Fractional Executives are having a moment – and for good reason.
On the heels of the pandemic, we’ve seen a number of flexible work arrangements emerge: remote companies, part-time tech, and more freelance consulting than usual. Many leaders have taken on roles as a fractional executive — though as supply and demand increase for such leaders, so does confusion around what this title means and how these roles work.
In this article, we’ll leverage our own experiences as working fractional leaders alongside conversations with 20+ executives to:
- Explore where fractional lies in the “Expertise As A Service” spectrum
- Share real-life examples of how Fractional Executives differ
- Navigate the common pitfalls of a Fractional Executive
- Uncover why companies should hire Fractional Executives
- Discuss the larger impact of fractional roles
By the end, we hope to prepare you to engage in a successful fractional arrangement in the upcoming year. We will establish a framework that sets industry standards and improves equity in the burgeoning fractional market.
What are Fractional Executives?
A Fractional Executive offers their expertise to a business as part-time leaders, often brought in to help fill leadership gaps or leverage external experience in a new phase of the company’s growth.
The “Expertise as a Service” Spectrum
Fractional Executive roles fall somewhere between Advisors and Interim Executives — leaders who work at a company for a set duration of time. They are all former operators, founders, or executives with specific expertise, and often move along this spectrum.
Let’s explore the differences between each role type.
Advisors give feedback and guidance on a limited basis but they don’t actually execute. They are world-class operators with a specific set of knowledge critical to a company's success.
The commitment level of Advisors varies greatly; most meet with founders monthly while a “hands-on” advisor might dedicate up to four hours a week. Regardless, their function is to give advice, but they don’t typically interact with people outside of the core leadership team or own any tangible deliverables.
While advisors command the highest hourly rate, they usually work a few hours each month and often take no cash compensation in favor of equity — though a growing number of more hands-on Advisors noted starting to charge a combination of cash and equity.
Fractional Executives also provide advice but they’re more hands-on, dedicating up to 24 hours per week to own key deliverables or manage teams. As a result, these roles often require highly efficient leadership and management styles.
They focus on filling specific strategic and executional gaps in a leadership team, which are often identified in partnership between the Fractional Executive and company leadership team.
You can expect to pay a Fractional Executive working 20 hours a week about 60-70% of what you would expect to pay a Full-Time Executive, as their value is not directly tied to the number of hours they work. We’ll dig more into compensation later in this article.
Interim Executives commit 40+ hours a week and have a larger purview than Fractional Executives. They’re able to influence company culture, get involved in the team’s day-to-day, and are responsible for setting their function’s strategy and vision. Unlike traditional Executives who come in with a long-term commitment to grow with the company, Interim Executives are often hired for set duration of time. We’ll hear more about this throughout the article.
Interim Executive salaries vary greatly based on location, industry, equity, and function.
How Fractional Executives Differ
There are three dimensions by which these role types differ: commitment, responsibilities, and compensation.
We intentionally excluded two common types of roles:
- Consulting, because it is project-based, whereas these experts have an ongoing engagement.
- Freelance, because it is execution-based, whereas these experts work strategically or as multipliers.
In speaking with over 20 executives across functions, industries, and the expertise-as-a-service spectrum, we started to learn more about the intricacies of each leadership role. Let’s double-click on nine of those executives to understand their motivations and compare their approaches to time commitment, responsibilities, and compensation.
The level of commitment, both on an hourly basis and duration of engagement vary by role and company needs.
Advisor: Yuriy Timen
Yuriy takes a more hands-on approach than the typical Advisor. In his advisory engagements, he sometimes spends 1-2 hours per week with a client in 6-12 month increments. His advisory time is a balance of executive coaching and mentoring marketing leaders as they identify north-star goals and flesh out plans for achieving these goals.
Fractional CTO: Doa Jafri
Doa works with each client between four and 16 synchronous hours per week on an ongoing basis. Doa attributes her ability to work so few hours and create meaningful impact to the nature of engineering.
“”— Doa Jafri, Fractional CTO
Doa typically sets monthly or quarterly goals with leadership and hyper-focuses on solving them. She does whatever needs to be done to achieve the goals – including holding strategy sessions, hiring, managing, and on occasion, executing.
Fractional CMO: Alissa Riter
Alissa began her Fractional engagement with three days per week for an initial four-month period. She’s found this level of commitment is a forcing function for focus, where a sense of urgency and clarity around what matters most motivates her to make changes immediately.
She credits this urgency for giving her permission to share the unfurnished truth but also acknowledges that it requires a high degree of trust that needs to be built over a short period of time. She also took the time to define what a Fractional Executive is in her own words below.
Interim Executive: Elena Verna
Elena tends to take on interim roles with a 9-12 month duration. The main factor driving this duration is that on any given growth loop, it takes about 6-12 months to fully validate, so she stays on long enough to establish a new growth loop and ensure it’s successful.
Her commitments are retainer-based because the first three months of onboarding and discovery are generally full-time, but as strategies are articulated, she transitions into delegation and direction before she transitions to succession planning at the end of her engagement. The hours she spends on a project lessen over time as the needs and nature of her services evolve.
The most adept Fractional Executives co-define goals with their founders/leadership teams to ensure they have specific goals to focus on.
Advisor: Ely Lerner
Ely works full-time as a product and growth advisor to multiple companies. He’s able to do this effectively by gaining context on his clients’ business asynchronously, but he explicitly draws the line at execution.
“”— Ely Lerner, Product & Growth Advisor
Advisor: Yuriy Timen
Yuriy considers the main function of his advisory roles like a road-trip co-pilot.
