A fractional executive is an excellent way to access c-level talent without the full time costs to leverage the expertise and experience of a part time executive.
Access to top talent to lead your team is expensive. Right? You must commit to a high salary, costly benefits and a contract that keeps your business on the hook for paying these professionals.
Hiring a fractional executive empowers business leaders with the opportunity to:
- Secure leading executives without long-term commitment
- Scale business operations with the help of a part time executive
- Add leadership to teams at strategic times or during critical projects
Catering to businesses in a B2B environment requires a skillful, expert approach that a freelance executive can provide without a high commitment level for small- and medium-size enterprises (SMEs).
Businesses can access C-suite executives with specialized skills, including CEOs, CFOs, COOs and more.
What Is a Fractional Executive
A fractional executive is someone who:
- Contracts with a business on a freelance-like basis, which may be hourly, by project or on a non-full-time basis.
- Offers experience and expertise in C-suite positions (more on that below).
Businesses that require higher skill specializations and an exec to fill in gaps in the company’s skillset can rely on a part time executive. Startups and businesses that are still in the early stages of growth can leverage the industry knowledge of execs in these roles.
Hiring for these roles at a time when 47% of CEOs state hiring is a challenge. Fractional execs allow CEOs to fill these skill gaps in companies while searching for a long-term hire or can access the exec’s knowledge during key periods, such as mergers or expanding into new markets.
Part time executives:
- Dedicate a portion of their time to one or more companies
- Give businesses access to skills and specializations that don’t exist in the company
- Open access to very high-level talent to growing enterprises
Companies are increasing their reliance on freelance executives for many reasons.
Why Hire a Fractional Executive
Experience. Finding the right strategic fit for your business can elevate sales, revenue, growth and odds of success in any economic climate. Part time executives are brought to teams for a few reasons:
- Operational tasks in the business’s day-to-day operations are too time-intensive to allow owners, CEOs and other leaders to focus on core tasks. Adding a fractional exec frees up time for leaders to focus all of their time and attention on growth.
- Skill gaps are common in growing businesses. Execs often take on tasks that are out of their wheelhouse because they have no one else in the organization who can help. Access to this part-time talent allows businesses to bring on marketing or sales leaders to fill in key areas of operation.
- Budget shortfalls or in the middle of rapid growth periods may be a time when it makes most sense to bring on a part time executive. You can hire the exec without having to commit to a long-term contract or high salary.
- Support during key transitional periods or for leaders. Often, growing businesses struggle to continue growing because leaders are beyond capacity. Hiring one of these professionals allows leaders to have the support they need in their day-to-day operations.
- Adapt to the ever-changing world of business environments. C-suite executives provide support and cost-savings during economic downturns.
Organizations reach stagnation without key leaders in the right roles. Budget issues, or if it’s simply not the right time to bring on an exec full time, can hinder growth and lead to lost potential market share.
Fractional executive positions allow corporations to gain a new perspective for current challenges and a fast replacement if senior leaders leave their positions.
Selecting an adequate fit for your business or a specialist is crucial to maximizing the benefits a fractional executive offers your company. We’ll cover what to look for when hiring these execs later on in this guide, but let’s first examine the roles that can be filled.
Fractional Executive Roles
Businesses can fill any executive role with a part time executive, including some of the most important:
Strategic direction of a company, in multiple capacities, can be filled by the expertise of a Chief Executive Officer. A part time CEO often joins a team when the existing CEO is being replaced or is out of the office for an extended period of time.
CEOs can help:
- Put seasoned executive teams in place
- Manage finances
- Oversee operations
- So much more
Selecting the right CEO can put the company on track to meet goals by managing the company’s entire operations and making strategic decisions.
Chief Marketing Officers that are fractional, will guide company success by aligning objectives with marketing on a part time executive basis. A CMO can assist a company with:
- Managing marketing needs across multiple departments
- Positioning the company in the right market
- Driving brand awareness
CMOs can fill many roles on top of marketing director, such as search engine optimization, social media manager, brand manager and customer advocate. Revitalizing a company’s brand or marketing strategy is a time-consuming task that is best handled by an experienced CMO.
Chief Revenue Officers (CROs) help companies sustain growth through strong strategic revenue management. These professionals can help maximize profitability, forecast revenue, improve the sales and marketing strategy, review pricing models and more.
Companies with the need for a part time CRO but not quite ready for a full time CRO can hire lean on a Fractional CRO’s expertise.
Chief Financial Officers (CFOs) are senior executives who are responsible for the financial guidance of the company. A CFO may help with:
- Quarterly budgets
- Cash flow tracking and forecasting
- Maximizing return on investment
- Reporting quarterly finances
CFOs help companies remain on track to reach their annual projections while improving the company’s cash flow and finances.
Chief Technology Officers (CTOs) integrate IT planning into business needs and oversee the entirety of a company’s information technology department. The guidance of a CTO can be leveraged to help with:
- Internal infrastructure and systems
- Strategic technology planning
- Research and development
Chief Human Resource Officers (CHROs) who are fractional take control of the human resource department and act as a liaison between management teams and key shareholders on a part time basis. A CHRO is responsible for justifying and explaining the human resource needs of the company and work in a wide range of capacities:
- Recruitment in the workplace
- Resolving issues in the workplace
- Employee training
- Company culture
- Public policy and government regulations
- So much more
A CHRO helps align a company’s human resources with its mission and goals.
Product strategy and delivery and market trends all fall within the skillset of a CPO. The CPO (Chief Product Officer) helps in multiple capacities. Your CPO may analyze customer requirements and how they align with your product guidelines and development.
A fractional executive like a CPO can help on a part time basis where experienced product strategy is needed.
