is the difference between change and crisis, between change management and crisis management.
Petr Ševčík
I would use a simplistic example, crisis management is ARO, change management is holistic medicine. The moment you use crisis management, you are by definition in a situation you don't want to be in. It's usually triggered by some external shock, some external impulse, and that style of management is directive and focused on rescue and then recovery. When you manage change, it may be triggered by some external impulse, but it is targeted, it is consciously managed, it usually takes longer and you need to get more people on board. There's more of a process of internal buy-in, coalition building and incremental planning. I once heard a nice example that a manager should have management styles like golf clubs. You pull out the appropriate style when you need it. When you come into a company that needs change, I have almost always found that I have had to use crisis management methods. We all remember
covid closures, so we had to respond to that. But then there are managers who specialize in crisis situations. They deal with insolvencies, restructuring, but that's a different discipline. The fundamental difference is that in a crisis you act with a rescue orientation, you act in a directive way, you act immediately and quickly. In change, you have a vision of the target state and you act more in a style of internal buying, persuasion and winning people over. But of course, these disciplines are intertwined. Some say crisis management is part of change management. It's basically a theoretical debate. You use what you need.
How do people react to change and what to do about it?
Martin Hurych
When I remember how it used to work in corporations, or how it works today with many of my clients, when I come up with an idea, people's first reaction is that they are afraid of change. It's actually a natural thing. People are subconsciously afraid of change. How do you deal with that? In layman's terms, I guess there has to be a methodology to it, people definitely go through a bunch of phases, so let's talk about that side of things. When you join, the first time a medium sized business owner introduces you to the team and you see those eyes in the column, how do you deal with them?
Petr Ševčík
People don't like change and then you meet with statements that they never did that in the company. My favorite still is why change something that works. I have an analogy for that again, you need a fixed point in that company between people. Either you have that fixed point in the principal, the owner of that company who wants that change and you can lean on that, or you have that fixed point among the employees who see that something is happening and you need to change the company and convince the owner. That happens too. So the first step is to have a strong point. Internally, there has to be a sponsor of change who will be with you. If you go it alone and you don't have a fixed point, you're not going to move it. It is necessary to create a sense of urgency, a subconsciousness that we are burning under the seat. It is the point at which it is necessary to create that perception, at least among key players, that something is happening in the market and we have overslept. You give examples of what happens if we don't change. I don't know if I was lucky with the companies or the employees, but usually in those companies the key employees themselves sensed that something had to happen. The system and the way the company has operated up until now has to change. Then, of course, there are people who are uncomfortable with the change because the accountant has to go from the old accounting system to the new one, but you have to take that into account. All the time you have to explain to those people why you are doing it, what you are doing, what it will lead to and what would happen if we did nothing.
Is change management a reactive or proactive method?
Martin Hurych
Now, as we're talking about it, one thing has resonated with me, and I don't think it has to be that way. You said that we need to create awareness or keep in the minds of those people that we're burning under the seat. That sounds a little defensive. Does that mean that change management is already coming really close to the crisis and can't be planned proactively instead?
Petr Ševčík
That is a very good question. I personally put the changes in three areas. The first is development and growth, that's positive. We want to grow, we have new products, we want to take on new companies, or we have a better proposition and we want to take over the market of the competition. Another area is organisation and functioning. This is where a company grows in terms of turnover
but does not have a set-up inside the company, does not have a structure, does not have processes and does not have technology. It's the people inside the company
they know. They know that they are doing badly and that something needs to change. This might include the arrival of a new owner or, conversely, preparing the company for sale to a new owner. The third big area is the problem of performance, and this is really important because Czech companies are addressing it late. You can have several levels of the problem. The first one is that you have a problem at the strategy level. Your numbers are still good, but there are competitors who are succeeding better than you in the market. My favourite example is Nokia. I, when I was an MBA student, we were given Nokia as an example of a totally dominant company with a perfect product and a perfect proposition. Where is Nokia today? That's an example of a situation where you don't have a problem in the numbers, but you have a problem in the future. At that point, you have to convince a lot of people that the problem is real and show them with examples what will happen if we do nothing. It helps a lot if you have that enlightened sponsor, that sponsor who knows that they need that change. If you don't address that, you start to have a problem in sales. Competitors grow faster than you, you lose market share, sales stagnate or even decline. The moment you don't solve the problem in sales, you start to have a problem in the bottom line because companies respond to the problem in sales with discounts, extended maturities, bonuses, etc. You have lower margins, you have lower EBITDA, you have lower profits, or you get into a loss, and when you don't address that, you have a balance sheet problem. That's where the crisis phase comes in, because if you have a balance sheet problem, you can have an equity problem, you're not meeting bank covenants and you're running into trouble. If you don't address that, then you get into the trouble of having a cash flow problem and a liquidity problem, and that's really bad. So that's the long answer to your question. Change management can come early, it can come early, but you need to be there to take in the signals that the market, your own people and your customers are sending you. I might follow that up with bonus material. It's kind of a simple questionnaire where there are 12 questions focused on 12 key functions of the company. It's not a due diligence, a really quick, quick check, but it's kind of a first indication if you happen to have a problem bubbling under the hood somewhere.
