The Cost of Executive Interim Managers

Comparing the costs of an executive interim manager with the apparent cost of a permanent recruit is normally as misleading as it is tempting.

The 1% Rule

As a rule of thumb clients should expect to be charged a daily rate for an interim, which is equivalent to 1% per day of the equivalent annual permanent package for the role. So an executive interim manager operating on behalf of a client as one of their Directors whose permanent package would be say £ 85,000 per annum, should be thinking in terms of paying £ 850 per day for a sensibly overqualified executive interim manager for the role.

Utilisation

When they enter the market, executive interim managers typically calculate their daily rate based upon an assumed utilisation level of no more than 67%. This brings an immediate 50% premium above the equivalent full time salary.

Value

The right executive interim manager can mean the difference between delivering £ 5m and £ 10m of business benefit, and so those executive interim managers who have established their reputation for delivering value charge more accordingly.

Volume

Fundamental driver of an executive interim management service providers' mark-up is volume. The number of transactions through a true executive interim management service provider is more like that of a niche management consultancy, and such consultancies typically charge out non pay-rolled associates for medium-term consultancy assignments at mark-ups of 100% or more. This is why more and more CEOs are finding out an executive interim manager at say £ 900 per day represents an extremely competitive alternative to associate consultants charged at fee levels of up to £ 2000 per day.

Cash

Cash is critical to any business. Recruitment agencies are paid in one lump sum, shortly after the beginning of the placement, and that "up-front" cash is valuable. Executive interim service providers on the other hand are paid typically on a monthly basis, rather than with an up front lump sum.

Gain-Share

It's an interesting idea for us too, because an executive interim manager can earn much more this way; yet because the "devil is in the detail" when it comes to drawing up how such schemes can work for the win-win benefit of both client and executive interim manager, we would normally advise using a more conventional charging process first. This does two things. It firstly establishes an important element of trust between the two parties, which is essential for the success of such schemes; and secondarily allows the interim to more completely assess the risk/reward ratio before allowing them to choose whether or not to commit to a gain-share mechanism. Clients are advised that typically gain-share approaches are more costly to the client than the conventional charging process.

Like to Know More About an Executive Interim Manager?

Don't hesitate to contact us to learn more about interim management generally. We also have resources regarding interim management consultancies and the market for interim management in the UK. There's also information about our supply chain consultancy services and some guidance about how to register for Supply Chain Consultancy & Interim Management Jobs.