Make sure it is a good fit for both you and the executive. The executive starts on a project or interim basis. He/she works to accomplishe the items on your priority list, giving both of you first-hand knowledge to determine if it is a long-term fit.
You have numerous options for structuring how the executive works with you and your company. Whether you need them one day per month or five days a week for a few months, there is a lot of flexibility getting started as well as on-going. Once the executive has a good understanding of what you need and how they can help, you can discuss what will fit best for your company and your budget.
The term Interim Executive is most commonly used when an executive is brought in to fill a gap between the departure of one executive and the start date of the new executive. However, interim executives can also be used to carry out high-level projects or initiatives; such as M&A work, rebranding, increasing revenues or profits, new product development and international expansion, to name of few. The difference here between an interim executive and a management consultant is that the consultant usually just provides strategy and a plan where the interim executive will do both of these things and then execute the plan. They are more hands on. Not all management consultants are executive level and do not have the background to be able to step into an Interim Executive role should the need or opportunity arise. Cerius Executives only works with Interim Executives and Management Consultants with a verified history at the executive and c-suite level.
The typical response to this question is, “It depends,” and it does. We will review in detail what it depends on and the typical ranges a company can expect to see, and why. For the simplicity of comparison, we will discuss all rates in terms of hourly since that is the most common for management consultants.
What company are you sourcing the management consultant through? There is a pretty big range if you are hiring one of the Big 4 consulting firms (McKinsey, Booze Allen, Accenture, Deloitte) compared to a small boutique firm or an independent management consultant. You can expect the hourly rate to start at $350 and go as high as $1,000 depending on whether the entry level consultants are working on the project or one of the partners. Generally, there will be a blend of resources varying in rates. For a smaller boutique firm, the rates come down quite a bit and will typically range from $250-400/hour. Working directly with an independent consultant the rates will come down slightly from there starting at $100-350/hour. Yes, there is a vast difference in both the ranges and between the types of sources. Which is right for your situation can depend on the size of your company, the critical or high profile nature of the project (ie. strategic plan to the Board of Directors), range of resources needed for a single project, your budget and the type of output needed (ie. do you need an assessment, a plan or someone to also implement the plan). At Cerius, the rates fall into the independent consultant category. The rate range an individual management consultant will take is determined by them. The consultant pays Cerius a referral fee for the service we provide in connecting them with the client and managing the process from beginning to end. Since they spend less time on obtaining and administrating the project, they are able to allocate more time to revenue generating activities for themselves.
Experience level The experience level of the management consultant is generally the starting basis for the rate. If the consultant on a full time basis would generally make $350,000/year, their rate will be quite a bit higher than a consultant who would likely make $175,000/year in the job market. In the simplest of terms, take the annual salary and divide by 1040. Why 1040? Assuming a 5 day/week, 52 week work year, there are 2080 work hours. We are apply only half of the 2080 work hours (1040) since studies show most management consultants spend about half of their time on business development and administrative activities and the remainder on assignment. Again, this is the starting point with the individual consultants work load, activities and the below then factoring into things.
Size of your company and the situation We have discussed that potential salary level plays a factor in management consulting rates. Since salaries range based on the size of the company and the situation, so do consulting rates. The types of situations can include both the situation the company is in as well as the consultants. For example, a company turnaround situation will garner a higher rate than a project involving assessing a sales team. Some consultants also factor in their own situation combined with the company’s and may be willing to take less because they see it as a fun challenge and are financially able to. Length of project/assignment This can have an impact depending on the expectation for the length of a project. A project involving an assessment that will take 2-3 weeks will be quoted at a higher rate than one that will last 3-6 months. One thing to beware of is thinking that an assignment that is full time for 3 months will have a lower rate than one that is part time for 3 months. In reality, they will likely be about the same. Though there is more short term income for the full time 3 month project, and keeps them from accepting another 3-5 days per week assignment.
