Did you notice that fractional executives seem to be everywhere now? They’re more in demand than ever, so today we’re exploring why that is happening and how you can leverage this trend, either as a CxO for hire or as an employer.
Any business, no matter how small, needs leadership for its mission-critical areas: marketing, finances, operations, technology, and so on. However, not all companies can afford a full-time executive.
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What are fractional leaders anyway?
Fractional executives are leaders who share their expertise part-time [Wikipedia definition here]. They typically have a background as full-time CXOs and extensive experience in their field or industry, either very specific to a certain niche or very broad.
Why don’t we just say they’re part-time employees then?
Because of the flexibility of this role: in most cases, there’s no set number of hours they need to work. Since their value-add is more strategic than execution-level, they can work with more than two clients at a time too.
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Not quite freelancers but not consultants either
Fractional CXOs aren’t freelancers.
It’s not just because everyone seems to (unjustly) hate the F-word recently. Fractional roles come with different responsibilities and they’re strategy-oriented, not execution-oriented.
For instance, one common setting is bringing in a CXO that manages your freelancers as well.
They’re also more than consultants because they are embedded in your business more deeply. They meet the team, they’re in permanent contact with you, and so on.
Unlike a consultant, whom you have 1-2 sessions with, you can contact your fractional CXO pretty much anytime and get their opinion on whatever you’re doing at the time.
Like an employee but without the huge overhead.
A fractional CMO, for example, won’t create your landing pages or your email campaigns for you. They will tell you what landing pages to create, what tone of voice to use, when to send the emails, and so on. They will also help you improve on all your existing assets.
Execution is always cheaper than strategy and advising, so it makes no sense to pay for a fractional CXO to do what a contractor can do for a fraction of the price.
There are, however, more hands-on fractional roles. It all depends on your business needs and what your fractional executive wants to/can do.
Why are fractional leaders so in demand?
Flexibility is the keyword here: the employer isn’t bound to a long-term contract and they have access to global talent.
The same goes for fractional leaders: they can juggle more than one employer, which mitigates the risk of losing all their revenue in a single layoff bout.
It’s a win-win.
Another reason for the increase in demand is the rise of micro-businesses. Tiny startups, digital entrepreneurs, and solopreneurs don’t need a full-time C-level executive. Moreover, they don’t have the budget for one either — think multiple 6 figures.
They do, however, need the advice and expertise of seasoned professionals. For a fraction of the cost of a full-time employee, they can leverage that expertise for as long as they need it.
A recent survey showed that 72% of CEOs are preparing for a recession. Another study found similarly grim outlooks, with 90% of CEOs expecting the economic conditions to worsen or stay the same.
Thus, it makes perfect sense for business owners to want to do more with less — yes, even more so than usual. Hiring budgets are diminished and fractional roles can help cushion this blow.
Speaking of costs:
What should I expect to pay for a fractional CXO?
As expected, fractional leaders’ fees vary widely, depending on their expertise, experience, industry, and more. However, as a rule of thumb, you can expect to pay 30-40% of what you would pay for a full-time role.
You can find the average salary of a full-time C-level executive on platforms like Glassdor and from there on it’s fairly easy to figure out what a fractional leader would charge.
However, keep in mind that, for a full-time role, you also cover:
- Health insurance
- Office space rent
- Gadgets (laptop, work phone)
- Various subscriptions: email, Saas solutions, and more
- Paid time off
- Various bonuses and perks, especially at C-level
When you hire a fractional CXO, you won’t have to worry about most of these things. Perhaps you’ll need to add them to your company chat app or set up a business email address for them but, for the most part, the fractional CXO will have their own tools and gadgets.
Common fractional roles: CMO, CTO, CFO, COO
The biggest demand I see right now is for marketing and financial roles. This ties in very well with business owners’ need to do more with less — both marketing and finance can help you do that but paying for a full-time CMO or CFO is unrealistic for most small and medium-sized companies.
Let’s look at some examples of what each of these roles can achieve:
- CMO (Chief Marketing Officer) or CGO (Chief Growth Officer): adds structure to chaos and brings a strategic vision that you can execute for years. They can also manage your in-house or outsourced marketing team. The demand for fractional Content Managers is also on the rise.
- CTO (Chief Technical Officer): helps you identify gaps in your current tech stack, create a digital transformation strategy, or improve your security.
- COO (Chief Operations Officer): VERY in demand right now because micro businesses need help with their systems and operations. A fractional COO can help you build better processes in every area of your business and spend less time on menial and repetitive tasks.
- CFO (Chief Financial Officer): more and more micro businesses pop up and most of their owners have no clue how to read a balance sheet or what EBITDA stands for. A fractional CFO can help you realize that your biggest issue is not your revenue but your profit margin, for instance.
Fractional roles have just started being in demand
I expect this trend to continue for the foreseeable future because flexibility is a massive benefit for any business. In uncertain economic climates, fractional roles can be a life-saving option for both employees and employers.
This is one of the reasons why I’m launching a fractional CMO service as well — I see demand at an all-time high and I know most of my consulting clients could use the long-term strategic support I can offer.
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I was interviewed by Nika Talbot for her “Bold Types” series and I spilled everything, from my first job to how I started my first business with $60 and to how I built the best trust bridge of my career, this newsletter you’re reading right now. You can read and listen to it here.
Adriana’s Picks
- Hermes is (finally!) being sued for refusing to sell Birkin bags unless you buy other items first.
- Instagram is testing longer reels to maximize engagement.
- MrBeast is launching a reality show with Amazon in which 1k people will compete for $5m — the largest prize in game show history.
That’s it from me today.
See you next week in your inbox!
Here to make you think,
Adriana
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