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Adelphias Rent to Own Recruiting Solution

VP John Pitek hired an interim marketing director at a cost of $182,000 per year—higher than the $120,000 salary at which the company eventually hired the interim 60 days later. “It’s a small fee to pay to avoid a big mistake,” Pitek says.

May 29, 2004
Related Topics: Contingent Staffing, Recruitment

Adelphia vice president John Pitek calls it the "Rent to Own Program." Brought on in January to revamp the marketing and sales department of the 2,700-employee central region while the company works itself out of bankruptcy, Pitek had the initial task of filling a vacant marketing director position.

    The Charlottesville, Virginia-based vice president of marketing knew that recruiting could be time-consuming and challenging. "I needed to get talent in quickly," Pitek says, but he felt that hiring someone immediately was a risk. "There’s not a huge pool of local talent, and relocating costs are very expensive. It’s a lot safer for us, if we’re going to move someone, that we know it’s the right candidate."

    Like a growing number of executives charged with hiring decisions today, Pitek decided to bring in an interim director. According to a May 2004 report by Staffing Industry Analysts Inc., the market for interim executives, while still small (estimated at $750,000 last year), is growing rapidly. Even with signs of a recovery, the lagging economy during the past few years has made some companies hesitant to take on highly paid permanent employees.

    Interims allow companies to retain the flexibility to grow and shrink with market demands, says Melodie Reagan, CEO of Auromira Executive Advantage, a firm in Superior, Colorado, that specializes in top-level interim and permanent placements. "Business is moving at a rapid speed," says Reagan, "and the benefits of interims are really starting to catch on. They are part of the staffing tool kit that enables companies to adapt to changing conditions."

"It’s worth it to spend more"
    In Pitek’s case, the "rent to own" strategy enabled Adelphia to avoid the high front-end costs of recruiting a qualified candidate, and it postponed relocation and benefits expenses until the company felt sure it had found the right person for the job. Even though he hoped to hire him permanently, Pitek brought in a temporary marketing director through Auromira at a per diem rate of $700. That fee, he says, which works out to $182,000 per year with no vacation days, was higher in actual cash than the $120,000 salary at which the company eventually hired the interim 60 days later, especially when company-funded plane flights to and from the director’s home in Denver are factored in. But Pitek thinks that the higher cash price was well worth it.

    "We might have been paying a premium, but it’s a small fee to pay to avoid a big mistake," Pitek says. "It’s worth it to spend more to get a test drive. If you bring in someone who doesn’t work out, you’ve lost those expenses, and then there’s a separation package on top of that."

    Indeed, only one out of seven candidates who deliver well in an interview will result in a good employee, according to Profiles International, which sells employee-evaluation products. Each mishire, the firm says, costs a company an average of three to six times the employee’s annual compensation. The end result is that American corporations lose $11 billion each year to employee turnover.

Less time wasted
    Although the conventional wisdom is that interim executives are more expensive than a permanent hire, that’s not always the case, says Reagan. Once you factor in traditional employee benefits such as health insurance, bonuses, stock options, vacation days and relocation reimbursements, the true cost of an interim can actually be lower than that of a permanent employee. And even if you plan on hiring the interim permanently, by setting up an initial interim arrangement, she says, you don’t have to waste time during the negotiation phase. Instead, the candidate can begin working immediately, and hiring packages can be hammered out while he or she is on the job. According to Pitek, the ability to hire an employee who has already been tested on the job is the true value of the temporary executive.

    Mitch Halbrich, managing director of Spherion’s interim executive division, thinks interims are great for project-based work or a turnaround situation, but that if a company needs a permanent person, an interim may not be practical. The use of an interim can sometimes cause a company to put blinders on, he says, forgoing an exhaustive search and limiting itself to just changing the interim’s status from contingent to permanent. "It can happen," Halbrich says, "and if it works out that the interim is the permanent solution, great. But you are less likely to find the specific skills in someone’s background that best fit the job if your search is limited."

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