Martin Hurych
When you talked about the sponsor, how many times has it happened to you that you made a contract, then you didn't find the sponsor and in the end it looked like it was going nowhere?
Petr Ševčík
This full-on once in the last 10 years, or one and a half times. But that one example was truly spectacular. We agreed with the first sponsor on some priorities and what the company needed, and then 8 people took on the role of sponsor over two years, and the priorities kept changing, and it was really impossible.
What is the change curve and what does it look like
Martin Hurych
When I watch myself going through a change that I don't like, it's usually the getting angry phase, then the I told you so phase, then the resignation phase, and then I'm just going to try it out. In the end, I have to shame myself in front of the mirror that maybe it's really good and often I become the most die-hard fan of the thing. My wife could tell her own story in the years we've been together. Typically this manifests itself when we have to go somewhere I don't want to go for the weekend. Is it really like that? Is that really how people work? Is there any theoretical way to describe it?
Petr Ševčík
You have actually described in words the famous change curve, which shows the development of motivation and competence over time. People first react with some shock and annoyance, then there is a phase of frustration, resignation, then some testing, adoption, and finally, when it goes well, the change is adopted and performance is higher than at the beginning. I always show this curve to both clients and staff in companies because it has the force of almost a physical law. It's normal, and I always say very openly, that people will have a phase where they will be angry, where they won't believe it and where it will piss them off. It's okay, but it's important to talk about it and not keep it to yourself and not dwell on it. It's possible that getting angry indicates a real problem that needs to be addressed.
Martin Hurych
It's one thing to show it, it's another thing to describe it to people, but it's a third thing to actively work with it in life, because even though I know how it works in theory, I still feel like it annoys me. What do you do with it, how do you work with these people?
Petr Ševčík
This is where we get into the art of negotiating with people, because the moment people are emotional, you can't convince them. So it's necessary to get to the level where you're operating at the level of racio again, reassuring the person that you understand their frustration, but showing them the shared vision that you're moving towards. If he wants to change something there, he thinks something is wrong, then we can look at it together. But you can't solve anything in emotion.
When to hire an interim manager and when to leave the change to your own people?
Martin Hurych
When to bring in an outsider and when to entrust the change to your own management? Why is it a good idea to bring in an outsider? A lot of companies take me on to benchmark deals and get them off the ground, which is a change of sorts. A lot of times there's actually a desire to leave the management to the internal people and take me in as a facilitator so that those people learn the ropes and de facto manage the change. Because the belief is that I'll teach them how to fish and then they'll move on. I'm not going to catch the fish for them, which is a good assumption in principle. On the other hand, I see that when someone new comes into the company and says the same things as the internal people, they have a lot more confidence and everything follows them a lot faster. So from your point of view, when is it good to entrust the change planned for a long time in advance to your own management and when is the time when I see that the internal management will not move it and it is good to take some specialist from outside?
Petr Ševčík
I'd say an outside specialist almost always, unless it's a change like moving offices or something like that. Change management is really a craft and in any craft you get better by repetition, repetition makes perfect. The moment you have existing management that is good at what they do, but they do it in some sort of rote routine, it helps if you find a person who does the change like a treadmill. An interim manager goes to new companies every few months, or once every year and a half, once every 2 years, and has those routines down. They already know what to do and how to do it. So you actually buy expertise, you buy experience, you buy speed of change. I always make these changes with people inside the company. I don't do it for them, I don't do it over them, because the target state is that there is always that permanent management that has to sustain the change and develop it further. The worst thing that can happen is that you put something in place and six months later it flips back. That's wrong, that's change that hasn't been completed.
