Fractional leaders have been present in back-end administrative roles for many years but, post-pandemic, they are increasingly populating the C-Suite as well.
As Mark Thacker explains in an excellent piece at Fast Company, a fractional leader is, “an executive who assists a company and shares their expertise for a fraction of the time.” Fractional executives may also be referred to as interim or part-time executives. While it may seem counterintuitive to fill executive roles for the short term, it makes good business sense. Fractional executives are a cost-effective and agile solution for companies that need to fill gaps in their leadership caused by demographics and/or expertise.
Modern business is a complex beast. The rapid evolution of technology, supply chain issues, and worldwide demographic, economic, political, and social upheaval have left companies with little choice but to evolve and adapt. While there is no one easy solution to address all of these issues, fractional leadership may provide an edge as you navigate today’s business environment.
What Are Fractional Executives?
Fractional executives are professionals who are well experienced in providing leadership and expertise in finance, operations, marketing, technology, and/or strategy. They work with companies on a temporary or as-needed basis, sometimes working with more than one company at the same time. Hiring executives on a consultancy basis allows companies to tap into their expertise without the commitment and cost of a permanent hire.
Financial considerations are often a key driver in the decision to hire fractional executives. However, there are several other benefits to hiring these professionals, including:
- They can fill leadership and knowledge gaps, which are becoming more prevalent as baby boomers retire and younger executives lack the wealth of experience needed to replace them;
- They can focus on key initiatives and quickly solve problems since they aren’t involved in other aspects of the business;
- They may be able to provide fresh perspectives, without internal biases, leading to increased innovation;
- They can be more objective in identifying issues, providing insights, and challenging the status quo; and
- They can increase your agility and flexibility.
In a way, fractional executives are more like strategic partners than employees. They offer their expertise and experience to you on a short-term basis, to help your business succeed and grow.
The Emergence Of Fractional Executives
The concept of fractional executives has existed for a few decades. However, there has been a strong upward trend in hiring these professionals within the last few years. Initially emerging as a response to economic downturns, fractional executives amply demonstrated their value during the early 2020s. As many companies struggled to adapt to worldwide social, political, and economic upheaval and global supply shortages, the economic advantages of hiring short-term or part-time executives became clear. Further, the shift to remote work, the accompanying technological advances, and the expansion of the gig economy have made it easier than ever to integrate highly specialized professionals into the C-Suite for short periods.
Advantages Of Hiring Fractional Executives
As explained above, hiring fractional executives has gained significant traction within the past few years. Shifting global markets, worldwide social, political, and economic upheaval, and notable changes to workforce demographics are requiring companies to evolve. As part of that evolution, employers are increasingly hiring fractional executives. While those hires may be made out of necessity, this shift makes good business sense for several reasons.
Increasing Flexibility, Scalability, and Cost Efficiency
One of the most compelling reasons to hire fractional executives lies in their flexibility and cost effectiveness. Companies can scale hiring to reflect pressing needs, project requirements, or budgetary constraints.
Further, there is a significant cost saving in hiring fractional executives, as compared to hiring long-term executives, who often command a hefty salary and benefits package. When a fractional executive is hired, not only is there an immediate cost saving but the company can strategically allocate the remaining resources.
Managing Demographic Shifts
Baby boomers have been filtering out of the workforce since 2008, when they began turning 62 years of age (the earliest that Social Security retirement benefits can become available). By 2031, the youngest members of that generation will have reached the age of 65. It’s difficult to predict just how many of this generation – which numbers approximately 72 million Americans – will retire by age 65. However, it’s clear that the workforce will significantly decline.
As baby boomers leave the workforce, they create large gaps in the knowledge and expertise that is collectively held by a company’s employees. Younger workers may not have the experience to fill these gaps. This is where fractional executives with specialized skills and knowledge prove their value, helping companies transition into new leadership models.
Accessing Specialized Expertise
While companies may need assistance in filling a variety of different kinds of skills gaps, the rapid advancements in technology can be particularly difficult for companies to grapple with. Fractional executives can provide the focused expertise that a business needs to implement new technologies, restructure processes, or devise growth strategies – and ultimately succeed in our volatile world.
Delivering Agile Project Execution
Because fractional executives are often hired for a specific project, or to address a specific concern (such as a knowledge gap), they can contribute focussed support. Drawing on their experience, specialized expertise, and knowledge of best practices – and working without the distraction of day-to-day duties or office politics – they are often able to quickly address challenges and deliver results. This type of rapid response is key to managing today’s fast-paced and dynamic market conditions.
Gaining Fresh Perspectives And Insights
By hiring external fractional executives, you have the chance to tap into fresh perspectives and insights. Often, the decisions made by long-term executives are colored by internal biases or preconceptions. But fractional executives bring new ideas and learned best practices to the table, allowing them to suggest change, identify new opportunities, and increase your company’s innovation.
Myths About Fractional Executives
Hiring fractional executives is not yet a widespread practice. As with hiring any kind of contractor, employers may hesitate to hire interim executives who seemingly have little or no stake in their company’s success. First, it may be helpful to think of them as consultants rather than contractors. Also, as Mark Thacker’s piece points out, fractional leadership has an important role in today’s business and will likely contribute significantly to the changing face of work. For that reason, it’s necessary to move past the common myths around hiring fractional executives.
Myth: Fractional Executives Won’t Understand Your Company
Many leaders worry that short-term hires won’t understand their company well enough to provide effective leadership in the C-Suite. But, as Thacker points out, fractional executives don’t need an in-depth understanding of your products or services. They are meant to provide specialized expertise and leadership while other long-term employees provide needed generalist expertise. Even if your fractional executive is completely new to your industry, they still bring the exceptional value as leaders that can only be learned from steering companies through crises.
Myth: Fractional Executives Have Minimal Impact
It’s often thought that a leader’s impact develops and grows over time. As a result, some companies worry that a fractional executive won’t have the same kind of impact as a long-term hire. However, we all know from personal experience that time spent in a particular role is not directly proportional to a person’s success in that role. More often, success is defined by an employee’s experience, expertise, initiative, and soft skills. Fractional executives, having worked in the C-Suite for other companies, have the skills and background needed to hit the ground running as leaders – and to have a positive impact while doing so.
Myth: Fractional Executives Won’t Implement Needed Change
It may be tempting to believe that fractional executives aren’t invested enough in your company to shake things up and initiate the major changes you need. If they won’t be there to share in your success down the road, why should they do difficult work for you? In fact, to succeed as a fractional executive, these workers need to broadcast their successes and show other potential employers just how effective they can be. With their background and experience, they know exactly how to plan, execute, and create lasting, positive change for business.
Rapid change is upon us. The way we do business is changing, the expectations of employees are changing, and the entire world is witnessing unprecedented social, political, and economic change. To ride this out, leaders must be willing to implement change in the workplace – including the shift towards hiring fractional executives.
