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It seems that if you earn more than the PM and are in the public sector you need to be thinking about a pay cut. The media seem to have really latched onto this salary benchmark so much so that there has been TV programmes devoted to it. Who saw Panorama on the BBC the other night!? As I was watching it, I had the urge to throw something at the TV as they seemed to be missing the point. Perhaps it was me who had lost the plot – it had been a long day. All the talk was on who earns what and that some of them were useless and completely overpaid. Granted – I suspect some are but where was the talk of value? Where was the argument that if you are one of the best performers in the whole of your sector you should be rewarded with better pay? Do you have to be totally altruistic to want to work in the public sector?
My favourites were a Head Teacher on 150k who runs not one but two schools and took them from being near the bottom to the top; or the Chief Constable of Cleveland who has made the streets far safer. In contrast we have the Head of the BBC earning 800k – is he worth 4 top performing Chief Constables?
The subject of value got me thinking. Should interims base their rate on the value they add? It is not a surprise that market forces – the availability of good interims has a big impact on rate. Also a client has a budget or a view on a rate. Importantly, many interims will say “my day rate is £x pounds per day” and if they are getting the rate that they ask for they are some way along to being satisfied.
I am interested on how we can further the debate on rate and the value that interims can bring to an assignment. I doubt that we as an interim recruitment firm are in a position to request a share of the savings / benefits that a client achieves and for this to be passed to our interims for every one of our assignments. What we should be seeking to do is examine the potential value added for every assignment and this should be the key factor in setting a rate or requesting a bonus – even if it is more than the PM.
Please respond with your ideas – which one of you wants to be the first to confess you earn more than the PM?
Doug Baird is Managing Director of Interim Partners.
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October 1st, 2010 at 7:01 am
Hi Doug
An excellent point about fixed and variable day rate. However, where the role is solely “caretaking” during recruitment, maternity leave, etc there is probably little need for incentive and little opportunity for the interim to make change. Moreover,, change is normally not desired.
Where incentive is applicable is in the interim restructuring, turn-around roles. I, for one, have worked with all fixed for many years, but over the last period, especially where working with smaller companies and non-UK, have tended to a fix/variable type of remuneration. The variable has been results driven and either monetary or a mixture money/shares. The set up of the variable base takes care, but has worked in the cases met. The problem comes in the reliability of measures before starting, because that is where the calculation is based. The share value for conversion also requires some negotiation. However, if the client is willing and open discussions are held, it is easily possible.
To my mind the issues lie with the Interim Management companies who want fixed cash remuneration and not a variable or share/cash mix. Even broaching the subject has provoked acerbic reactions in the past. Most interims who are professional and confident would be willing to take success-tied portions of remuneration, I feel.
This type of scheme would clear the decks of the so-called interims who are only trying to fill in between permanent roles, and leave the work open for professional interims to really solve the problems.
Regards
Tim
October 1st, 2010 at 7:34 am
I for one would be delighted to be able to base my date rate on the money I have saved, or contracts I have retained, and would indeed like to have received a percentage of those savings. For all of my past interim assignments in the private sector, NHS, charities and not for profit organisations I have saved at least 3 times what I was paid on each assignment. On another assignment I saved a recurring £200k pa year for the next 10 years.
I do know of an interim who saved a PCT £27M in 1 year, but the PCT managed to fritter it away with the next few months.
I fear however that we will continue to have our day rates forced down to 40-60% of former rates, my direct experience, without any consideration of the monies saved or value added.
October 1st, 2010 at 8:02 am
Some of the press reporting of public sector interim roles has been ludicrous, e.g. in ‘The Times’. I think some journalists have taken a daily rate and multiplied it by 365 and then compared it with David Cameron’s salary. On this basis, even my fairly average interim rate looks scandalously high. This is nonsense. Using a more realistic number of working days and including the Prime Minsters, pension and other benefits would be closer, but still doesn’t tell the whole story. For instance, it takes no account of the significant value added to an organisation at a critical time. I also don’t get perks like a flat above the office in Central London and use of a country mansion.
October 1st, 2010 at 8:29 am
Hi Doug,
This is a subject very close to my own heart, as well! I know other providers are keen to make progress here too.
In my mind, this is all about measurement & demonstrating success.
At the first level, I think that the IM industry should adopt a standardised worksheet that shows the Internal Rate of Return (IRR) or Net Present Value (NPV) of the interim’s intervention. This should be discounted at the Tresury’s Long Run Cost of Capital, i.e. 3%. It’s quite a simple calculation really split into three key elements: one-off CAPEX or OPEX; incremental annual savings; incremental annual costs etc.
However, not all interim interventions can be so neatly projectised & especially before the start of the engagement.
Last year, I spent most of the year working for DEFRA & agreed a series of objectives before I started the assignment with my CEO. Each objective was measurable & and had identified before the start “What will success look like?”
Innovation will be important over the the next few years, identifying radically new ways to deliver front & back-office services. This is all measurable & confident interims should be able to offer to reduce cost per unit of service by x%. In this regard, innovation is more typically associated with defining new or re-engineered services.
Apart from innovation, there is also the the opportunity to improve existing services. In my experience, most improvement consultants, like Lean & Six Sigma are input related & do not focus sufficiently on output measures. Isense that these services might now be at the margin.
The challenge is to find robust output measures.
I sense that many branded consultancies are well placed offering discounted or pro-bona services to help with the analysis challenges. It’s bit of a shame really, as a two or three really experienced executive interims could probably offer more innovative approaches to radical improvement. Personally, I have a background in Strategic Cost Reduction (Innovation), and coupled with some operational colleagues, or traditional Value Engineering facilitators could punch way above our weight (or cost).
Regards
Alf Oldman
Interim Finance, Transition & Shared Services Director
October 1st, 2010 at 8:36 am
The best deals are where there is high level of trust. The best pay I ever got was where I said I would for nothing but asked for a percentage by which profit improved. But to do that you have totally trust the client.
The levantine taxi driver approach ”pay me what you think it is worth , effendi”
tends to get higher fares than a metered charge.
October 4th, 2010 at 1:04 pm
Informative and thought provoking, good points well made. I had not looked at the situation in this way. As for the head of BBC I can only gasp at the parallel with four top performing chief constables, it really makes me think if we have all lost the plot