How long does it take to place an interim change manager?
Martin Hurych
We've already seen how long the assignment, or the length of the interims mission in the company, actually lasts on average. I understand it's anywhere from six months to two years. Can you say that?
Petr Ševčík
I would say from a few months to something like a year and a half to two years, if we take one mission. Then what can happen is that those missions can pile up and during the first mission there's a new topic, a new assignment, a new problem that you start to address with the client and it moves on.
How is the interim manager's remuneration determined?
Martin Hurych
We've talked about 90's crisis managers before. There used to be this assumption that an interim or crisis manager was a terribly expensive service. We're talking about small and medium-sized companies. When do I afford an interim, and how much should I possibly prepare for one, or how does the remuneration of an interim even work?
Petr Ševčík
I would leave aside the crisis managers who work in scenarios like insolvency, restructuring and get paid a success fee when the company is sold or something similar. Let's really talk about interim contracts. An interim manager is predominantly compensated on a per-man-day, man-day, or project rate basis. That is, he does some project work and gets paid for it. However, the absolutely dominant method is a man-day rate, plus possibly if there are milestones set, a success fee for achieving certain goals and results. When we talk about the spread of the rate, it's relatively big on who you buy or what service you buy. You have to remember that everything is in that rate. You pay for the service, you don't pay any more levies, you don't pay the car, you don't pay the phones. Some people go the all in method, which means everything is already in that price. That's what I do, I charge a rate per day and my business is already accommodation, transport etc. Someone takes the form of charging a net price for the service and adding overhead. Sometimes when a client tells me that it's expensive, I tell them to think about how much they pay the director, how much it costs in dues, how much it costs for the car, the office, all that stuff. If he does the math and divides it by the number of days a year he works, he comes up with a rate. Interim managers are not dramatically more expensive, especially in the context that an interim manager is far more flexible. You don't pay headhunters, you don't pay severance if you don't like them, you have a very short notice period, and you have a very quick adaptation of that person. Interim managers are taught to navigate a new company very quickly and figure out what they need.
Can an interim manager be taken on part-time?
Martin Hurych
Can an interim be bought for one day a week or is it a permanent job?
Petr Ševčík
It's both. There are colleagues who work in the style that they have 2 or 3 projects at the same time and dedicate 1, 2, 3 days a week to each client. I prefer the way where I have one client at a time, I dedicate myself to that client, and then I move on to the next client. Both ways work.
What can be the negatives of interim management?
Martin Hurych
Now we have described all the pros, but where are they?
Petr Ševčík
I was also thinking about this, because I thought that a similar question would come up. I confess I can't think of any fundamental ones. But of course I am on the side of the industry. All you can do is get the assignment wrong if you pick the wrong person for the mission, or if you're basically looking for a permanent person and hire an intern. But you have to know what you want, and if the interim service is right for it, there are no major buts. I'll quote one number. It is from Germany, but as I said, we are 10 years behind Germany, so hopefully it will be similar here. They did a survey in Germany and the satisfaction with interim managers among their clients is at 90%. Tell me which company has 90% employee satisfaction. The point is that interim managers have experience, they have knowledge and they have the motivation to help the client. We came across the interim management association, and I, when I take colleagues that I know, the primary motivation that they have is really to help the client. There's independence coded into interim management. An interim manager wants to be independent, they don't want to be an employee, but helping the client is why we do it and what creates our reputation, references and more work.
What does Peter enjoy most about interim management?
Martin Hurych
It's obvious that you enjoy it. What exactly do you enjoy about interims and change management as such?
Petr Ševčík
The variety. The way I got into interims was that I was let go from the corporation, and as Woody Allen says, if you want to entertain God, tell him your future plans. The exact same thing happened to me. Looking back at that time, I thought, I was all startups at the time, or strategy changes or crises, and I thought I should capitalize on that. That's when interim management started coming to the Czech Republic and it clicked for me that it was right for me. It's not for everyone, it's important to remember that there's another side to that independence. If I quote some long-term statistics from Europe, when an interim manager looks at his annual capacity, he has to take into account that he is billing 70% of the time. So they have to take that into account in their business model that not every day is paid and it's not an employment relationship. But if the job fits your personality setup and if you've already done some of it, it's really fulfilling.
