Background

Independent businesses

Market forces

Interim day rate comparisons

Background to rates

Interim Management is widely accepted and a widely used resource of "on demand" managers. As such "market" interim day rates exist but depend on a number of factors which this page will set out.

Interim managers are normally available to start within days to quickly bring experience and skills for "business critical" problems.

Interim managers quickly add value. In fact, a recent study of 400 business change management assignments found that almost £50m spent on interim managers generated a return of just under £700m. (Source Accountancy Age)

However the project cost of the interim is an issue that needs early consideration.

What follows is mainly aimed at organisations that have not used an interim manager before on some of the factors influencing interim day rates. It may also be useful for those that have used interims before.

Interim Managers are independent businesses

• Interim managers are highly experienced executives and senior managers who form part of your management team but who are not employees of the organisation they contract with as they operate through limited companies and are independent businesses.
• They are paid a "day rate" and only for the days they are working on assignment. They are not paid when on holiday or if sick.
• There are no additional costs to pay such as: Employers NHI, PAYE, pension, car, holidays, sickness, health insurance, search and selection fees, severance, share options, bonuses, maternity or paternity leave, etc. Interim managers pay all these costs themselves out of their interim day rate.
• They are normally engaged for a period of months but can also be part-time or on a long-term basis.
• When the assignment or project finishes there is nothing more to pay and no employment contract to unwind or any redundancy payment as they are not employees.
• As independent businesses the day rate represents the outsourced cost of a senior manager plus associated overheads.

Market forces that determine the interim day rate

The factors:

• Demand for and the scarcity of skills at that time
• The competition from the available "pool" of interim managers looking for assignments.
• The interim manager's "track record" of successful assignments that can be demonstrated.
• Private or Public Sector (Public Sector tends to be somewhat lower).
• Within Private Sector some sectors command different rates.
• The day rate "factors in" some compensation for days not on assignment as Interim managers have to be available at short notice, normally days.
• Length of the assignment and where based.
• The degree of difficulty in achieving a successful outcome to the assignment (A Turnaround would command a higher daily rate)
• The responsibility carried, the size and complexity of the organisations that they have operated in.
• If contracted through an Agency, the additional "mark up" on top for providing the agency service. Interimconnect, being a network, does not charge fees on top of the interim's day rate for an interim on assignment.

Interim day rate comparisions

Here are some comparisons and "rules of thumb" that may help when comparing against other alternatives for resourcing senior managers:

• Members of the Interimconnect network operate in a range of £450 up to £1000 per day billing through their limited company.
• Interim managers are about one third the cost of the day rate of a consultant. However there are many differences between the services provided by a consultant and an interim manager. In simple terms consultants normally offer a solution to a business problem but leave the implementation to the organisation. Interim managers implement business solutions , are part of the management team and normally are also able to offer solutions.
• Temporaries require supervision and are not senior managers or executives. Therefore they are not directly comparable with the role of the Interim manager.
• Contractors can command high day rates as they can provide specialist skills. But they are not part of the management team, require supervision and again therefore again are not directly comparable.
• An internal senior manager with the same skills, availability and track record may often be an alternative to an interim manager if they are available and their redeployment does create a "hole" somewhere else in the organisation.

  The Industry "rule of thumb" comparison

  Take the annual gross salary of the equivalent permanent senior manager.

  1% of this gross approximates the interim day rate.

  Example: £60,000 annual salary.

  1% =£600 per day.

These can only ever be guides. Fee rates will be decided through market conditions and a process of negotiation.

However we hope that helps!

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