Campion Willcocks explains why simple cost comparisons between permanent employees and interim managers seldom reveal the true picture

'Cost' is frequently cited as a reason for not using interim managers. Often the comparison is made by using the interim's day rate to calculate a notional annual sum, which is then compared to the annual salary of an equivalent permanent position - the difference leading to a conclusion that 'interims are too expensive'.

In reality, the difference between the true cost of a productive day for a permanent employee and an interim's day rate is slim - and may be further narrowed by the intangible benefits and flexibility that an interim brings. While the detail may vary between organisations, a real example from a large financial services institution illustrates this well.

For a permanent project manager with a few years experience on £45,000, the total employment cost is £95,500. To the basic salary are added bonus (15%), employer's NI on earnings and benefits (12.8%), pension (15%), car (£8k), training (£2k), health cover (£1.5k), other benefits (£2k). Another 20% is the overhead of HR, payroll, management and other support costs. Computing, phone and office costs are excluded as they apply equally to interims. Also excluded are recruitment and redundancy costs, although these can add significantly to the true cost.

In a year, after weekends and public holidays, there are 253 potential working days. Paid holidays (30), sickness (10 - believe it or not, the national average), formal training (10) and general admin for half a day per week reduce this to 180. And this doesn't take into account the growing levels of maternity, paternity and compassionate leave. The company in our example plans on 160 productive days per annum to allow for these, travel and 'bench time' between projects.

The real cost per productive day for our £45,000 project manager is between £530 and £595. And these ratios are reasonably consistent across salary scales - a permanent programme manager on £75,000 basic actually costs £815 to £915 per productive day.

Interim and contract change managers are only paid when they work, and are only on the team for as long as you need them. There are no upfront recruitment fees or end-of-role redundancies, nor do they accrue benefits. The real comparison is between their day rate and the true cost per day of permanent staff. Seen in this light, the cost of an interim no longer appears quite so high!

Then, of course, there are the 'non-financial' benefits. Interims come with all the skills and experience required and have 'done it before', usually in various environments. Their objectivity and independence can add a lot of value, especially where internal politics are involved. They also have a vested interest in performing: their only route to the next assignment is success in this one. And no career or re-deployment considerations are required if your business plans change and they are no longer needed.

Leading change management functions, recognising that interim professionals make good sense financially, are increasingly incorporating them into their resource models. As 20% to 30% of capacity, interims can provide that all-important flexibility in numbers and skills to enhance both responsiveness and delivery capability.