The interim market has been undeniably difficult in 2024.
Despite positive murmurings post-election which hailed the end of the commercial impasse that has bogged the Consumer market down thus far, Starmer’s sombre rose garden speech at the end of August has re-tightened purse strings around the country.
Alongside the reduced appetite for onboarding interim executives, there’s a trend of new clients wanting to move away from day rate contracts to either a fixed term contract (FTC) or to a direct offer of permanent employment. Often seen as a cost-cutting measure with FTCs appearing cheaper and more efficient by bringing the interim onto payroll.
So then, what is the logic behind many other organisations continuing to request day rate shortlists? Here’s what our clients, candidates and colleagues had to say on the subject:
You want access to the best talent
Without exception, the top reason given by clients is, accessing top talent pools. Marketing assignments at an attractive day rate ensures that you widen the potential talent pool of candidates. The majority of professional interims have their own limited companies; some also have their own brands behind them. Being a professional interim comes with financial risk. To balance this, candidates price their time competitively. As a client, if you push for an FTC then you lose access to a large slice of the talent pie of experienced talented interims, the real agents of change who can make a quantifiable difference to your organisation.
You want to drive commercial outcomes
Day rate interims are indeed the real agents of change. At New Street Consulting Group we always push our candidates and clients to prove tangible return on investment from their assignments. This is easily done using a Statement of Work, agreed at the outset and regularly checked against during the project. If an interim goes onto the payroll to deliver a particular timebound objective it is much harder to assess and measure success. Note that this does not hold true if your interim is purely there to fill a gap in the organisation design or for other roles that are Inside of IR35. Another commercial benefit of day rate contracts is that instead paying your whole agency margin upfront in an FTC, usually without any refund guarantee, you only pay your agency fee after you’ve signed off the interim’s timesheets and are happy with the work completed. Again, this focuses the interim provider on delivering outcomes, not contractors on seats.
You want agility when spend matters
Spend on interims within a Statement of Work contract can be accelerated or slowed depending on cost pressures. NSCG often place interims on 4-day week contracts who ramp up for weeks or months at a time when needed but can reduce to 3 days per week when required. We often secure you better talent through a reduced work pattern at the same cost as a less experienced, full-time FTC candidate. You lose this valuable lever with a fixed term contract.
You don’t want distractions
As an organisation needing interim support, you want the focus to be on delivery of outcomes, not on internal politics or administrative tasks. When you hire on a day rate basis you can segregate duties clinically and commercially. Interim executives want to focus on getting the job done and usually benefit from the psychology of this separation which minimises noise and maximises returns.
So when should clients bring in an FTC or offer a permanent contract at interview?
Clearly when a role sits Inside of IR35 it makes financial sense to all parties to use a fixed term contract. Day rates become inflated to the point of impracticality. FTCs also allow for appropriate salary benchmarking against peers. If the role is planned for 12 months or more from the beginning, five days a week, and sits within the org structure there is a good argument for adding the interim to payroll. It is important to note that many interim providers do not offer refunds for FTCs so you need to do your own due diligence and be certain that the future employee is the right fit for the brief. You should also consider upgrading the base salary in an FTC to capture top talent, as many contractors aren’t eligible for benefits like shares and pensions which command a market price.
As there are more permanent candidates in the interim market than usual, we frequently have offers of long-term positions despite the hiring process starting as an interim one. Sometimes it is best to start on a day rate for a short period and then convert the interim to a permanent contract once both parties are confident in the fit. This allows for a shorter, sharper focus on planning and on outcomes. It also means you don’t risk a full fee should the candidate not be right long-term.
However sometimes there is mutual agreement and willing on both sides to sign on the dotted line permanently. In these cases, we step away and allow the client to take control of the process of referencing and onboarding.
If you have any questions about finding the best interims in Retail and Consumer market or need advice hiring on an FTC basis, find out more here. Alternatively request a call now and one of the team will be in contact. We would be happy to assist you.