In today’s rapidly changing business environment, marked by technological advancements and global market shifts, many companies seek innovative ways to remain agile and cost-effective. One of the surprising answers to this call is the emergence of the fractional executive. As companies big and small grapple with the uncertainties of fluctuating economies and market conditions, the fractional executive stands out as a unique way to gain critical expertise without the cost of a full-time commitment.
What is a fractional executive?
While the concept of a fractional executive has been around for decades, the rise of the gig economy and the push for more flexible work structures coming out of the pandemic accelerated the demand for this type of leader. The fractional executive refers to seasoned professionals who provide leadership and strategic guidance to companies part-time or contractual. These roles emerged as an answer to several business needs, particularly for companies not ready or not needing a full-time C-suite executive but still requiring the insights and direction such a person can bring.
There are fractional executives available for nearly every position. According to Ben Wolf, the author of “Fractional Leadership: Landing Executive Talent You Thought Was Out of Reach,” the most common ones are chief marketing officers, chief sales officers, chief operating officers, chief financial officers and chief technology officers.
The fractional executive is differentiated from an advisor or consultant because of the nature of their engagement model. Whereas an advisor offers mentorship and executive support, they only provide a few hours monthly. A consultant is usually brought on to address a specific issue, often structured on a project, time or material basis. On the other hand, the fractional executive has a higher level of commitment, usually four to 20 hours per week on an ongoing basis. Plus, the goals of this executive are tied to the North Star metrics of the company, typically set to quarterly goals.
The benefits of hiring fractional executives
There are many benefits to bringing on a fractional executive.
Expertise. As small and midsize companies grow, it’s typical to find that your organizational needs may extend beyond your existing personnel and leadership team. Perhaps your company is struggling to increase sales, you aren’t sure how to scale the technology in a performant manner, or you need a design leader to help improve the user experience of your existing products. Fractional leaders can help navigate these complex challenges because they come with decades of experience in that same problem space or industry. They can guide your organization hands-on, working in an integrated way with the rest of your team.
Cost-effectiveness. One of the most immediate benefits is the cost savings. Unlike full-time executives, whose compensation packages can be extensive and include salaries, bonuses, benefits and other overhead, fractional executives are explicitly paid for the hours they contribute or the projects they undertake. This financial model offers businesses substantial savings while still accessing top-tier talent. You can hire an industry veteran with the needed experience but may need help to afford a full-time executive.
Flexibility. Every business goes through phases — from rapid growth spurts to consolidation periods. Fractional executives provide the elasticity to have an experienced hand on deck when needed, without the permanence of a full-time position. This is particularly valuable for short-term projects or during transformative business phases.
Moreover, you can derisk the possibility of hiring the wrong person as a full-time leader. There can be long-term costs associated with bringing on a bad executive, and a fractional executive provides the opportunity to limit your exposure by doing a trial period or short-term engagement.
Improved decision-making. With their extensive backgrounds, fractional executives can provide crucial guidance on critical strategic decisions. Moreover, because they aren’t ingrained into the company culture or office politics, they can offer fresh perspectives, helping businesses identify opportunities or pitfalls that might have been overlooked.
Increased productivity. Fresh eyes can often see process inefficiencies. Fractional executives can streamline operations, introduce best practices and boost overall productivity. Moreover, businesses can delegate tasks more judiciously with their guidance, optimizing team outputs.
Enhanced morale. Strong leadership can invigorate a team. A fractional executive can provide direction, mentorship and a sense of stability, all contributing to a boost in team morale and a more cohesive work environment.
Are fractional executives right for you?
While the advantages of hiring fractional executives might be clear, how do you know if one might suit your company? First, consider what role would have the highest impact and is the most urgent. Do you need this leader long-term or short-term? Here are a few example scenarios for when it might be good to hire a fractional leader.
- Startups. An early-stage startup may not have the resources for a full-time executive like a chief financial officer. This may be particularly true if a startup is still early in its product and wants to preserve its capitalization table for fundraising. However, the startup may need financial strategies, and capital raising is still a critical function. A fractional CFO can fill the gap, offering financial acumen without long-term financial commitment.
Often, for a tech startup, the key employees tend to be the CEO, CTO and chief product officer, but the company usually needs more time for a full-time CMO, CFO and COO, for instance.
- Small businesses. Small businesses aiming to make their mark can benefit immensely from targeted marketing. A fractional marketing executive can help carve out a niche, optimizing resources for maximum market impact.
- Midsize businesses. As businesses grow, operational efficiencies become paramount. A fractional COO can help iron out the kinks, ensuring the company scales smoothly.
- Large enterprises. Complex IT projects and strategies in sizable organizations often need expert guidance. A fractional CIO can be the linchpin, ensuring that IT strategies align with business goals.
- Product-driven companies. In the highly competitive world of product development, design is paramount. Companies striving for innovation can engage a fractional chief design officer. This expert can guide the product’s visual and functional aspects, ensuring it meets market demands and provides an exceptional user-centric experience, setting the product apart in the crowded marketplace.
The fractional strategy
Considering a fractional executive is not just about cost-saving; it’s a strategic decision that aligns with contemporary business needs. It’s about leveraging expertise, enhancing flexibility and optimizing resources. For businesses navigating today’s dynamic landscape, it’s a solution that promises adaptability, growth and sustainable success. Before diving in, though, companies must research and find the right fit — after all, with the plethora of options available, the right match can be a game-changer.
Won J. You, founder of WJY Studios, is a seasoned design leader and educator who’s spent over 20 years designing and creating award-winning experiences. He has led innovation efforts as design director at Discovery Communications, where he successfully incubated, patented, and launched products, and more recently, he’s directed experience design work for Porsche, Edward Jones, The Los Angeles Times, and Cedar Fair. Connect with Won on LinkedIn, or follow WJY Studios on Instagram. For business inquiries, reach out at [email protected].
Opinions expressed by SmartBrief contributors are their own.