Read a translation of the article below. The original article is published in Finnish in on Tilisanomat's website.
Digitalisation, internationalisation, and economic uncertainty are forcing companies to react faster than ever before. Traditional recruitment is not always the most effective solution if expertise is needed immediately for a critical project or change initiative. In such cases, a interim manager may be the solution.
Interim management has become common in Finland and has become part of strategic talent management. A good interim manager brings experience, objectivity and the ability to act quickly.
Typical assignments for a interim manager include ERP upgrades, IFRS transitions, M&As, and financial process redesign. Assignments typically last 3–6 months, but extension contracts are common. The shortest assignments are often critical projects, while the longest ones (lasting several years) include transformation projects.
The profile of an interim expert is clear: they are an experienced person with decades of expertise and a background in management team-level roles or demanding expert tasks, such as Business Controller tasks.
A interim manager or independent expert is not an employee of the client but sells their expertise through their own company. The contractual relationship is a service contract, not an employment contract. In practice, this means that
The employer takes care of all of their employer obligations, such as wages, social security costs and insurance.
The hourly or daily price paid by the customer covers all employer costs, and the customer does not incur any obligations related to the employment relationship, such as holiday pay or the application of the Working Hours Act.
The contract practice allows for flexibility, allowing the workload to vary. Flexibility is one of the biggest advantages of temporary management: the company receives expertise exactly when it is needed.
An important consideration from a taxation perspective is related to job titles. According to the Tax Administration's guidelines, the job of a limited liability company's CEO is a personal job in nature, which can only be performed by a natural person. The compensation paid for the CEO's job is always considered in full to be the salary of the person appointed as CEO, regardless of who the compensation is paid to (KHO 2013:1).
This means that if an interim director works under the title of “CEO”, his or her remuneration is earned income, on which the payer must withhold tax and pay the employer’s health insurance premium. The compensation is a salary, even if it is paid to a limited company owned by the person making the payment or even if the assignment is short-term. The duration of the assignment also does not change the nature of the compensation.
In practice, this limits the use of titles. An interim director can, for example, act as an operational director, but not as an appointed CEO if the intention is to invoice the work through the company. This is an important consideration for both the client and the contractor, as the wrong title can lead to tax penalties and additional costs. If the company is in crisis, the appointment of an actual CEO may not be attractive, also because the role of CEO carries significant legal liability.
The market for interim managers and independent experts has developed rapidly. Experts can be found through intermediary companies and their networks, from the company's own networks or on LinkedIn, for example. An independent expert can be able to start work very quickly, as practical examples illustrate:
A construction manufacturing company urgently needed a finance manager, and the independent expert selected for the position started in less than two weeks.
Due to personnel changes, a company needed an interim CFO for five months. An experienced financial management expert with a background as a CFO and experience in ERP projects and corporate restructuring was selected.
A technology company that made an acquisition needed a strategy expert. The interim specialist supported the strategy process, managed communications and material production, and brought critical expertise to an intensive three-month assignment. This growth company, which has grown rapidly through large-scale acquisitions, has learned to use strategic-level interims as part of its toolkit. For example, interims have been found for the roles of CFO, ERP project manager, finance manager, and integration project leader.
Situations of change and disruption require rapid response and specialised expertise. An independent expert may be necessary when an organisation does not have the time or opportunity to recruit a permanent employee. Typical situations include critical financial management projects, such as ERP system implementation, M&A integrations, IFRS transitions, and financing arrangements.
Interim professionals bring leadership, structure, and clarity to situations where time and expertise are critical. They don't just fill the gap, they deliver the project and leave behind effective processes for the team to use.
Interim management contracts differ from traditional employment in many ways. The contract must clearly define roles and responsibilities so that both parties know what tasks and objectives are covered by the assignment. Confidentiality and data protection are critical, as financial management tasks involve sensitive data. GDPR requirements and trade secrets must be clearly documented in the contract.
The results of the work belong to the client, so the transfer of intellectual property rights must be ensured. In addition, insurance must be taken care of: the interim's liability insurance and statutory insurance must be in order. It is also worth including force majeure conditions and the client's termination options in the contract.
The Client Obligations and Liability Act applies to situations where work is performed on the client's premises or at the work site and a fee is paid for it. Before concluding a contract, the client must obtain certain reports. The reports may not be more than three months old and must be kept for at least two years after the completion of the work. Mandatory reports include an extract from the trade register, a tax debt certificate, a certificate of pension insurance and a report on working conditions and occupational health care if the contractor's company has salaried employees in addition to the contractor.
If the contractual partner is foreign, the client must also obtain corresponding reports from the partner's country of origin. In addition, certificates related to the insurance of posted workers from the EU, such as A1 certificates, must be secured.
Independent experts do not usually use electronic services that allow for checking the client's liability obligations, but if the interim comes through an intermediary, this can be required from the intermediary. In addition to companies focused on interim management, intermediaries include, for example, headhunting companies and accounting firms. It is important that all reports are documented and stored systematically.
An interim service provider can be a key partner when a client needs financial management expertise. They advise the client on the requirements of the Client Obligations and Liability Act and tell them what documents are needed. In addition, a service provider can have a large and multidisciplinary network of interim managers and experts, which makes it easier to find a competent person.
The interim service provider can also handle the procurement and documentation of client liability reports on behalf of the client, which reduces risks and saves time. In some cases, the service provider can provide expert services itself or provide experts from its network of partners. This service can be a significant added value for a client who is unfamiliar with the market or wants to ensure that all obligations are met.
The change in working life does not only affect companies, but also workers. The number of independent experts in Finland has grown significantly in recent years. More and more experienced professionals are choosing entrepreneurship instead of employment because it offers freedom, the opportunity to influence the content of assignments and a flexible way to utilise their own expertise.
However, this opportunity is still largely unknown to many company decision-makers. The traditional way of thinking is that expertise is acquired by recruiting a permanent employee. Interim and fractional management challenge this model: expertise can be brought into the company exactly when it is needed, without a long-term commitment.
Project experts bring solid experience to the company, either part-time (fractionally) or full-time, depending on the client's needs. They can work a few days a week or intensively for the entire project. This flexibility is especially valuable in situations where the schedule is tight and skills are critical.
Often these people would not necessarily be interested in a similar position on a salary basis. They value independence, the opportunity to choose assignments and focus on what they do best. For the company, this means access to top talent that would not necessarily be available through traditional recruitment.
In Finland, the phenomenon is particularly visible in the areas of financial administration, HR, IT and change management. Through service provider networks, hundreds of experienced experts who have worked in management team-level positions are available. Their expertise can determine the success of a critical project and at the same time bring a new perspective and operating models to the company.
The competitiveness of companies increasingly depends on the ability to react quickly and manage change. Flexible acquisition of expertise is a strategic issue. An interim manager or independent expert brings not only expertise, but also an external perspective. This can be crucial in situations where the organisation's internal resources are strained or special expertise is needed that is not available in-house.
The author is the Founder and Managing Director of interim service provider Ferovalo and Best Best Talent Platform. She has extensive experience in connecting independent experts with forward-thinking companies — a trusted partner for finding the right talent solution.
elina.liehu@ferovalo.com
+358 40 564 7441