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Warning: Today’s blog might be slightly controversial. After all, I’m talking about money, which is nearly always a loaded subject, but no more so, when it comes to negotiating fees for your next interim assignment.
Whether you are an experienced interim or just starting out, having ‘the talk’ about day rates, length of contract and expenses can either be a necessary evil or a very necessary negotiation. But make no mistake, it is a negotiation! Of course, it all begins with knowing what you are worth and what the client is prepared to pay.
Colleagues in permanent roles are often staggered by interim day rates – perceiving the interim to be an expensive organisational option. I admit, this career path does have it’s financial perks, but here’s the thing….
As an interim, I’ve said sayonara to job security. On average, I can expect to work for 9 months of the year – long term contracts are not always a shoe-in! I am frequently required to work away from home – at distances which mean a daily commute isn’t feasible, so several nights in a hotel are part of the gig. That’s time away from my family and friends not to mention home admin, laundry and the like.
If I take holiday or sick leave, it isn’t paid for by my employer. Neither is down-time. Any career development is funded by me (assuming I have the opportunity in-between assignments). Lets face it, leisure time is in short supply when you are actually working!
Most assignments have a break clause that favours the client, so as an interim I bear the risk and uncertainty of a project which could change scope or be canned mid-way through the assignment if sponsorship changes client-side.
For many clients professional indemnity insurance is a pre-condition of signing a contract, and then there are accountants’ fees and other general operating costs which go with interim territory. All expenses that need to be factored into the day rate you set.
So, how can you respond to clients or critics who question the ‘cost’ of interim, without necessarily understanding the value? Here are my top tips:
Tip #1: Be really clear about your value proposition as an interim. If price is a reflection of value, make sure that what you offer to a prospective client (skill set, experience, specific expertise) delivers something they cannot find from within the organisation. The key here is to demonstrate why they should hire you, and why you are the best at what you do. It’s not enough to be average when you are asking for an above-average day rate.
Tip #2: Know the marketplace. Day rates in Investment Banks are not the same as those in Local Authorities, so be realistic about where you are pitching price-wise. It’s worth talking to interim providers to get a feel for what the going rate is, but if you are making a direct approach to a client, don’t be shy in asking them what their budget is. Actually, best to understand if they actually have a budget! Within reason, never be tempted to simply lower your rate because the client/interim provider asks you to. All this means is that they can’t sell you at the rate you are charging, not that you aren’t worth it. Those who insist on ‘cheap’, will always be cheap (and probably don’t understand interim), so don’t short-change yourself. Exit gracefully.
Tip #3: Be prepared to negotiate. I know, this seems like a complete contradiction to Tip #2 but consider this. If you are too rigid on price, it may be a long wait between assignments. Unless you are a leading industry expert, with clients beating down your door, every conversation you have about fees will be a negotiation. Personally, I have in mind a ‘rate range’ which flexes depending on the assignment. There is no upper limit! So, for example, shorter and riskier assignments carry a higher day rate than those which guarantee 12-18 months of work. You could, if appropriate also negotiate on expenses and working from home to compensate for a slightly lower day rate.
Money is simply paper and metal. In the UK we are culturally programmed to avoid conversations about awkward subjects like money. I say it’s time to get over that. In the end, you will only get what you have the courage to ask for.
How do you deal with day rate conversations? Do you have any negotiating tips for other interims? Answers on the blog, please.