The Economics of an Interim Executive
With a suddenly vacant position, you can spend a lot of time searching for a full-time executive or hit the ground running with an interim executive.
When an executive departs and the hunt for a replacement begins, there will always be a void until you hire a new executive. This void is detrimental to a company, as work and decisions that should be done by an executive are either not getting done or passed around to other employees. If you instead hire an interim executive to steady the ship until finding a permanent replacement, you save not only time, but money as well.
Work Doesn’t Stop
The gap previously mentioned can be quantified as an opportunity cost, which basically is a missed benefit when choosing one option over the other. By choosing to leave the executive position unoccupied while you are on the hunt for a new one, this opportunity cost has been calculated by researchers to be over 2 times that executives salary.
By hiring an interim executive, that missing position is filled immediately with a highly qualified professional, and work can more or less resume like before.
Flexibility with an interim executive
Hiring a full-time executive means you are paying for that executive for a 5-day work week. Now some companies may not need an executive working 5 days a week, but rather only 3 days a week. This is where interim executives come in.
You can specifically state how many days/hours that the interim executive needs to work in their contract. This is a great way to cut costs,as you are only paying for when you need their service, rather than every 5 days. Interim executives also allow you to change executives easily depending on your needs. This is because you are not giving long term commitments with interim executives.
If you are not satisfied with the way things are run, or have a new problem requiring different expertise, you can easily change executives, while still retaining the same cost savings.
The average time an executive spends at an organization is about 3 years, sometimes even less than that. With this high turnover comes high risk. This risk comes in the form of severance packages in which companies are forced to pay for an employee who has been since long gone. With this volatility in the executive market, interim executives are the better choice when it comes to hiring leaders. Not only can you easily swap and change executives, but you also don’t have to worry about things such as severance packages, since interim executives are temporary – unless you decide to keep them permanently.
Economically, interim executives are a much better choice than full time, permanent executives. Not only do you save more money with interim executives, but you also have more flexibility and lower risk.