How interim managers are paid

Interim managers typically charge by a ‘day-rate’ based on their track record, function and seniority. Depending on how sourced, clients are invoiced by the interim manager or service provider. When buying direct, the interim manager will negotiate a day-rate directly with the client. Sometimes they may consider a fixed fee, part-payment by results or other arrangement, depending on the work. If the interim manager comes via a service provider, then the provider will take a fee (margin). An interim manager is an independent professional who charges on the basis of their added value to the business. That value might be judged by extensive cost-savings, revenue and/or profit growth, significant risk mitigation, or the provision of key services that may not be able to be done within an organisation currently.Interim managers both advise and implement, often in challenging conditions. They expect to be rewarded for making a big difference, not simply for ‘turning up. A suitable rate reflects the value the business receives from the interim management solution offered. It is a mistake to value the ‘interim day-rate’ based on the pro-rata cost of an ‘equivalent’ permanent employee. If this trap is fallen into, businesses will significantly reduce the likelihood that a genuine professional interim manager or executive will express interest in their assignment and be more likely to attract applicants who are marking time between permanent jobs. Also, any money saved on the rate by engaging a cheaper solution may be swallowed up in time delays and recovery costs if the assignment is not implemented properly or if the person leaves the company in the lurch. Interim managers are neither employees nor agency temps, both of whom carry hidden costs, including company NI, benefits costs and variable employment costs. Clients should consider the holidays, bank holidays, sick days, jury service, training days, burst boilers and compassionate leave days that are paid to employees and fixed-term contractors, but not to interim managers. Employee base pay: 100% + Company National Insurance 12% * rounded: variable due to limits and caps. Car allowance, medical benefits, pension 8% Medical, life insurance and other benefits 4% Pension 8% Senior employee bonus 15% Holidays, sickness, training 20% * employee is not working but is paid Fully loaded employee cost: 167% Interim managers, depending on expertise and seniority, typically charge from around £450 to around £2,000 per day. Payment is without the two-thirds on top costs paid to senior employees and companies only pay the interim manager or executive for the days they are actually working. Employers offering ‘pro-rata’ employee base-pay rate to an interim manager are offering a rate of only c.60% of the ‘equivalent’ employee’s package. Businesses setting a rate should consider, if they want their assignment to attract a professional interim manager or whether any ‘temp’ will do. If thinking of an ‘equivalent to permanent’ rate, 1% of annual salary per day or close to it is a good rule of thumb. For real added value, a ‘fixed-term temp’ or ‘perm equivalent’ pay calculation is unlikely to attract a professional interim manager.