It seems like every business owner dreams of achieving major traction in the marketplace. That fast track growth, however, often comes at a cost. Things get taped together. There’s no process to speak of. Systems? Ha. Things go missing, including clients and team members. Lack of resources means that even the crown jewel, the company’s ability to out-innovate, may be put on hold just to keep up.
When a company grows faster than the capabilities of the leadership team, the end result is often a splat: the company hits the wall.
Smart fast-growing companies have started looking to part-time or fractional executives to provide c-suite leadership, mentorship, and the operational upgrades needed to help a company break through the ceiling to growth.
Fractional executives bring the fresh perspective of experienced c-level executives quickly and affordably. With a focus on getting results, companies find that renting the rock star exec outweighs getting 100 percent of the time of a lesser light.
When Should Companies Use Fractional Executives?
The fractional model of executive leadership means companies can rent out a piece of an executive’s time, getting all of the skill at a fraction of the time and a fraction of the cost of a full-time executive.
This especially makes sense for companies ramping up growth or who are starting to shift their focus to big goals to streamline operations, acquire, implement new projects, sell the company, or IPO.
In these instances, business leaders often find they don’t have the capabilities in house to hit the targets. Without the time for a full-blown executive search to meet the long-term business needs, or the financial flexibility to commit to a full-time hire, fractional leaders can be the answer.
Let’s explore 5 benefits of fractional leadership.
1. Get the Executive Expertise You Need Now
Any sized business can benefit from using part-time executives in fractional roles. It could be a small business looking to expand market share that could benefit from the expertise of a Chief Marketing Officer who can work on that project on a part-time basis. Or there could be a need for an experienced CEO who can provide next level leadership to coach the co-founders on a part-time or fractional basis. (Curious about the difference between fractional, part-time and interim executives? Read our guide.)
Regardless of a company’s c-suite needs, hiring a fractional CEO, COO, CMO, CTO, CIO or Chief Sales Officer makes it easy to laser focus on calling in exactly the right skillset to address those needs. Fractional executives bring best practices from years of experience working with dozens of companies across a range of industries.
Consider, for example, a company that has outgrown the outsourced bookkeeper it used in the past. Perhaps the transactions are increasingly complex and the reporting requirements more sophisticated. A fractional CFO can zero in on initiatives like creating a dashboard of financial metrics, improving forecasting accuracy, looking at how pricing can impact profitability, or leveraging an inventory system.
How It Works
InterimExecs RED Team member, David Neafus, is a fractional Chief Financial Officer who has worked on everything from startups to turnarounds, IPOs to mergers, debt to equity financing. His experience raising $500M for clients and hitting home runs (Alnylam Pharma IPO; Stromedix sale for $500M; Glycofi sale for $400M), allows smaller companies to access the firepower of a big name CFO.
“The benefit of a fractional model is that the client or company doesn’t have to pay for a full-time CFO,” Neafus says. “The cost is a lot less and I focus my time and efforts only on the items that need my level of experience.”
2. No Need to Pay for an In-House Hire
This specialized top-tier executive talent can reinvigorate an organization without the time and expense of a permanent executive. By engaging a fractional executive rather than a permanent hire, a company can save on overhead costs, such as paying for health insurance and time off on top of a high salary.
And then there’s the high cost of hiring the wrong exec. Leadership IQ says that 46 percent of new hires fail within 18 months. This then adds the cost of severance and a new search, which is another gamble.
Fractional executives can be a low-risk way to bring on top-notch leaders who specialize in working with companies going through points of change. This is especially helpful when a company’s current needs could be much different from what it will need 6 or 12 months in the future.
3. Benefit from the Flexibility to Stop, Change, or Add Service
Fractional executive services are flexible, meaning you can scale up or scale back an executive’s time as needed based on the demands of the business.
A part-time leader often kicks off an assignment with an assessment of what’s working and what’s not to determine deliverables and kpis. Goals may range from leading and completing a big project over a span of time to upgrading operations and processes before hiring a permanent replacement to adding value in the company to prepare for sale.
In every case, clear objectives are set with a laser focus on achieving a return on your investment.
4. Hire a Part Time Executive for Months or Years
Fractional executives’ time can be flexible to fit a business’ current and ongoing needs.
For example, an unexpected vacancy could mean a fractional executive helps for six months while a permanent search takes place.
A corporation implementing new technology might bring on a part time executive for the project duration to support the full-time management team.
A company ramping up growth might bring on a part-time CFO or CIO to provide ongoing support for a number of years until the company determines it is ready to hire a full-time executive.
5. Fill an Empty Executive Position Fast
It can take months to fill c-level positions as you search for candidates that have the perfect combination of experience, availability, and cost. Rather than leaving the company to founder during the search, hiring a fractional executive is a way to keep forward momentum and improvement going.
Getting the right leadership team can be the make or break for high potential companies. To explore how a fractional or part-time executive can help, call us at 847-849-2800.