Types of Arrangements: As you have seen from the above, not all projects are created equal as is the case for how to quote the project. We have seen a variety of projects quoted on hourly, daily, retainer, flat fee/project based as well as the prior combined with a success fee. Which is right for your situation will also depend on all of the above. Typically types of projects such as assessments and strategic planning can be done on a flat fee basis. When there is a potential for a significant cost savings or revenue increase and the company has a small budget, adding a success fee combined with a lower than usual rate is something to be considered. The right management consultant combined with an arrangement that fits the situation and your budget can often make a big impact to the success of a company. Having that impartial outside resource that can not only provide a new perspective but also often needed additional hands-on assistance is invaluable.
Interim Executives are generally quoted on a daily or monthly rate rather than hourly or fixed project fee. No matter whether it’s 8 hours a day or 12 hours a day, you pay only the daily rate. Same thing for the monthly rate, no matter whether there are 28 days (4 weeks) in a month or 31 days (5 weeks) per month you only pay the agreed upon monthly rate. Since an Interim Executive role is tasked with specific objectives and timelines, they are far less likely to get involved in the day-to-day politics and minutiae; thus accomplishing in 3-4 days what a full time executive will accomplish in 5 days. You can then compare the cost of an Interim Executive working three to four days per week to that of what you would be paying a full time executive employee (salary, taxes, benefits, bonus, etc). The cost will be close to the same but the interim executive will get the work done faster.
Once we have a good understanding of what you need, we start identifying executives in as little as a day. At that point it depends more on your availability for interviews as well as the executive’s schedule.
Cerius has a fee share with the management consultant. In exchange for our marketing and sales activities connecting them with the client as well as the administrative and accounting activities that allow them to solely focus on the assignment, the consultant provides Cerius with a revenue share fee based on the rate they have agreed upon with the client. Generally, the fee the client pays is not much more, if any, than they would pay if they found the consultant and contracted directly. Using Cerius’ services saves significant resources, gives you an advisor through the process to make sure the right results are delivered and provides a consistent and proven vetting process to find the right consultant for your situation. Cerius has one of the largest networks of vetted executive level consultants. Our success is tied to finding the client the right interim executive or management consultant and making it easy for them to focus solely on addressing the client’s needs.
Cerius has been connecting executives with companies for over ten years. Through referrals, partner relationships and internet searches, we have been introduced to thousands of executives. With the current job market we expected this rate to slow down for a number of reasons, but instead, the rate has doubled due to our reputation for top level performing executives and making it easy for consultants to work with us. We are pleased that most of our referrals come from executives already in our network referring a colleague. At Cerius, we have two clients; the companies we provide the services for and the interim executives/management consultants.
This is always an option. LinkedIn has the largest database of professionals in the world. This can be both a benefit as well as a problem when looking for a management consultant. Some of the circumstances to be aware of. You are generally starting from ground zero with a search. You will either end up with thousands of results or just a handful depending on how specific your parameters are. It can be a good place to start if you have the time to get an idea of backgrounds and the range of experience that is out there. Some of the common challenges then become: Figuring out the background and expertise you are looking for and narrowing the search criteria to the point of mostly getting just those individuals.
Finding the individuals who have the expertise you are looking for. As you know, everyone has their own approach to their LinkedIn profiles. The range includes nothing more than their name and the last two company names they worked with to a full history including the weekly slideshow presentation and the 150 groups they are members of. For management consultants it is especially difficult since most don’t include all of their projects, ie. type of assignment, type of company and what they did. This is valuable information that may cause you to quickly dismiss a potential fit since you don’t see all of their background and accomplishments.
Finding the individuals who are available for a consultant project. From our experience, many high quality management consultants do not label themselves as independent consultants on LinkedIn.
A lot of good quality interim executives and consultants are not on LinkedIn so you won’t find them at all.
Once you find someone, you still need to go through the process of verifying and vetting to determine if what the individuals list as their accomplishments are valid and can be replicated for you.
One of the benefits is that if you do find someone who has the right background and they are connected to someone you know, you may be able to get a personal referral. This was more relevant a few years back when you did need to at least know the person’s email address in order to connect with them. This is becoming less and less the case in recent years. Personal networks are a great resource for trusted referrals but can be very limiting. You will likely only get the individuals referred to you who are one degree away from your immediate network and only those your network knows enough about. It never hurts to get the word out and get connected as long as you are not in a situation you would like to keep confidential.
