IM Providers: the North-South Disparity
Interim management providers account for less than 20% of assignments in Italy and Spain, as the primary channel remains personal networks. In contrast, in Northern Europe, the majority of assignments are secured through providers. The disparity between the reliance on providers and personal networks in Southern Europe can be attributed to several factors:
1. Cultural Preferences for Trust and Relationships
Relational Business Culture: Italy and Spain have a strong relationship-driven business culture. Personal connections and trust are often prioritized over formalized processes, making personal networks a preferred method for securing assignments.
Direct Access: Decision-makers often feel more comfortable hiring someone they know or who comes recommended by trusted contacts, bypassing the need for providers.
2. Cost Considerations
Lower Costs for Clients: Engaging an interim manager through personal networks can be more cost-effective, as it avoids provider fees or commission structures.
Provider Fees: Providers typically charge a significant margin on top of the interim manager’s salary, which may deter some clients.
3. Market Fragmentation
Limited Provider Reach: The interim management market in Italy and Spain are less consolidated, with fewer large, dominant providers compared to other countries. The interim management market just adapts to the larger number of smaller companies and greater fragmentation. Many providers are small or regional, limiting their access to broader networks.
Lack of Awareness: Some companies may not be aware of providers or their added value, choosing to rely on personal connections instead.
4. Perceived Value of Providers
Client Perception: Some companies may perceive providers as unnecessary intermediaries, especially if they already have access to a strong personal network.
Provider Quality: Not all providers are seen as delivering unique value, such as matching the best talent or ensuring project success, leading clients to skip them.
5. Established Networks of Interim Managers
Experienced Managers: Many interim managers have built robust personal networks through years of experience, enabling them to directly secure assignments without involving providers.
Referral Dynamics: Interim managers often get referred within industries, making providers less essential in such cases.
6. Regional Variations
Focus on SMEs: Italy’s and Spain’s economies are heavily reliant on small and medium-sized enterprises (SMEs), also family owned. These businesses often prefer informal, relationship-based hiring practices over engaging formal providers.
Geographical Spread: Providers may struggle to cover Italy’s diverse regional markets effectively, while personal networks can cater to local relationships.
7. Providers’ Role in Specialized Markets
Complex or Niche Roles: Providers are more likely to be used for highly specialized or complex roles where personal networks may not have the necessary expertise.
Long-Term Assignments: Providers may have an edge in assignments requiring contractual security, compliance, and long-term guarantees.
This dynamic reflects a market heavily reliant on personal trust and connections, underscoring the need for providers to differentiate themselves by offering unique value, such as broader talent pools, faster matching, or handling complex compliance needs. However, the primary barrier to interim providers growth in Southern Europe is the low proportion of large companies.