Interim Manager vs Permanent Employee: How the Costs Compare

Many people assume that an interim manager is going to be more expensive than a permanent employee.  However, a closer look at the figures may suggest otherwise.

  • More than salary –  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.
  • Holiday pay – a permanent employee will receive paid holiday, an interim won’t. Allowing for bank holidays there may well be at least 28 days or more a year when you’ll be paying a permanent employee but they won’t be working. If an interim isn’t working you don’t pay them!
  • Sick pay – permanent employees often qualify for sick pay. Interim’s don’t.
  • National insurance – employer’s national insurance, at around 13.8% of salary, is another significant cost to add on a permanent hire.
  • Adding it up – just allowing for these additions, an executive on £100,000 actually costs more like £175,000
  • Relocation costs – when a permanent executive joins a firm, if they have to move, their package may include covering relocation costs.  An interim, in contrast, is used to living out of a suitcase and going wherever the next assignment takes them.
  • Bonus – senior employees often have some element of performance-related pay in their package. This may take the form of share options or a bonus. Normally, this will amount to around 20-25% of salary. In the interim management market bonuses are not normally expected. What’s expected is that the interim will deliver brilliantly for the day rate you’ve agreed; that’s what they’re there for.
  • Exit costs – if a senior permanent employee isn’t delivering or your business circumstances change it will take some time to exit them from your organisation. They may have a three months’ or more notice period.  During which time you will be incurring the cost of their salary but most likely they will be doing very little. In contrast, interims are typically on just a month’s notice. 

Looking for an interim manager?  Send us your brief now.