Published on February 25th, 2013 | by Nigel Peters3
Interim Manager Daily Rates - Why Are There So Few Interims at £3K a day?
Interim manager daily rates is a contentious subject and one which I and the Alium team contend with on every assignment, every day. Recently, Nigel Young, our Head of Retail, has put together a bespoke model on the pricing of interims vs. permanent recruitment which our clients are finding incredibly useful, and is the first port of call when querying affordability. However there is also a wider number of dynamics that need to be considered when reviewing interim investment levels:
1. Be realistic
There are plenty of advisors, consultants and lawyers, especially in the bigger firms, that can command sky high interim manager daily rates. However, with all the brand and infrastructure comes a hefty price tab. In the interim space, the highest I have ever worked on is £5000 per day (in the oil and gas industry) and I have heard reports in financial services of £7000 per day, but these are not regular or recent - and just not realistic.
2. Value not price
This is foremost in this supply and demand “I must have someone and now” market. But such is the paucity of demand that you can, and will, get a fair price. Clients are price sensitive in the current conditions so my first advice to an interim is don’t price yourself out of the market. The pricing conversation is a key part of the negotiation. The price must be fair for all concerned. But what is fair?
To me, it is always about value over the pure supply and demand ethos. An interim must be giving value to a business, be it top or bottom line, or providing an insight that they do not have in the business already. When I used to operate in the management consultant markets, a useful benchmark was to provide 10 x the value of your fees. Ask yourself, do you or your interims or management consultants do that? If you are on a £3k a day fee that is a lot of value to achieve - but £6m of bottom line is not insurmountable in many of the roles interims undertake.
3. Unique skills
So what else would drive £3k+ interim manager daily rates? Well, a unique set of competencies, usually for a much shorter duration, is often the circumstance. These specialist interims are typically on short contracts where their knowledge and experience can add huge value quickly and effectively. In this way it is not dissimilar to the role of an executive chairman or a specialist practitioner in a field such as pharmaceutical or technology. Allied with their expert insight, these could also be the particular entry qualification or criteria for this level of fee.
4. FD Fees
Specifically, finance directors for FTSE 30 companies who are known and trusted by the business analyst community, can command a particular premium on interim manager daily rates. Furthermore, if they are also aligned with sector experience and avert urgent demand, this can create a higher pricing scenario. One such specialist brief came from an overseas hedge fund recently that asked for “the biggest finance director you have”. I understood what they meant immediately and days later we closed the deal. This assignment had left head hunters searching for 6 months for that ‘perfect storm’ candidate – sometimes though, they simply don’t exist and you have to think laterally and pay a premium.
Finally location can also influence all the above. Dropping into a hostile or semi hostile environment (no, I don’t mean Glasgow), or into a region or area of particular hardship, can also command a premium on the fee. An increased fee could, for example, take into account expenses, air travel and of course risk.
So while £3k+ interim manager daily rates is far from the norm, it is not unheard of. To ensure you are paying the right level, use the value test – this is crucial. And remember, with caution and uncertainty generally still in the minds of businesses, an investment of this level for anything other than a short period, is still too far for most.