A fractional executive is a seasoned C-suite professional with at least twenty years of experience in their field of expertise. The majority of fractional executives boast an impressive career history with experience in various C-level roles across multiple industries. Some of them have since retired early or moved on to become entrepreneurs but are willing to share their expertise in a fractional working arrangement.
How Fractional Arrangements Work
Instead of hiring a senior executive full-time, a company engages a fractional executive to take on an interim role for a fraction of the time and cost. Fractional executives can take on several roles including Chief Operating Officer (COO), Chief Financial Officer (CFO), Chief Revenue Officer (CRO), Vice President of Sales, and Marketing Director.
Fractional working arrangements are usually flexible and dependent on the needs of both the company and the service provider. Some fractional executives work on full-time, short-term contracts while others prefer part-time, long-term engagements. There is also the option of hiring virtual fractional executives who provide their services remotely.
Often, a fractional executive will enter the company with the purpose of meeting defined goals and objectives. They will put in place strategies, plans, and processes, or develop the capacity of your employees to allow your company to scale up. Although fractional executives can be considered a transitional asset, some companies prefer to retain fractional executives long-term instead of hiring an in-house C-level executive.
Who Needs Fractional Executives?
Small and medium-sized enterprises (SMEs) and startups typically do not have the financial resources to hire an in-house C-level leader. Unlike established companies that often have a team of top senior executives, most SMEs and startups only have the business owner acting as the Chief Executive Officer (CEO). Yet, growth and scale are essential for small companies to survive and compete.
A sign that your company may need the intervention of a fractional executive is that it is not attaining set organizational goals. Perhaps the leaders in your company do not have the knowledge or experience to create an effective growth plan or marketing strategy. Even if your company is operating fairly well, you may be missing out on opportunities for scalable growth. If you feel that your company is not achieving its full potential, you should consider engaging a fractional executive.
Benefits of Engaging Fractional Executives
More Cost-Effective
An average C-level executive can command a minimum of $250,000 a year before benefits and taxes. Many startups and SMEs simply cannot meet such a high salary expense. This creates a catch-22 situation where the company needs revenue to pay for expertise but does not have the expertise to attain this revenue. Fractional executives are much more affordable than in-house senior executives, allowing companies to access top executives. There may also be potential tax savings.
Access Expertise
With decades of experience in C-suite roles, fractional executives have a depth and breadth of experience that can benefit any business. They have practical knowledge about a vast range of industries and valuable connections that can help a company gain an edge over than competitors. Furthermore, fractional executives are invested in professional development. They constantly educate themselves about industry trends and technology, helping your company to stay at the forefront of change.
Help Where It Matters
You can hire entry-level employees for general roles such as sales and customer service, but you need someone who really understands the big picture to affect growth. A fractional executive can help you with complicated tasks such as strategic planning or operational streamlining and help your company focus on revenue expansion. Having an expert in your corner also allows you as a business leader to spend time on the core of your business instead of trying to handle everything on your own.
Get an Entire Team
C-level executives are powerful but they must be backed by a competent team to make a solid difference. Some fractional service providers now allow companies to outsource an entire team of fractional executives. For instance, your company could engage a team of fractional revenue experts to help your company scale successfully. This saves you both the time and effort involved in aligning your team and systems. Your revenue can take off much quicker and your company can be ready to scale sooner.
More Flexible
Fractional working arrangements can be negotiated to suit the demands of the company. A fractional executive could start full-time and reduce their hours as the in-house team becomes better trained and more productive. When you hire an in-house senior executive, you often have to sign a long-term employment contract. This can be a liability when the executive does not meet your expectations. Although fractional engagements also require contracts, they generally have more flexible severance terms.
The idea of hiring a top-level executive with Fortune 500 experience may seem a pipedream for many small businesses. However, this is now a possibility with fractional service providers. With a fractional executive or a fractional team of experts, your company can function better, increase revenue, and set itself up for long-term scale and success.