The cost of an Interim Manager rarely bears a direct relation to the equivalent permanent salary for a role. Gwen Carter, head of Capita’s specialist Interim Management division, explains the differences and provides some useful pointers.
Comparing interims with permanent staff can be very much like comparing apples and oranges. To understand the cost of each option we really need to start by highlighting their differences. Typically Interim Managers are appointed to take on roles with a strategic focus, with defined objectives and clear timescales, with assignments lasting on average three to six months. By its nature, Interim Management is a very different proposition to a permanent role.
Interim Managers usually operate under their own limited company, charging a day rate for their services but it is common for potential employers to try to make a direct comparison between these and salaries. A salary cost alone doesn’t, however, take into account the full costs of employment of a permanent member of staff, which can often equate to over one and a half times the salary.With permanent employees, organisations are liable for Employer’s National Insurance contributions, Death in Service cover, holiday pay, sick pay, car, pension contributions, health cover and any other benefits on top of actual salary. In the case of Interim Managers, there are no hidden costs outside of the day rate, with all of the above being borne by the interims themselves.
It is also important to note that the cost of using Interim Managers is closely linked to delivery and outcome. Once you consider how employing an experienced interim could save your organisation considerable time and money, or assist you in meeting a critical deadline, then value for money becomes apparent. Using an Interim Manager is a proven solution to a problem, and you should also always consider the potential risk and cost of not addressing issues or failing to procure the key experience or expertise that may not currently exist in your organisation.
Furthermore, you only pay for actual days worked and, as Interim Managers are highly qualified, they often deliver the required outcome in fewer days than a less experienced person might be able to. This further highlights the need to look at the total cost of recruiting an interim rather than a pro-rated salary calculation. Daily rates are based on market forces and will generally vary between sectors, location and disciplines. Organisations are paying competitively for specialist expertise, proven ability and peace of mind. Interim Managers are however generally flexible with their rates, which will vary greatly dependent on the nature and length of an assignment, travel requirements and the organisation. It is also useful to note that first time or new Interim Managers will tend to demand lower rates until they have built up a reasonable portfolio of experience.
When considering the cost benefit of using an Interim Manager this is really a balance between a number of key factors. These should always take into account the full cost of employment, the level of experience required, the risk of not filling a position, flexibility and the speed of delivery required.
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