Published on March 28th, 2012 | by Nigel Peters0
The price is right
I am often asked what the cost is for an interim manager against that of a permanent hire. Is there a set way to calculate this? I always feel this question is a little like comparing chalk with cheese. In the first year there probably isn’t much difference - but that sort of timescale is not really the point of interim management! Any pricing discussion always revolves around the key question: “What does your business need to achieve?” Once this is determined, we can then ascertain how best to take you from your current state, the ‘as is’ position, to the future end point - the ‘to be’ state.
The type of interim is also important. Is it a Project Manager that is required or a Change Transformation Director for example? This question is a much greater factor on price than any other associated fee. By selecting the most appropriate interim manager, or building a bespoke team, you can overcome the particular challenges you are facing, resulting in an improved business situation.
As ever though, price will play a part in the negotiations. Because most of our interims are highly experienced and usually more senior, they bring with them a wealth of skills and capabilities that can add enormous value. But what is that price in today’s market? Without doubt, the usual dynamics of supply and demand feature in this field. I am sure that a lot of our interims have reduced their fee rates from the heady growth days of 2007. Indeed, similar conversations about daily rates are happening right now across a variety of social networks - proving it to be a hot topic. Our approach is always one that both the client and the interim company have to be clear about exactly what the interim will deliver before agreeing on price.
Outside of supply and demand, there are several other factors that will influence rates. Contract duration, type of contract, location, notice period and type of company (start up, VC or complex large corporate) may all promote different pricing models. There are also more innovative structures based around risk and success. So it is not as simple as it may seem - but I haven’t answered the question!
Straight forward day rates have dropped considerably in some sectors and the comparison with permanent contract rates is often close, especially when executive search fees, bonus, pension, NI and long term incentive schemes are taken into account. But, when you consider the flexibility and agility that interim management offers, there is much to be said for this option in the current market.