How to choose an interim manager? And as an interim... how to choose a contract?
Martin Hurych
I'm trying to give advice here. Let's spark thinking in two directions. On the one hand, I've got a medium-sized business, something's scrubbing, something's rusting, and I need to fix it. How do you choose a good interim manager? On the other hand, for your less experienced colleagues, since you've been in the business for a bunch of years, how from the position of an intern to sniff out that the client and the contract is what I'm going to enjoy? How do you actually get the chemistry right from both sides to make it fun for both sides?
Petr Ševčík
I'll start with the second question. I have a visualisation for this, I imagine a cube, which has on one side disciplines like general management, business management, marketing management, in short disciplines. On the other side it has disciplines and on the third side it has situations like change, project, etc. Where those 3 axes intersect is where my competencies and what I want to do converge. I ask myself if it intersects with my client and if it's a discipline I can do. I had an inquiry from automotive a few weeks ago and I flat out said I can't do it, I don't do automotive, I've never been there, it's a specific industry and I'm not Grandpa Know-It-All. So that's the first thing, to look at it in terms of my competencies, in terms of the fields that I can do, in terms of the situations that I deal with and see if there's an intersection. From the client's point of view, the first phase of cooperation, the diagnostic phase, gives that first answer. The vast majority of interim managers work in such a way that in the first phase they analyse the company and give the client a proposal. You, as the client, already get a feel for the person in this first phase. You know the company and you see if he has uncovered any skeletons, if he names things as they really are, or if he has opened your eyes to something and if you sit down with him humanly. Then, of course, there's some professional history. As a client, you're looking to see if that person has been in business for a while. For example, we in the interim management association have a certification that is proof of professional competence. That's to tell the client if the person has done something before and is really an interim manager who has done it and who can do it.
Martin Hurych
It occurs to me that the analysis may be a catalyst for both sides. The moment I show the analysis and the other side tells me it's not, but I'm fundamentally convinced, that should be a warning light for me.
Petr Ševčík
I will admit that I personally have never experienced a mismatch of this nature after the initial diagnosis. However, I do know that it does happen that there is a diagnosis and then the client says that they don't want such a drastic change and the diagnosis ends the collaboration.
How about trying something of your own?
Martin Hurych
You've been fixing up other people's businesses for quite a few years now. Have you ever thought of starting something of your own and playing on your own turf?
Petr Ševčík
Unfortunately, I haven't had that one idea yet where you'd think that's it. I used to run a business back in the 90s, but not since. However, I am working with two colleagues on a scenario called a management buy-in, where we are looking for a company to buy with a financial investor. We don't have the money to buy the company, but we have a financial investor who has the money. So parallel to my interim management livelihood, we are working on finding a suitable target. I have an analogy that we are playing the Czech league, but then there is the Champions League, where you buy the company, develop it and then sell it to a strategic investor.
Summary
Martin Hurych
Before we end this together, let's summarize our conversation, as I often say here, into something that can be set in stone. When should I seriously start thinking about an intern as a solution to my current situation?
Petr Ševčík
Let's look at 4 basic situations. I've lost a man, I need an immediate replacement. I need to manage a project for which I don't have the right person. I need to make a major change to the company, or I'm dealing with a crisis situation. These are the 4 basic triggers where a business owner or a contracting company should tell themselves that interim management is a service that exists in the market and I can use it.
Martin Hurych
Now that I've met you in one situation, where can I find you?
Petr Ševčík
You can find me on my website, www.sevcik.biz, or on LinkedIn. There are quite a few of us Peter Shevchiks there, but I'm listed as interim change manager. You can also find me among the members of the Czech Interim Management Association on the web, www.caim.cz.
Martin Hurych
Thank you very much, it was great. Good luck.
Petr Ševčík
Thank you for inviting me. Thank you, likewise.
Martin Hurych
That was Petr Ševčík, interim change manager. If we have in any way sparked you to think about interim management and especially change management, because unfortunately the times are conducive to it, we have done our job well. Be sure to give us a subscribe and like wherever you're listening right now, whether it's YouTube or your podcast app. Don't forget to download the bonus that Peter put together. The bonus will be, as always, on my website, www.martinhurych.com/zazeh. All I can do is keep my fingers crossed and wish you success, thanks.