Explained: Fractional Leadership
Updated: Feb 23
On the heels of our new Fractional Leadership program launch, we've created a brief guide to help you understand the benefits of working with fractional executives and how they can support your team.
What is a Fractional Executive?
Fractional hiring refers to bringing on board a hands-on leader who works a set number of hours per week or month with multiple companies. Unlike traditional consultants, fractional executives are more involved in the day-to-day operations of your business and become an integral part of your team.
The term 'fractional' is typically reserved for executive-level roles, such as CFOs, COOs, CTOs, and others, who prefer to work with multiple companies rather than committing to just one full-time position. This approach offers a high degree of flexibility for both startups and fractional executives in terms of commitment and cost.
Fractional Executives are a valuable resource for small and mid-size businesses in need of professional help to manage through tough spots, without the need to hire a full-time executive. These highly skilled professionals have experience in various industries, a broad network of contacts, and a proven track record of problem-solving. Their ability to fill executive roles at a fraction of the cost of a full-time employee changes the game for the acquisition of talent in small and mid-size companies.
What is the difference between a Fractional Executive, a Consultant, and an Advisor?
A fractional executive, advisor, and consultant are all professionals who can help you take your business to the next level - but there are some key differences between them that you should know.
A Fractional Executive is a highly experienced professional who works in a senior-level management role on a part-time or project basis. They provide the skills and expertise of a C-level executive to small and mid-size companies at a fraction of the cost of hiring a full-time executive. They work as a part of the company's team, managing critical leadership areas, and are responsible for creating action plans to meet the business's specific needs.
The Fractional Executive may work remotely or on-site, depending on the needs of the company and the nature of the work. They may be engaged for a fixed number of hours per week or per month, or for a specific project with a defined scope and timeline.
Next, we have Advisors. These professionals offer strategic guidance to companies or individuals. They can provide advice on specific topics or offer a broader perspective on business decisions. Typically, they work on a project or retainer basis, providing recommendations and counsel, but don't take an active role in the day-to-day management of your business.
The employment structure is more loosely defined and less structured compared to fractional leaders or consultants. Advisors provide advice and guidance on an as-needed basis, whether they’re on retainers or a project basis. They can also be brought on as figureheads for branding purposes. In this case, the Advisor's role lends credibility to the brand and helps establish the company as a thought leader in the industry. This could involve speaking engagements, media appearances, or other activities that position the advisor as an expert in their field and create visibility for the company.
A Consultant, like an Advisor, is typically brought in to solve a specific problem or improve a particular area of a business. However, consultants tend to be more hands-on and involved in the execution of their recommendations. They may work on a project basis, providing analysis, developing solutions, and implementing them.
Consultants typically have the most narrow employment structure of the three as they work on a project basis, and so their time commitment varies based on the scope of the project and the needs of the client. They may work full-time hours for the duration of a project, or they may work part-time, depending on the needs of the client and the nature of the work.
So, to sum it up, a Fractional Executive is a part-time or project-based senior executive who takes an active role in managing the business. An Advisor offers strategic guidance and recommendations on specific areas of the business. And a Consultant provides analysis, develops solutions, and implements them, often taking a more hands-on approach to their work.
What are some of the benefits and advantages of hiring Fractional Executives?
Hiring a Fractional Executive can provide many benefits and advantages for your business. Here are a few to consider:
Cost savings: Fractional Executives offer the skills and experience of a C-level executive at a fraction of the cost of a full-time hire. This can be especially beneficial for small and mid-sized businesses that may not have the budget for a full-time executive.
Flexibility: One of the best things about working with a Fractional Executive is the flexibility they offer. You can bring in the expertise you need on a part-time or project basis, giving you the ability to scale up or down as necessary.
Experience: Fractional Executives are highly skilled professionals with experience in several companies or industries. They bring a broad network of contacts and a proven problem-solving track record to help your business scale and grow.
Broad and diverse perspectives: Fractional Executives often work with multiple clients simultaneously, and these clients are often at a similar stage of growth. This allows fractional leaders to constantly apply learnings and best practices from different organizations, bringing a wealth of diverse and ongoing experience to each engagement.
Strategic guidance: Working with a Fractional Executive can help you develop and implement effective action plans to achieve your business goals. They can work closely with your team to identify areas for improvement and develop strategies to address them.
Specialized skills: Fractional Executives can provide specialized skills and knowledge that may not be available within your existing team. This can be particularly valuable for small and mid-sized businesses that may not have the resources to hire a full-time employee with those skills.
Reduced risk: Hiring the wrong executive can have disastrous consequences for a company, particularly during times of economic uncertainty. By hiring a Fractional Executive, companies can benefit from experienced leaders without the long-term commitment and cost risk of a full-time hire.
Trial hiring: Speaking of reduced risk, fractional leadership gives you the chance to "trial" a leader and potentially bring them on full-time. Many fractional leaders are open to the idea of joining the right organization on a permanent basis, and this arrangement allows both parties to test the waters before making a long-term commitment. And, if the fractional leader decides not to join the organization full-time, the experience of working with them can help the founders and hiring team to identify the specific qualities and expertise they should look for in a full-time executive.
