The proposal arrives on a Thursday afternoon: an interim manager to cover the supply chain director’s seat, available in two weeks, at a day rate of €1,200. The CFO opens a spreadsheet, multiplies the rate by 220 working days, and looks at the result: €264,000. The permanent director who left was paid €120,000.
Her note to the CEO runs to one line. Twice the cost of a hire.
Some version of that spreadsheet turns up in almost every first conversation about interim management, whatever the country or the sector. The multiplication is always correct. The conclusion is almost always wrong.
It makes two mistakes. It sets the interim’s rate against the director’s salary, when no employee costs the company only their salary. And it prices the interim for a whole year, when the company needs one for a few months. Correct both, and “twice the cost” shrinks to a premium the company can weigh against what it buys.
The market has a shortcut for setting that premium at a fair level. It is called the 1% rule. For the question most buyers are really asking — what is a fair rate for this role? — it works far better than its simplicity suggests.
The 1% rule prices the role, not the person
The rule fits in one sentence. A reasonable day rate for an interim manager is about 1% of the gross annual base salary of the equivalent permanent role. A position that would pay €120,000 a year points to a rate of around €1,200 a day.
Three words carry the weight. Base means base salary: no bonus, no company car, no recruitment fee. Equivalent means the permanent role the interim actually covers, at the seniority and scope the assignment demands. About means a starting point for negotiation, not a tariff. Of the three, buyers get “equivalent” wrong most often, and that is where this piece ends up.
Nobody invented the rule last year. The UK’s Institute of Interim Management has described it as the traditional fee method in its guidance for more than a decade. Interim providers in Germany, Austria and Switzerland quote it to clients as the standard orientation. When two mature markets settle on the same shortcut, the arithmetic behind it deserves a closer look.
The rule holds because nobody bills 220 days
Here is the CFO’s spreadsheet again, with the missing lines put back. The permanent director earns €120,000; the interim charges 1% of that, €1,200 a day.
| Line | Permanent director | Interim at 1% |
|---|---|---|
| Base salary or day rate | €120,000 a year | €1,200 a day |
| Employer social contributions (about 20%) | €24,000 | Paid by the interim |
| Pension top-up, car, insurance, training (about 12%) | €15,000 | Paid by the interim |
| Annual cost to the client, or annual invoicing | €159,000 | €1,200 × 145 days ≈ €174,000 |
| Working days in the year | About 250 | About 250 |
| Leave, public holidays, sick days, training | About 45 days, paid | About 30 days, unpaid |
| Gaps between assignments, winning the next one | None | About 75 days, unpaid |
| Days worked or billed | About 205 | About 145 |
| Cost to the client per day worked | €159,000 ÷ 205 ≈ €775 | €1,200 |
The employer contributions line reflects markets such as Germany or Poland. The gaps line reflects market surveys, which put established interim managers at about two-thirds of their available days.
Read the table across the year first, from the interim’s side. The interim invoices around €174,000; the director costs the employer around €159,000. Out of the larger figure, the interim still funds their own pension, insurance, equipment and unpaid leave. Over a year, an interim at 1% earns roughly what a director costs, not more.
Then read it per day, from the client’s side. The client pays €1,200 for a day of interim work against about €775 for a day of the director’s. That 55% is the real premium. The CFO’s spreadsheet inflated it to 120% by setting the rate against salary rather than cost. It is also where most comparisons stop, too early.
Over a real mandate, the gap narrows further
Take a six-month mandate. An interim working it full time bills about 120 days, the working days in six months less public holidays: 120 × €1,200 comes to around €144,000. Filling the same six months with a permanent hire costs about €80,000 in loaded salary, plus an executive search fee of a quarter to a third of first-year salary, another €30,000 to €40,000. The permanent route comes to €110,000 to €120,000.
On paper, the interim is still dearer by roughly a quarter. The permanent figure, however, leaves out the three-month notice period before the hire can start, the cost of the role standing empty during that wait, and the severance if the role later disappears. Once those are counted, the gap narrows further and often closes.
So the client does pay a premium under the 1% rule, but it is not the interim’s windfall. It covers the interim’s unbilled days, and it buys what a permanent hire cannot offer: a start in two weeks, a clean exit and payment only for the days the company needs.
The rule is only as good as the salary you feed it
Most mispricing does not come from misapplying 1%. It comes from choosing the wrong equivalent role — a title that sounds similar but carries a different scope, a different market or a different level of accountability.
The three case studies below come from the territory I work in: portfolio governance, supply chain transformation and multinational operations in Central Europe. The figures are rounded and illustrative, and zloty conversions use roughly 4.25 to the euro. What transfers is the reasoning, not the numbers.
Case study 1: A “Global PMO Manager” is priced by scope, not by title
A multinational industrial group has approved a portfolio of strategic initiatives across three regions. It needs someone to run it: intake, prioritisation, a monthly portfolio review with the executive committee, and follow-through on what that committee decides. The role description says Global PMO Manager.
The title is where the mispricing starts. Benchmark it against permanent PMO manager salaries, and in Germany you land somewhere between €70,000 and €100,000 — a rate of €700 to €1,000 a day. In Poland, the same title benchmarks lower still.
Now read the scope instead of the title. The role governs a global portfolio, reports to a member of the executive committee and shapes what the organisation starts and stops. Its permanent equivalent is a head of global PMO or a portfolio director. In a Western European group, that role earns around €130,000 to €150,000, and the rule points to €1,300 to €1,500 a day.
The gap between those two numbers is not a negotiating margin. It is the difference between pricing the label and pricing the job. Organisations that buy a portfolio director at a PMO manager’s rate usually get what the rate describes: someone who maintains the tracker while the real decisions happen elsewhere.
