In so many ways, business and the workplace are morphing, changing and re-inventing themselves. Departments. Divisions. Head offices and regional operations. Supervisors, mid-management. So, it is no surprise that the executive row is not immune.
While consultants-for-hire have been a fact of business life for generations, the new concept and trend of “fractional leadership” is gaining popularity and is occasionally called “consultants-on-steroids.”
With the rise of fractional hiring at various levels, many businesses are outsourcing to gain deep and very specific expertise and to achieve the crucial ability to scale at the executive level.
Traditionally, business owners (who wore most of their business’ executive hats like CEO, CFO and other key decision-making roles) built a robust team of internal employees who worked closely together, had meetings around the big boardroom table and problem-solved, all from within.
For various contemporary business reasons, that is no longer the most viable strategy.
Business leaders have learned that strictly internal thinking and expertise have limits. Some begrudgingly acknowledge that, in today’s demanding business environment, one person can’t possibly meet the scope that fractional teams can provide. Fractional leadership offers the business strategic executives with hands-on experience across a range of functions, from CMO, CTO, to CFO and other key roles. For many businesses, bringing in a fractional leader can be a compelling strategic option for many reasons. Key examples are the value of a fractional chief marketing officer (CMO) or chief communications officer (CCO).
Fractional leadership is also a potent bonus because it allows the business to skip the imprecise recruiting ritual and onboarding process and go straight to doing the actual work. Some go as far as calling the dramatic new business trend the “virtual C-Suite.”
“In the last five to seven years, the whole concept of fractional leadership has really become a frequently used term and a popular option for some businesses,” says the upbeat Craig Kalvin, principal at Edmonton’s CK One Solutions. “Executives in all areas of leadership are working on a fractional basis to give companies the valuable benefit of experienced, but strictly part-time, executives.”
When it comes to comparisons with conventional consulting, experts like Kalvin note that it is a lot like apples and oranges.
“The fractional leadership model has raised the level of responsibility. Conventional consulting tended to be used to help complete a task. Fractional leadership is more about bringing on skilled and experienced leaders to become part of the management team, without needing them to sit at a big desk five days a week,” he explains.
“Especially in the Edmonton area, most successful fractional leaders have plenty of experience in the roles they are filling. Same for some consultants, but not necessarily. Fractional leaders become part of the team when the arrangement is set up properly. Consultants often maintain some degree of separation. Fractional leaders are available to the company beyond the length of the project.”
According to Greg Hussey, president of Impact HR in St. Albert, “Fractional leadership is utilized for the C-Suite or higher level senior managers. It became popular because it enables an organization to access skills on an as-needed basis, particularly if they do not have the budget for a full-time permanent executive hire.
“Fractional leaders work in a business, usually on a part-time basis, but they are embedded in the leadership team, often helping to steer the business through times of change. Fractional leaders are more experienced and provide direction for important business functions.”
Hussey differentiates that fractional leaders are different from consultants, who typically work on a project or address a defined problem and are hired on for a specific period of time to analyze a problem, develop a set of recommendations and implement an action plan.
“It is advantageous for mature organizations who are not experiencing much growth and it also benefits growing organizations that require executive skills while they scale up. Companies can bring on an experienced fractional leader without making a long-term commitment. For some organizations, it is much more beneficial to have the flexibility, without the added costs that come with a full-time permanent executive.”
The experts agree. For small and mid-size businesses, there are pros and cons, successes and challenges.
“Fractional leadership allows mid-to-small size businesses to access talent that would not have been available to them in the past,” Kalvin points out. “For example, in the finance world, a business generating $2M per year in revenue often cannot afford, and really does not need to, pay $150K+ for a full-time CFO with experience.
“They can reap the benefits of having that same skillset available to them once per week or when they are going through a significant project like year-end, budget time, merger and acquisition, complicated issue, etc.”
He admits that, sometimes, the new “virtual C-Suite” concept may require re-thinking to fit some management teams. “Just as an example, it may not work as well if the owner/CEO or the management team are the type that require immediate answers whenever an issue pops up or when an idea is generated. One of the challenges is learning to assess what requires immediate attention. The business may need to adjust and get used to the rhythm of working with the fractional leader.”
Hussey admits that while fractional leadership is exciting and effective, there are possible downsides. “Since a fractional leader is not employed on a full-time basis and likely working for multiple companies, they may not be as responsive as a full-time employee may be. There could be delays in making decisions, slower progress on projects and a longer time to build relationships with the leadership team.
“They may also not have the same knowledge base or understanding of the company and the culture; this can lead to challenges when it comes to making informed decisions. Also, fractional leaders may not have the same level of commitment as a full-time leader or the other members of the leadership team. They may not be held as accountable for any negative decisions and they may not be subject to the same level of oversight over their performance,” he says.
The economy, ever-changing trends and lessons learned from pandemic disruptions are all factors in the increasing popularity of fractional leadership.
He continues, “The recovery from the pandemic and other external factors, such as inflation and higher interest rates, have accelerated fractional leadership. As many organizations navigate the post-pandemic world, there is still much uncertainty, especially with so much talk about a looming recession.
“Organizations, in general, are likely to increase fractional leadership, with much uncertainty remaining and a heightened level of budget conscientiousness. Many organizations are revisiting their structure and determining where there are opportunities to efficiently utilize a fractional leader.”
There is positive momentum as businesses embrace the trend of fractional leadership and there is growing consensus that a fractional leader brings more objectivity and a fresher, outside perspective when it comes to their subject matter expertise and experience of having managed teams within different company cultures.
Most importantly, fractional leaders offer fresh ideas. They have a unique focus to challenge a business’ status quo.
