What does an interim manager cost compared to an executive search?

The success of companies stands and falls not only with the quality and uniqueness of their products and services, but also depends on whether there are high-performing teams with suitable managers in all departments. Finding these people and recruiting them for your own company is becoming increasingly difficult due to the growing shortage of specialists and managers. Hiring an executive search service provider to find suitable candidates for middle and senior management positions is common practice. After all, the costs are calculable. What many people fail to take into account: In addition to the commission for the executive search provider, there are other expenses that are often not taken into account. If these are added to the pure recruiting costs, the supposedly expensive interim management becomes a lucrative solution. We therefore ask the question: What does an interim manager cost compared to an executive search?

Executive search: the obvious costs

They are constantly putting out feelers for experienced professionals and are therefore in a position to fill top positions: Executive search headhunting firms. Executive search headhunters specialize in recruiting candidates for executive positions and management jobs. They manage the entire recruiting process: they analyze the company's individual personnel requirements, actively search for suitable candidates, approach them in a targeted manner and discuss whether the person in question matches the profile they are looking for in terms of their expertise and character. They also support their client during interviews and the recruitment of the desired candidate. Executive search headhunters are well paid for this service. Their commission usually amounts to around 25 percent of the annual salary of the new employee.

Executive search: the hidden costs

Whoever thinks that this is just the commission costs is mistaken. Other hidden and opportunity costs must be included in the calculation. A key factor is the duration of the recruiting process. This is because the search for suitable top personnel can take several months to a year - in some cases even longer. During this time, urgent tasks remain unfinished. This can have a direct or indirect impact on a company's turnover. There is also a risk that important strategic decisions will fall by the wayside - which can cost companies dearly in the long term. Once the new employee has finally been found, it takes some time for the person to reach their maximum productivity. A training period of up to six months is not uncommon in middle and upper management. During this time, relevant initiatives can also come to a standstill - with corresponding, financially detrimental effects.

Many people also forget fixed expenses, such as for salary, non-wage labor costs, possible severance payments, legal disputes and vacation and sick leave. And, of course, working with a headhunter for executive searches generates internal costs, for example in the HR department, in the relevant specialist departments and in management. This is why companies should internalize that the total costs of recruiting and employment are significantly higher than the pure placement fee they pay to an executive search consultancy.

It makes sense to compare the complete costs of recruiting and employment. (© Deutsche Interim AG, created with Canva)

The costs for interim managers (daily rate)

All these costs are not incurred when companies hire an interim manager. Only the interim manager daily rate has to be paid. As a rule, the interim manager's daily rate is between 1,200 and 1,600 euros. If interim managers accept mandates far from their place of residence, accommodation and travel costs may be added - this is usually the case in 40 percent of projects. Assuming that interim professionals work 14 days a month, accommodation and travel costs amount to around 560 euros per month or a good 40 euros per day.

If you only look at these figures, interim managers are naturally more expensive than permanent employees. However, other criteria must also be taken into account when evaluating the interim manager's daily rate. Unlike in the case of executive search, interim managers are available as external service providers virtually at the touch of a button. Professional interim management providers have candidate pools comprising several thousand professionals with a wide range of qualifications and many years of experience. It is therefore usually a matter of days, rarely weeks, until a suitable top executive is found. What companies really appreciate is the fact that interim managers do not require extensive onboarding. They have a firmly defined assignment and get started immediately - always striving to achieve the agreed goal. Another plus: they do not incur any costs in the event of illness or for vacation days taken and leave the company again at the end of the assignment - without companies having to pay for termination agreements or legal disputes. All of this is already priced into the interim manager's daily rate.

The best of both worlds: Combining executive search and interim management

Of course, the comparison between executive search on the one hand and interim management on the other is a bit of a limp. While the former is about finding managers for a permanent position, hiring interim professionals provides companies with exactly the specialist support they need - for a certain period of time, but not permanently. It can therefore make sense to combine executive search and interim management as proven recruitment methods. As headhunters in the field of executive search need time to track down suitable candidates, interim management acts as an excellent interim solution: within a very short time, an interim management provider places professionally suitable managers with the company. The external manager either continues the business or implements an urgent project in a targeted manner. This gives companies the time they need to search for the perfect candidate with due diligence with the support of an executive search consultancy and to find - and hire - the best person. As soon as they start their new management job, the interim manager's mission is already accomplished. The experienced professional has paved the way for the new manager and moves on to take on the next challenge.

💡READING TIP 1
In our article Interim Management & Co.: An overview of recruitment methods, we compare the advantages and disadvantages of active sourcing, active placement, executive search and interim management.

💡READING TIP 2
In our brochure Connected Workforce: With Interim Management to a Connected Workforce, you can find out more about the causes of the shortage of specialists and managers and why the connected workforce is a promising solution.