Outsourcing Senior Management… Seriously?

Regardless of the reason for setting up the business, an entrepreneur tends to be a visionary who is on a mission to materialise their dream and give it its own life in the shape of a business. Running a business is not all roses and there are many thorns that exist in the day to day of running a business. Such thorns, however, can largely be foreseen and planned for.
We encounter many private companies that are heavily dependent on the owner or entrepreneur to provide vision and leadership and essentially to be the core driver of all aspects of the operation. These are reasons that owners and entrepreneurs tend to grow their management team with the introduction of a CEO or other CXOs. In doing this, however, the owner/founder typically struggles with delegating vision to an ‘external’ person. In trying to harmonise all these different aspects, an increasing number of companies are moving to outsourcing. They are finding that a model that was originally conceived to reduce costs and to address back-office and support functions, can have equally beneficial and successful applicability to senior leadership roles.

Owners can free their time while focusing on their strengths

When a business is set up, the founder/owner typically created it based on his/her vision and leveraging current strengths. The typical reality in a growing business is that the owner ends up fulfilling many roles from vision setting to leader, product developer, client-facing person, business planner… and the list is endless. The reality is that an outsourced CXO can easily be dedicated to one or more of these areas in order to give the area dedicated input and guidance while freeing up some of the owner’s time.

The expertise required is beyond the budget available

Recruiting full time CXO staff tends to be quite costly and many companies toy with the idea for years before actually taking the decision to recruit. Companies who are willing to outsource such roles typically end up bearing a much lower overall cost since the resource is available to them for a reduced number of hours. This model is also particularly beneficial where the owner or current CEO would require professional accompaniment by a C-level colleague that is way beyond the input given by a traditional coach while still retaining control over the operation.

Owners want to grow the business while retaining control

Creating and setting up a business is no mean feat and owners would have been through years of sacrifices and hardship to bring a business to the place it is today. In considering the way forward, such owners are typically faced with a dilemma when recruiting C-Level staff since, in order to retain them, they might need to offer equity stakes, relinquish control of the financials and step aside from major company decisions in order to allow the new person to operate.
These dilemmas are not easy to face and work through and many owners would feel the need to pull C-Level expertise on board while not being comfortable with the associated challenges. It is not easy to release so much to a person the owner barely knows and questions start to crop up on what could happen if the relationship does not work. For this reason, outsourcing such a function easily brings expertise to the table in a position where the person is answerable to the owner. This enables owners to take advantage of the expertise, actually learn from it and run the business while retaining full control of the business.

A CXO is the next step but you’re not sure

A company is sometimes clear on the fact that recruiting a CXO is actually the next step however the owner might not be sure of how and whether it would work. There might be uncertainty of letting go the reins, of whether the work chemistry will work, or whether the CXO will join for the long term… All these are valid points that need to be cleared and worked through before such an important hire is made.
Outsourcing the CXO role for an interim period is an excellent way of testing the waters, using the outsourced CXO for assisting in running the business, for defining the final recruitment required and for crafting a path of the changes that are required in order to increase the chances of success for such a recruitment. The outsourced CXO can also stay on as a bridge with the full-time recruit to help them settle in. In addition, they might also be kept on a very reduced involvement in order to guide and facilitate the relationship and direction between the owner and full time CXO.

Input is required now but the hiring process takes time

Industry and market changes sometimes lead companies to a situation where they know that imminent senior input is crucial. The company might be facing new opportunities, trying to break into new markets, taken a big hit due to some external factor… the business would clearly need C-level input yet they cannot afford to wait for the whole recruitment cycle to be complete. Outsourcing the function can serve to onboard the expertise in the immediate while then allowing the business to actually take the decision of whether to prolong the outsourced input or whether to use the outsourced CXO as a bridge to onboard a full time CXO.

Owners can get burnt out and succession is a challenge…

Building a company frequently takes its toll on business owners. They experience many sleepless nights, strained relationships with family and countless worries about the business’ future. Consequently, many owners are frequently exhausted and on the verge of not being able to stay involved on a daily basis. These feelings can be compounded where multiple owner partners work together and get to challenge each other and disagree on the running of the business. The effect of these feelings on the business is that the owner could lack the energy, excitement and drive to keep motivating and running the business.
Pulling an outsourced CXO on board is a good way to take stock of the situation while giving a fresh injection of expertise and energy to the business. This can also be used to look ahead and plan the future in terms of being a bridge between business partners, planning succession and even just accompanying the existing partners into the future.
Setting up a business is one of the most rewarding yet draining experiences anyone can undertake. The experience requires a lot of energy, sacrifice, constant commitment and unfailing strength. While this tends to be exciting to entrepreneurs, the reality is that they too are human and they too will require some expertise injection, business accompaniment, assistance with transitions or handling of a specific crisis. In these situations, an outsourced CEO or CXO can be priceless.