Interim Management is Value for Money

Posted on 08/03/2019

Opinion

Using the expertise of an external manager and still keeping the costs for the company within bounds.

There are very few companies in the world that do not have to account for the prices they charge their customers. For the majority, the price they place on their products or services – and the market position they want to take – is a tricky business. You start from a cost basis and the margin you want to realize. Or the other way around: you start from the value your product has or can have on the market and you recalculate. No matter how: you try to find that sweet spot called “value for money”.

If we ask business managers of companies not relying upon Interim Management, the price is quoted as a reason not to opt for this solution. This opinion is based on a few persistent misunderstandings.

The added value of the expertise of an external manager for a company is very high

Companies often have to rely on expertise or competences that they do not have in house. If a temporary shortage is concerned, then deploying an interim manager is a solution. Using Interim Management via 3W also guarantees:

  • Speed: once the exact question is known and the characteristics of the assignment are described, the intervention of the provider will ensure that an interim manager can start quickly.
  • Strict selection of the suitable candidate: the secret of a successful interim management assignment is selecting the manager who fits perfectly for the position, in terms of competences and personality and who also has a match with the corporate culture. The interim management agencies are responsible for a thorough selection from their own network of experienced managers, they know through and through.
  •  Flexibility: the assignment of an interim manager is by definition temporary. So you determine, together with the provider and the interim manager, and depending on your needs, how long this will take.
  •  Guidance by 3W: to ensure that the assignment is successful, the interim manager receives constant guidance from the office. If necessary, the provider can propose the replacement of the interim manager, so that the available competences evolve together with the assignment. The follow-up is performed continuously.

Interim Management does not cost more than own expertise of the same level.

Direct costs:

The price of Interim Management is “all-in”:

  • it is a fixed price that has been agreed in advance for a predetermined duration
  • no recruitment and selection costs
  • no social liabilities (due to no dismissal)
  • all benefits often granted to an employee are included in the price (company car, mobile phone, laptop, etc.)

Indirect costs:

With Interim Management, the company does not have any indirect costs, to be paid for a salaried manager:

  • the customer only pays the time actually spent on the project
  • the training costs are included in the price
  • holidays, public holidays, illness: this is not at the expense of the customer

The price for an interim manager is usually specified per day, and is of a similar size to that of a wage-earner with a similar job. It is clear that a comparison between the price of an interim manager and that of a wage-earner with a similar job can never be completely correct. After all, every company has its own HR policy. The following costs per day result from a general simulation:

Senior Product Manager (40 y.) Finance Director (55 y.)
 

Basic salary per month

Corresponding gross annual salary (x13.92)

Bonus (15% Prod. Mgr./25% Fin. Dir.

 

+ Social security employer (25%)

 

Wage costs employer

 

+ Costs of car per year (leasing)

 

+ Extra-legal benefits

Hospitalization insurance

Extra-legal pension, death …

Meal vouchers (€ 8 / day worked)

Fixed costs for the employer

 

Total extra-legal benefits and varia

 

+ Recruitment and selection costs (amortized over 3 years)

 

6.500

90.480

13.572

 

26.013

 

130.065

 

13.800

 

 

1.800

9.953

1.648

3.000

 

16.401

 

6.000

 

9.500

132.240

33.060

 

41.325

 

206.625

 

15.000

 

 

1.920

14.546

1.648

3.600

 

21.714

 

9.000

 

 

Total employer costs per year

 

166.266 252.339
Number of days worked per year 220
 

Price/day manager on the payroll

 

756

 

1147

Price/day Interim Manager(+/-) 850 1400

This table shows that the widespread idea about the high cost price of Interim Management is not in line with reality, at least if (almost) all costs are included in the calculation. A number of “hidden” costs could still be added, such as training costs or costs associated with the social liabilities.

To fill in these functions via Interim Management, the daily prices that are charged would fluctuate between +/- 850 and 1,400 € per day (VAT excl.). For that price, the company gets a very high qualified manager, who is quickly incorporated and handles the assignment in a very result-oriented way.

The service and the support offered by 3W fully justifies the price: our customers can testify to this!