What are Fractional Executives?

What are Fractional Executives? How do they Benefit Your Business?

If your business is fortunate enough to be participating in the uneven economic recovery but you don’t feel you can afford to hire full-time executives to oversee your expanding staff and drive your strategic initiatives, bringing on one or more Fractional Executives may work for you as you determine your next course of action.

Let’s explore the concept. What are Fractional Executives? First, Fractional Executives or what is also being termed as On-Demand Executives are senior level people who’ve “been there, done that” with decades of experience and are proficient at what they do.

Gray hair is an asset in this role because they’re long-standing executives with real world experience, who have faced the situations you may be grappling with first-hand. In short, they have “walked a mile in your shoes.” As C-suite and senior executives, they understand the dilemmas you are facing or can see the opportunities you have in front of you and know how to help you capitalize on them.

How does this concept work? A full-time executive might spend 20 percent or so of their time on strategic and big-picture issues. In this role, they are working to support the CEO in the areas of strategy and accelerating growth

(and other CEO priorities). The rest is generally taken up with routine reports, general management or technical issues, which can often times be accomplished by existing managers. In a situation such as this, the Fractional Executive can not only assist the CEO with moving the company forward but also help groom the Manager for increased responsibility when he or she is promoted. Furthermore, the company gets the benefit of an executive’s experience and expertise at a “fraction” of the cost of a full-time hire. The Fractional Executive also frees up time for you to do what you do best in running your business.

Depending on the business model and industry, using fractional executives begin to make sense when a CEO has made that conscious decision to move the company (philosophically) from “Club to Corporation.” It’s not based on a particular point in the company’s life-cycle but rather when the executives knows they need to do more and can’t because of limited band-width or a lack of experience. The most common trigger is when gross annual sales move past the $1 million mark and the “mom-n-pop” business model really needs to be moving toward a more mature organizational structure. While there’s no upper gross sales limit for bringing on a Fractional Executive, all department heads are typically staffed full time by the time annual sales reach $50 million.

The benefits of Fractional Executives versus Consultants is the engagements are generally based on monthly retainers rather than an hourly bill-rate and they treat the job as if they are full-time executives. You can contact them outside of their regular on-site hours to talk about work, as you would with any staff manager. They will take work away from the office or request

external email or system access so they can keep in touch and deal with things even when they’re not physically on site.

Like your full-time execs, they think about the work they do for you when they’re not in the office because of the type of responsibility you give them. They’ll send emails from home late at night, take phone calls after hours and be available when they’re not “on the clock.” The flexibility that lets you pick up the phone and make a call when you need your expert’s opinion is the same freedom they have in being able to work from multiple locations. The bottom line is Fractional Executives are experienced, reliable, long-term employees whose expertise is available at a fraction of the cost of hiring a full-time Executive.

Most importantly. It is critical that whomever you engage as a Fractional Executive or On-Demand Executive understands this is your expectation. As this unique industry and approach to business evolves, the Fractional Executive must be available to provide these minimum expectations and if this is not the case, continue your search. If you are going to make this investment, make sure you are getting what industry standards promote. ________________________________________

Gary Ledford is a Managing Partner with Townsend Strategies, headquartered in Knoxville, TN. Gary has more than 25 years of executive and senior management experience; building, growing and leading successful companies, with an excellent track record of increasing market share, profitability and product offerings.