Rationale Supporting Use of Interim Executives - How does the ROI Adds Up?

Typical  ROI between 5 and 20 and a Typical Return between $531,000 and $1,771,000

The actual return on investment varies enormously, but as a guide we would say that for every $1 you invest in an interim manager you get between $5 and $20 back. Interim management provides significant advantages to companies working in rapid change environments:

($100,000 management position)

• 4 month delay incurred finding a permanent employee = $100,000 lost contribution. Companies first need to realize that a permanent employee on $100,000 per annum is actually costing the business a lot more. Once you have added in recruitment costs, bonuses, holiday pay, employers' national insurance contributions, pension, health and company car benefits the real employment costs are nearer $171,000 per year. (Note that in the case of non-permanent needs; executive level management consultants routinely charge between $1,800 to $3,800 per day.)
• Speed of delivery (depending on project) = $354,000 to $1,771,000 in accelerated results. A senior manager is, on average worth, at least three times their annual salary in terms of their contribution to a company. The Chartered Management Institute surveys suggest that senior managers typically earn $141,620 per annum. But even if we apply this to the more junior $1000,000 per annum manager, if you take four months to find the right person, the delay has cost your business $100,000 in terms of lost contribution - and that's excluding the recruitment fees which search agencies charge, and the unease and inertia which recruitment delays create.
• Value of impartial advice = $34,520. You can add to the ROI formula the interim managers' value as an impartial sounding board. Remember interims do not expect to have a long-term career with you, so they are not going to tell you what you want to hear - they will tell it how it is. Their candor could save you a fortune.
• Value of having someone overqualified in place= $34,520. An interim manager offer instant experience and a capability which is almost always one rank higher than the job requires.
• Cost of interim senior executive $1,000/day over 4 months = $80,000. (Rates vary from $750/day to $2,000/day, plus expenses. A January 2004 survey of more than 100 Interim Executives showed an average candidate cost of $1,070/day.) (Note that in the case of non-transitional needs; executive level management consultants routinely charge between $1,800 to $3,800 per day.)