Interim manager's day rates

Interim Manager's Day Rates  

Interim Managers are a resource of "on demand" senior managers who operate as independent businesses. They :

- Manage and bring about change

- Drive businesses or projects forward.

- Turn the organistation around and restructuring.

- Fill management gaps due to unexpected departure, gaps (maternity leave etc) or unsatisfatory performance."Market" rates for interims exist but these depend on a number of factors which we set out here.

- Improve efficiency/profitabilityThey are available to start within days to quickly bring experience and skills for "business critical" problems.

Interim managers quickly add value as survey undertaken by Accountancty Age. The study of 400 business change management assignments found that almost £50m spent on interim managers generated a return of just under £700m. 

However the expected project cost of an interim is an issue that does need early consideration.

What follows is principally 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 the management team but who are not employees of the organisation they contract with. They operate through limited companies and are independent businesses.
  • They are paid a "day rate" but 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 NIC, 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 6 - 12 months but can also be on a part-time or 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 determine day rates

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 
  • Geographic location.
  • 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 assignment 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 comparisons

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

  • Members of the Interimconnect network operate broadly in a range of £500 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 themselves.
  • Temporary staff 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 generally 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.

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For more information on interim day rates do use the contact form or call Mike Measures on 44 (0) 1428 714367

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