Speedier process: Fractional Executives can provide a much faster solution to a company's needs than traditional full-time hires. While it can take six months or longer to hire a senior commercial leader, an interim or fractional placement takes only a few weeks. Additionally, fractional leaders are used to making an instant impact and can hit the ground running, eliminating the onboarding period needed for full-time hires. With a narrower focus, Fractional Executives can act faster and prioritize a clear set of objectives, leading to faster results and greater flexibility in a company's scaling journey.
Scaling in a downturn: Scaling in a downturn is challenging for any company. Economic uncertainty and market instability can make it even more difficult to chart a path to growth. But hiring an interim or fractional executive can help companies navigate these choppy waters and scale successfully even in a recession. These flexible leaders can help you make the right strategic decisions, access the resources you need, and position your company for the next fundraising stage. With their expertise and experience, they can help you weather the storm and emerge stronger on the other side.
How long do fractional engagements typically last?
The length of a Fractional Executive engagement can vary depending on the needs and goals of the company. Typically, fractional engagements range from three months to a year, with the option to renew the engagement based on performance and outcomes.
The flexibility of fractional engagements means that you can adjust the length of the engagement to meet your changing business needs. For example, if you need help during a critical growth phase, you might engage a Fractional Executive for six months to a year. On the other hand, if you need ongoing support in a particular area such as finance or operations, you might engage a fractional executive for a longer period of time.
How involved will the Fractional Executive be in my company?
It's important to note that while some business owners may be looking for a hands-off approach when it comes to their Fractional Executive, the best fractional leaders are often those who are hands-on and deeply involved in the day-to-day operations of the company. This is because a Fractional Executive is not just a consultant or advisor - they are a member of your team and are there to help drive your business forward.
By being hands-on, a Fractional Executive can provide valuable insights and expertise that a consultant or advisor may not be able to offer. They can work with you to define goals and strategies, and ensure that everyone is working together towards success. They can also roll up their sleeves and get involved in the day-to-day activities of the company, becoming an integral part of the team.
If you are looking for a more hands-off approach, you may be better suited to working with a consultant or advisor. However, if you are looking for a true partner who can help drive your business forward, a Fractional Executive who is hands-on and involved in the day-to-day operations may be the right fit for you. The best Fractional Executives are adaptable and will work with you to find the perfect fit for your business, whether that means being hands-on or taking a more strategic approach.
How are Fractional Executives compensated?
When it comes to hiring a Fractional Executive, there are a variety of compensation options available to suit different needs and situations. Let's take a closer look at some of the most common ways that fractional executives can be compensated.
Hourly or daily rate: One of the simplest ways to compensate a Fractional Executive is by paying them an hourly or daily rate for their services. This is a good option for short-term projects or for companies that need intermittent support.
Retainer: A retainer is a fixed fee that is paid to a Fractional Executive for a set period of time, usually one to three months. This is a good option for companies that need ongoing support, but don't want to commit to a longer-term contract.
Equity: In some cases, Fractional Executives may be willing to take equity in the company in exchange for their services. This can be a good option for early-stage startups that are cash-strapped but have a lot of growth potential.
Performance-based: Another option for compensating Fractional Executives is to tie their compensation to specific performance metrics, such as revenue growth or customer acquisition. This can be a good way to incentivize the executive to achieve specific goals.
Project vs Ongoing: When the client requires an executive to carry out an assessment or develop a sales playbook, it's usually a project-based engagement that can be charged as a project fee based on the scope of work and deliverables. But if the client needs an executive to provide continuous leadership and coaching to the sales team, then the engagement should be designed as ongoing and open-ended.
Introducing the Artemis Fractional Exec Practice!
We're thrilled to announce the launch of our new Fractional Exec Practice at Artemis Canada! Our team is constantly on the lookout for innovative ways to help our clients and VC partners reach their goals, and we believe this new service offering will do just that.
We understand that early-stage companies may not have the resources or need to bring in a full-time executive leader. That's why our Fractional Exec Practice is here to help. We've fostered strong relationships with experienced and strategic leaders in Finance, HR, Technology, Marketing, Sales, Product and Ops who are passionate about working with start-ups, coaching and mentoring existing teams, and driving strategy forward.
Our Fractional Exec Practice connects highly-qualified and carefully curated fractional leaders with start-ups that have specific needs. Whether you're seeking to add a fractional leader to your team or become part of our Fractional Exec Roster, we're ready to provide our expertise and support your company's growth. Contact us today to learn more about how we can help!
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Artemis Canada is a boutique executive search firm specializing in placing top talent in the tech sector across Canada, the United States, and Europe. Our team of experienced recruiters has a proven track record of finding exceptional candidates for a variety of roles, from C-suite positions to high-demand individual contributors. For more information on our services, please visit our website at https://www.artemiscanada.com/