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Companies are increasingly turning to “fractional executives,” those individuals with years of C-suite experience who provide their expertise on a part-time or consulting basis.
While the idea may sound innovative, these services have been around for at least 15 years, said Adi Vaxman, founder and CEO of Sheba Consulting and a fractional COO herself. The difference is, “Back then, it was just called outsourcing,” she said.
So, what is driving the uptick in fractional leadership interest — and is this something you should explore? We asked.
The Idea Behind Fractional Leadership
The increasing popularity of fractional leadership in recent years can be observed across every member of the c-suite: from CFOs and COOs to CHROs and CMOs. Jake Jorgovan, co-founder of Denver-based consulting firm Alpha Apex Group, says the trend has been building for a few years now.
“The pandemic really put the spotlight on this model, as businesses scrambled to cut costs while the market was quite uncertain,” he said.
There are many reasons for considering the idea, but Vaxman says typically, fractional executives are brought in during a time of growth or change to fill a specific need. Yuri Kruman, a fractional CHRO who has provided services to multiple companies, agrees. “Often, leadership has realized belatedly it’s time for real change,” he said.
And therein lies the main difference between a fractional leader and a freelance consultant. A fractional leader is hired to create change, Kruman said. They’re integrated into the company, while a freelance consultant is not.
Because of that, there can be some resistance to the idea.
“I still see resistance from people who have a hard time coming to terms with the idea that they have a person who is not fully committed to them,” Vaxman said.
Yet, she said, not being beholden to the CEO is one of the many benefits of hiring a fractional executive for the c-suite.
A fractional executive can speak more frankly about issues, without worrying the CEO will have them fired. That’s because most fractional leadership contracts are short term, and most fractional executives work for multiple clients, so they aren’t relying on this one company for employment, Vaxman said.
A full-time executive is more likely to weigh what's good for their career against what's good for the organization. “A fractional executive is 100% focused on making the right decision for the client and maximizing the client's resources,” she said.
Hilary Sutton, a fractional CMO for several nonprofits, says the arrangement allows her to speak more honestly. “I'm not married to specific branding or a specific project plan,” she said. “I can clearly see what’s working, what isn’t working and why.”
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A Wealth of Experience …
A fractional c-suite gives companies access to seasoned leadership they may not otherwise have the ability to tap into. “You get the strategic insights and experience of top-notch execs, without the heavy price tag,” Jorgovan said.
Because most fractional leaders work for multiple companies — and often in different industries — they bring a wealth of experience and knowledge to the table. “I've been a CEO for 20 years and since I started doing fractional leadership, I know more about market trends, systems, vendors, technology, marketing strategies, challenges and problems,” Vaxman said.
For instance, because fractional leaders work with so many vendors, they know when to question the fairness of a quote and spot when an extra fee is tacked on, Vaxman said. “When you’re a full-time executive for one company, you don’t have that type of insight.
… at a Fraction of the Cost
One of the biggest benefits of hiring a fractional leader is the significant cost savings. Hiring a part-time executive typically doesn’t involve paying for the usual slew of perks and benefits, equity shares or bonus compensation that come with onboarding a full-time member of the c-suite.
Plus, Vaxman said, companies often pay executives who end up doing work that a more junior person could do — at a fraction of the pay.
About 15 years ago, when Vaxman was a full-time COO, she did the math: “I realized after writing everything down for a few weeks that 80% of the things that I was doing could have been done by someone more junior with the right guidance,” she said. Those actions didn’t require her skills, abilities or experience. “An executive doesn't need to be doing a lot of the things that most full-time executives do.”
Smaller firms and startups, such as those with fewer than 50 employees, may not be able to afford a full-time COO or other similar executive, so a fractional leader can be the perfect fit.
“They don't realize that what they need are little bits of different people who amount to full-time at the end of the day,” Vaxman said.
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Tips for Hiring a Fractional Leader
There are potential obstacles to look out for when considering fractional leaders. Here are three key considerations.
Fitting In
One of the biggest challenges for fractional executives, Jorgovan said, is not being fully integrated to the team when they join a company. “The reality is that they won't become part of your company’s core culture,” he said.
But, he said, that’s okay. Their purpose is to fill a need or help bridge the gap until the company is ready to hire for a full-time role. Most fractional leaders are coming into the c-suite for a specific period with a clear mandate.
However, if a CEO expects a fractional executive to create change, it’s important to give that person time to create it, Kruman said. The CEO must be willing to allow a fractional executive to do his or her job without interfering or directing the work.
Finding the Right Experience
CEOs considering hiring fractional executives need to make sure whoever they are hiring has done c-suite level work in the past.
“Fractional work is not like regular employment,” Vaxman said. “You need to have the right brain and the ability to be super structured to have the systems and infrastructures to switch between clients and to make sure that client data remains private to retain security.”
Face Time Required
When seeking a fractional executive, it’s also important to assess whether the company culture can support the part-time status of the role. For instance, if the CEO is expecting someone to have face time in the office every day, then a fractional leader probably isn’t going to work, Sutton said.
Is Fractional Leadership Right For You?
Fractional leadership offers hyper specific expertise that isn’t limited to the company’s geographic area, for a fraction of the compensation cost of a full-time executive.
“With a fractional leader and with this remote culture in general,” Sutton said, “you can be location agnostic and find someone who has the exact expertise you need.”