Whether you need an assessment or your company restructured, there are a few key things we recommend to keep in mind when selecting the right executive for your needs. These are beyond the basics of verifying their background, checking references, background checks, etc. These are the areas that most often cause a company to get off track when finding the right management consultant for their need.
The biggest mistake we see is companies hiring a consultant who has had a stellar career, has a great reputation (references proved it) and said all the right things yet, the company was unhappy with the progress and the results. The biggest reason for disconnect is that the consultant didn’t have the right expertise and background to fit the situation. When hiring an interim executive, companies want an expert who has been in that exact or similar situation a number of times and knows how to quickly assess and solve the problem. Also one that works well with the existing executive team. One question – describe similar situations you have been in before, how you approached it and the outcomes.
A number of executives who have been consulting for years will have a consultants ‘toolbox’. These are often valuable techniques, trainings, methods, assessments, templates, etc they can use at your company to get more done faster. They have been tested with a number of other companies and situations and act as a great foundation. However, beware when these represent most of what the consultant is proposing and will use during the assignment. They should be a good base but also be customized to your company’s situation. Ask for examples of what has been used in the past and how it was adapted for each company. Look for outcomes and results rather than just a book of documentation and set of instructions.
This is often a tricky one but certainly needs to be addressed. Unless the project is solely an assessment, the deliverables should include more than a report, findings and suggested action plan. What is the expected outcome once they are done and what will you have to show for it? It is often difficult to quantify and predict at the onset which is why you will often see management consulting assignments broken into phases with concrete deliverables identified one phase at a time. This also acts as a good milestone to stop, look at what has been done, reassess the situation as it stands at that point and decide the best options for proceeding.
Probably one of the biggest causes for a bad experience with a management consultant is the gap between expectations and reality. When you bring in an expert, especially at the rates you are paying them, it is too easy to expect the visions you have in your head for the outcome to become reality. That is often possible but it may come with an extended timeline and expanded price tag compared to what you originally thought or were told. A management consultant can end up being the lynch pin you needed to pull everything you already had together and make significant progress towards your vision. Just make sure you and the consultant are taking into account all facts currently known and not substituting dreams for deliverables.
As you consider engaging a management consultant, here’s a few things to keep in mind that will help you with the initial framework.
Are you clear on what the actual problem or need is and what you want the outcome of the assignment to be? For example, we often receive inquiries for sales experts. There is an issue with sales so of course, a sales expert is needed. After talking through the situations we find the actual problem that needs to be initially addressed is marketing or engineering/manufacturing. Something to consider – the best individual to help you figure out what the problem is and the expected outcomes may not always be the same person to solve that problem.
Strategy vs. Execution
Having a consultant in for a few days to help you layout the future of your company and that year’s strategic direction is very different than bringing in the specific management consultant expertise to help implement that plan. Some are great at one or the other, few (regardless of what anyone says) are great at both, especially given the range of expertise you may need for implementation. One thing to keep in mind is the old adage, “If you have a hammer, everything looks like a nail.” Make sure you are engaging a management consultant can keep an open mind and will help you formulate the right strategy for you and your company vs. the one that he/she is most comfortable with and most knowledgeable of.
Besides determining how much you can afford, also factor in how long it will take to achieve the promised deliverables; which should in most cases pay for itself within a specified period of time. This is why measurable results are important. Everything you contract out to a management consultant should have a good return on investment (ROI).
Situations where an interim executive or management consultant makes sense: Lack of bandwidth in executive team to achieve all priorities | Lack of expertise in the company to lead and execute on important initiatives | Need for turnaround management consulting for a short period of time as the company prepares for a sale or acquisition | Filling-in while an executive is on medical leave or leave of absence | Filling-in when an executive leaves the company until the company can fill the position permanently | Bringing in higher level talent for a short time to put in new processes and procedures so they can put in a less expensive manager long term to maintain the department | Executive position where the skills needed to be successful change very quickly (i.e. IT, Marketing, etc.) | Startup Company who really does not need a full time executive in all executive positions (i.e. Finance, Marketing, etc.)
Situations best served by another talent management solution: Need for a long term executive whose expertise will continue to be useful as the company grows CEO believes they need all permanent employees CEO believes the company has the internal expertise to achieve all company goals Middle management positions.