A CPO will look beyond the product to better understand what the product lifecycle may look like and if market trends are showing signs of:
- Product demand waning
- Product demand rising
A fractional CPO is a strategic fit for companies planning to release new products and want to improve the odds of release success.
What To Look for In a Fractional Executive Leader
Hiring a fractional executive to fill key roles in a business requires finding a person who has the experience and track record of success to lead the company closer to its goals. A few of the “musts” when looking for a part time executive are:
- Track record
What quantifiable data can the exec provide to show that they can help your company grow? A track record of success for similar businesses or goals is a great start when searching for one of these professionals.
For example, a CMO may provide you with data that includes:
- The percentage increase the last company saw in their customers’ lifetime value (LTV).
- Conversion rate boost that the exec helped achieve.
If you find an executive who has helped position a company closer to its goals, it adds to the confidence that they can do the same for your business and/or employer.
Generalists can help in many operational areas of the business, but it’s preferable that the fractional executive have experience in:
- Your industry
- Assisting in a similar capacity
Review the executive’s resume, past employers and any recommendations that they have listed. If you don’t do your due diligence, you may hire an exec who doesn’t fit your company’s needs or culture.
Some execs do it all and others have expertise in one area that sets them apart from others in the industry. For example, if you plan on setting your business up for acquisition in the coming year, a specialist can help.
The specialist will have:
- Extensive experience in helping with acquisitions
- Insights on what can go wrong during the process
- Inside knowledge of the steps the business needs to take to maximize its value
B2B buyers want to work with brands that have a clear purpose and communication. One survey found that 64% of buyers find businesses with a transparent purpose to be more appealing.
Executives can and should offer a purpose-oriented approach that includes:
- Decision-making that moves the company closer to its goals
- Actions that have a purpose behind them that teams can recognize
Teams need an inspiring figure who can rally them to meet goals and exceed expectations. Meeting with the executive to understand if they’re an ideal fit will allow you to get a preview of their purpose-oriented approach.
How to Become a Fractional Executive
Entering a career as a fractional executive comes from experience – not coaching programs or courses. You should work in the role of the executive that you want to become. For example, a CFO can begin offering their services as a fractional leader because they have the skills and experience to be a valuable asset to other companies.
If you have the skillset to fill the role and help nudge businesses towards goals and want to work as a part time executive, you’ll want to:
- Create an engagement model: Your work will be as a fractional executive, who works less than full-time and is their own boss. Hash out how many days or weeks you plan on working, your day rate, why people will hire you and the type of contracts that you want to take.
- Network: Micro networking will create connections in your network who may refer leads to you. Many fractional execs network with others in similar positions because they offer leads, advice and insights into their role.
- Apply: If you have a resume of success in your field, you can now begin to apply for fractional positions or start networking with CEOs and other leaders in your industry.
If you’re a business-driven person who wants to be their own boss, a fractional position may be a good opportunity for you. Many of these professionals work in-house or on a consultancy basis before transitioning to fractional capacities.
What is an Average Fractional Executive Hourly Consulting Compensation?
Fractional executives can charge a day rate, retainer, commission-based or hourly. An hourly payment model is often preferred, and the rate is often higher than hiring in-house. Savings come from not having to pay benefits and the exec working in a part time executive capacity.
Each fractional position is different, but you can expect to pay an hourly rate of:
- $200 – $350 per hour for a CMO
- $200 – $350 per hour for a CFO
On the high-end, you may pay close to $1,000 per hour for a proven fractional CEO.
Pros and Cons of Using a Fractional Executive Leadership
Fractional leadership can offer many advantages, but there may be some potential drawbacks that will need to be considered.
Some of the many advantages of hiring a fractional executive include:
- Greater Flexibility Compared to Permanent Hiring
One of the biggest advantages of fractional leadership is that you have greater flexibility. Your SMB or startup doesn’t have to take on the risk and commitment of hiring a permanent executive.
If, for some reason, the executive is not a good fit for your company, you can choose to no longer use their services and seek the help of another fractional executive.
On the other hand, if a permanent hire does not prove to be a good fit, your company will have to go through the costly process of replacing the executive.
With a fractional executive, you also have the ability to scale their services up or down as needed, giving you tremendous flexibility.
- Cost Savings
Hiring a new employee is expensive, especially at the executive level – about 200% of the executive’s salary to complete the onboarding and hiring process.
Fractional executives allow startups and SMBs to access the expertise and leadership they need without incurring the expenses of hiring a permanent employee.
- Quick Access to Expertise
Fractional executives can step in and start helping your organization immediately. These agile professionals can provide the leadership you need on a part-time basis and will start implementing new strategies to improve performance right away.
- A Fresh Perspective
Fractional executives are not permanent members of the team, so they can bring a fresh perspective and be more objective when it comes to decision-making.
While there are countless advantages to hiring a fractional executive, there are some drawbacks to consider.
- Communication Challenges
Fractional executives work on a part-time basis, which can make it more challenging to collaborate and communicate on a regular basis. The executive may not always be available when needed because they have other clients.
- Lack of Continuity
Fractional leaders are not permanent team members, which can make it difficult to provide consistent and continuous leadership. Lack of continuity may be challenging or disruptive for some teams.
- Limited Ability to Build Relationships
Often, fractional executives do not have the time or ability to build strong relationships with team members, which may have an impact on their effectiveness as a leader.
How To Hire a Fractional Executive
Startups and SMBs that have never hired a fractional executive may not know how the process works or how to get started.
While there are many ways to connect with fractional executives – social media, referrals, networking events – marketplaces like RevPilots can simplify the process.
At RevPilots, we vet all of our fractional executive talent to ensure you connect with professionals who meet your needs.