Myth #3: Interim executives are too expensive.
Thursday 15th February, 2018
What price would you put on the benefit of immediate experience, when facing a change, transition or crisis in your organisation?
How do you price someone who can walk into most change or transition situations and help the client from day one? In the words of a board member of a multinational company:
“We needed someone over-qualified for the job, who could come in and run things from day one, rather than spend three months keeping the seat warm…”,
Executives who can handle this kind of situation with an immediate start are rare and therefore can charge a premium.
Arguably, no other comparable resource is available to companies: an experienced executive working with you, on-site, each day, to manage a business-critical situation. They do this with minimal briefing, little direction and usually with an immediate start.
In the absence of knowing suitable interims, or not knowing what these immediately deployable executives can do, many companies hire management consulting firms when there is a planned or unplanned change to manage.
Although many senior-level interims are similar in experience to management-consulting partners, they are priced differently. They are also a different proposition.
At a daily rate of between £1000 and £2500, inclusive of introduction fees, interim executives match the experience and credibility of partners in consulting firms, yet in price terms they are equivalent to junior and mid-range management consultants!
Interim executives will work with you as part of your leadership team to implement change or manage transition. They’ll certainly be able to sense-check the plan a management consulting firm recommends, then put in place what realistically works for your company.
In the words of one chief executive officer we spoke to, “With an interim, you get what you pay for. With a consultant, you often buy from the expert [partner], but the trainee or junior does the job to pick up experience.”
With an interim executive working with your business every day, you are getting far more bang for your buck – and a lot of operational experience to boot.
When comparing with permanent employees, cost out the full effective day rate of a senior employee. Include hiring (and firing) costs, holidays, training, sick days, NICs, pension, health insurance and so on – it could easily exceed £1000 per day. The comparison isn’t fair here, either. A permanent hire is allowed a learning curve when they start a new role, an interim has none.
Interim management costs are controllable and transparent too.
Interim executives have no interest in prolonging assignments. As soon as no further value can be added, or when the agreed assignment has been delivered, they move on to their next assignment – having given a comprehensive handover to you.
When hiring an interim, both client and interim agree the specific brief, what will be achieved and over what time period. Fees are usually charged as a day rate and are also agreed before the assignment begins. Unless a delivery bonus is agreed, clients only pay for the days the interim works – and those days are often long, so clients get plenty of value for their money.
Each change or transition situation is different. Managing them effectively requires a special combination of qualities which are hard to find. Successful interim managers operating at senior levels possess these. They enable delivery from a standing start, regardless of industry and situation.
They must be able to manage themselves (into and out of an assignment) and satisfy demanding clients who have high expectations of immediate results. They are given a brief and need little guidance, management or direction in how to deliver it. This gives you valuable time to focus on managing your business. Interims have the experience to just get on with it.
Companies should also consider the ongoing cost of not dealing with a change or transition situation.
Although interims should be rewarded for the benefit they bring to companies – and many will not take a role if they don’t feel correctly valued – don’t think they are bothered about status. They’re not. To be successful, they’re prepared to roll their sleeves up whenever necessary to get the assignment delivered.
One last thing – my advice when negotiating is the same to interim executives as it is to clients. Have an idea what you can afford, then agree what feels right for that particular assignment. Interims offer uniqueness (with their experience and approach), just as each assignment is usually a unique situation. There is no price list, so be prepared to negotiate if your company needs the benefit of immediate experience.