Interim Manager vs Permanent Employee: How the Costs Compare

For many people when they look at an interim hire they wrongly assume it is going to be more expensive than a permanent employee.

On reflection though, if you take a more in depth look at the associated cost of a permanent employee, you will see that hiring an interim can also be cost effective . A permanent employee for a senior level role isn’t just paid a salary. They also potentially gain pension benefits, car allowances, medical insurance and other perks.

This worked example from the Institute of Interim Management shows why: On top of an (example) £100,000 base salary, add company NI, benefits costs and variable employment costs. Then, factor in all the holidays, bank holidays, sick days, jury service, training days, burst boilers and compassionate leave days that you pay for. The following figures are approximate, but give a good sense of what your employees actually cost you:

Employee base pay (example) £100,000 100%

Company national insurance (limits apply. Rounded) £10,000 10%

Car allowance £8,000 8%

Medical, life insurance and other benefits £4,000 4%

Employers’ pension contributions £8,000 8%

Bonus and other incentives (can be much higher) £15,000 15%

Employee absence (52 days not worked, but paid for) £20,000 20%

Total costs to the business for 208 days worked: £165,000 165%

Total cost to the business for each employee working day: £793 0.8%

A good rule of thumb is that an interim manager will charge around 1% of an ‘equivalent’ salary per day. That allows them to match what an employee would be paid and cover their own business costs.

According to survey by the Institute of Interim Management, interims tend to charge the following:

● 11% less than £500 per day

● 22% £500 - £599 per day

● 29% £600 0 £799 per day

● 18% £800 0 £999 per day

● 8% £1,000 - £1,199 per day

● 10% £1,200 + per day

Choosing to engage an interim instead of a permanent employee, is considered more of a specialised requirement, as they offer a unique set of skills required to complete specific projects or initiatives that many businesses may not possess in-house, nor have the time or the resources to train or develop in existing employees. Typically working on varying timescales that can last from a couple of months to a couple of years, interim managers have a high calibre set of skills and experience in solving the problems that may negatively impact or derail a project.

Hiring the right senior manager can take months, but an interim manager could be available to businesses in a matter of days and offer several benefits such as:

● Quick Return on Investment

● Strategic mindset

● Demonstrable Project management skills

● Objective Focused and not bogged down with day to day business issues

● Transferable skills and knowledge from previous assignments

At Newstone Talent Solutions, we have an extensive network of interim professionals all available immediately or on short notice. Please get in contact if you would like to discuss further.

Paul@newstonetalent.com

Oliver@newstonetalent.com