Case study 2: A supply chain transformation is priced against the director who would own it
A Western European manufacturer runs five plants and has approved a two-year programme to redesign its supply chain. The plan brings one sales and operations planning process, a consolidated distribution network and new planning tools. The board has signed off the business case. What is missing is someone to deliver it, because the internal candidate has just left.
The tempting benchmarks sit close at hand. One is the supply chain manager at plant level. Another is the senior programme manager in IT who runs the planning-tool rollout. Both roles exist, both have salaries on file, and both point to a rate at or below €1,000.
Neither owns what the interim will own. The permanent equivalent is the director who would lead the transformation across five sites — a supply chain transformation director or a VP-level operations role. That role earns around €150,000 to €170,000, and the rule points to €1,500 to €1,700 a day.
This case also shows what the client is buying. The interim does not rewrite the strategy; the board has already approved it. The role carries that strategy into delivery across sites that do not report to each other, and handing it over means delegating a mission rather than hiring an expert. The equivalent salary has to match the mission, not the nearest job title in the payroll system.
Case study 3: A multinational’s Polish site is priced by accountability, not by address
The hardest case is also the most common. A Western European automotive supplier runs a plant in Poland. Group management launches a programme to bring the plant into the group-wide planning process and needs an interim programme director on site. The role reports to the group operations director, works in English and runs its governance through headquarters functions.
Polish salaries are quoted monthly, so the rule has a local form: a day rate of roughly 12% of the monthly gross salary. There are three candidate salaries to apply it to, and two of them are wrong.
The plant’s own PMO manager earns around PLN 22,000 a month. Priced on that, the rate would be about PLN 2,600 a day, roughly €620. That buys someone who can run the plant’s project list, but not someone who can hold a programme against group functions in a second language.
Programme directors at headquarters earn around €140,000. Priced on that, the rate would be €1,400 a day. That imports a Western European salary into a role performed in Poland, against the Polish labour market.
The right base sits in between. What would a permanent director-level programme lead with group accountability earn in Poland? Around PLN 42,000 a month, or roughly €118,000 a year, which points to about PLN 5,000 or €1,190 a day. The international scope is not extra. It is already in that salary, which is why the equivalent is the group-facing role rather than the plant role.
The principle generalises. Price the role where its accountability sits, at the market where the work is performed. Travel and accommodation for an interim who comes from abroad are expenses, invoiced separately, and never a reason to move the rate.
1% is where the negotiation starts, and five situations move it
Once you’ve identified the equivalent role, the rule gives a defensible anchor. Several situations legitimately move the final number away from it:
- Very short assignments. A four-week mandate leaves the interim with a proportionally larger gap afterwards. Expect a rate above 1%.
- Crisis and board-level mandates. A turnaround, a company close to insolvency, or an interim role with statutory liability carries personal risk that a salary benchmark does not capture.
- Fractional work. Two days a week blocks more of a calendar than the billable days suggest. A modest premium is normal.
- Very long assignments. Buyers often expect a discount for eighteen months of certainty. Experienced interims tend to argue the opposite, because a long mandate costs them other opportunities. Treat length as neutral unless both sides negotiate it openly.
- Provider placements. When an interim provider makes the match, the client price includes its margin. A rate 15 to 25% above the 1% anchor can be entirely fair and does not mean the interim is overcharging.
One case sits outside the rule altogether. Where no permanent equivalent exists — a niche expertise the company would never hire full-time — there is no salary to take 1% of. The value of the outcome sets the price, and the conversation should say so openly.
Body leasing looks cheaper because it prices a different thing
In markets where senior people routinely work on B2B contracts, many buyers skip the day-rate conversation altogether. They ask an intermediary for “a manager on B2B”, set the monthly invoice next to the gross salary of the role and conclude they have found interim management at a discount.
The comparison is broken before it starts. A B2B invoice already contains the costs the 1% rule is designed to cover: unpaid leave, self-funded insurance, the gaps between contracts. Setting it against a gross salary counts those costs on one side and ignores them on the other.
What such buyers have usually found is body leasing. The intermediary supplies a person, the client directs the work and the contract buys capacity rather than an outcome. The invoice sits close to a salary because the arrangement is priced like one: full-time, open-ended, with the contractor absorbing unpaid leave and the intermediary taking its margin from the middle.
That is a legitimate way to add hands. It is not a cheaper route to the same result, because a leased specialist and an interim executive answer for different things. Sold under the interim label, body leasing becomes a caricature of interim management, and not every day rate buys you an interim manager. The price is where the caricature is easiest to spot.
A cheaper interim is rarely the cheaper decision
The CFO in the opening scene did one more thing after sending her note. She asked the provider for candidates at €800.
A rate well below the rule does not buy the same interim for less. It changes who is available. Experienced interims with a pipeline decline, and the shortlist fills with people for whom the assignment is a bridge to something else. The saving on the day rate is real and visible. Six more months of rising inventory, a stalled programme or a board losing patience cost more, and they never appear in the same spreadsheet.
Naming the equivalent role is defining the mandate
Every case study in this piece turned on the same question: which role is the interim actually covering? The global PMO priced as a tracker, the transformation priced against a plant manager and the Polish programme priced at the plant’s own PMO level all failed on that question, not on the percentage.
That question is not really about pricing. To name the equivalent role, a buyer has to state its scope, its reporting line and the decisions it may take. That is the mandate, expressed in money. A buyer who can answer has done most of the work of setting the interim up to succeed.
A buyer who cannot answer has two problems. One is a rate that will be wrong in either direction. The other is an interim who arrives without a defined mandate, and that one costs more than any day rate. A well-priced interim with no authority to act is still an expensive observer.
Name the role honestly, and the rate is simple arithmetic; leave it vague, and no rate will be right.