“”— Yuriy Timen, Growth Advisor
Yuriy is also adamant about setting up boundaries because scope creep can become a real problem. He usually anchors his advisory engagements around a standing 60-minute call with the CEO or another member of the leadership team. He then drives value from these calls through asynchronous communications and pre-reads to make sure he comes prepared.
Fractional CTO: Karen Sun
Karen offers 16 distinct services, from technical roadmapping to hiring and in rare cases, prototyping. Offering this “menu” allows Karen to have meaningful conversations with her clients and co-identify the width and breadth of their needs.
To decrease the frequency with which she performs IC work, she identifies the levels that each of these services typically occur (i.e. VP, Tech Lead, EM, IC). From there, she selects or prioritizes the work that better match her appetite. Overall, the bulk of her work focuses on driving high-level impact, such as cultural change management, growing managers, and organizational design.
Fractional CMO: Dorian Kendal
Dorian took a different approach to his Fractional Executive role, which has since transitioned into a full-time CMO role. He’s found fractional marketing leadership responsibilities generally take two forms:
- The first is to right the ship. This approach is important when marketing teams/functions exist, but strategies and tactics are stalled or underdelivering.
- The second approach is to build a foundation. These responsibilities are more focused on laying a foundation for the business and then handing the strategy off to the existing team and possibly leading the search for a leader to replace them.
Compensation is a more sensitive subject. For anyone considering a Fractional Executive role, we don’t want to get your hopes up; compensation comes in many forms and varies widely based on industry, experience, company stage, etc. But we have found that Fractional Executives take a variety of approaches to defining their compensation plans. We’ll share a few ideas for approaches below.
Fractional CMO: Dorian Kendal
Dorian used a simple formula for determining his rate as a Fractional CMO. He identified his salary requirements, divided into an hourly rate, and then added on a 30% premium to compensate for lack of benefits, bonus, equity, etc.
Dorian found this approach was helpful because he often found himself working more than the 25 hours per week that was initially agreed on. Instead of doing that work at a loss, he was compensated for all of the time he spent with his client.
Fractional CTO: Karen Sun
Karen has a diverse range of arrangements with her clients. She works both on hourly and retainer models, and sometimes transitions from one to the other. Her retainers are typically indefinite and often works with early-stage companies for pure equity.
With larger companies, she tends to prioritize cash compensation. Karen’s arrangements are so diverse because her primary concern is purpose: Is she doing work that betters the world? Is this something she’d work on for free? These qualifiers take priority.
Interim Executive: Elena Verna
Elena, on the other hand, prefers to work off of a monthly retainer for her 9-12 month engagements. The amount of the retainer remains the same, regardless of the number of hours she’s spending on the project as it evolves through different phases: discovery, direction, and succession.
The Emerging Full-Time Fractional Executive
As Fractional Executives have grown in popularity, they’ve started to structure under two different models.
Model 1: Part-Time, Flexible Engagement
This first model is where the Fractional Executive gets our original definition: Working as an executive on a fractional, or part-time, basis. In this model, the engagement is not typically set up with a clear end date in mind. The leader comes in and determines what is necessary to be successful. Oftentimes, this model works best for small or mid-sized organizations. For the company, a part-time Fractional Executive is more cost effective while vetting the leader for potential long-term fit. For the leader, the part-time role allows them to similarly vet the company before making a full-time commitment or simply have their hands in a few different roles at once.
Model 2: Full-Time, Fixed Engagement
The second model is an emerging form of the role. In this model, a leader works a full-time schedule but is contracted for a specific duration — often six to nine months. For some companies, six to nine months can be a lifetime in their history. Rather than waiting to recruit throughout that period, a full-time Fractional Executive can come in and quickly execute as recruiting finds the right hire to join permanently. Elena Verna does a version of this, which she calls the Interim Executive.
This model often works in larger organizations where there’s more hoops to jump through that may take too long to make movement on in a part-time engagement. For example, the larger the organization…
- the larger the number of people dependencies. This can oftentimes require a Fractional Executive to be a manager — not just a leader
- the more likely the Fractional Executive needs to take ownership of the actual outcomes (versus influence them)
Avoiding the Common Pitfalls of a Fractional Executive
Whether you’re reviewing a role as a Fractional Executive or at a company considering hiring one, we recommend being aware of how communication, trust, and goal setting factors in.
The Communication Gap
Almost every client and Fractional Executive we spoke with cited the communication gap as a primary obstacle. Working reduced hours means that events occur while you’re out and you find yourself playing catch-up in the little time you have with a company.
But a few trends materialized in combating the communication gap:
- Invest in async communication. Incentivize your team to post regular updates in Slack instead of only verbally sharing progress updates in meetings.
- Don’t drink from the firehose. It’s hard to keep up with an entire company. Try to only focus on updates in relevant sub-organizations or projects.
- Touch base weekly. If your organization is in a period of instability, set aside 30 minutes to connect with the company’s leadership team each week. Focus on high-level changes, like a pivot in strategy, critical customer feedback, or staff changes.
Before we go into each in detail, consider hearing the pitfalls from Growth Advisor Yuriy Timen below.
Lack of Trust
When leaders join a new company, they spend a great deal of time building trust across the organization. We found that this is more difficult to do on a reduced-hour schedule and slowed initial progress.
In order to get the most out of a Fractional Executive, it’s important that mutual trust exists between both parties. Based on the constraints of the engagement, you don’t want to waste too much time requiring Fractional Executives to “prove themselves.”
Allowing them to move quickly resulted in stronger relationships, quicker proof points, and longer engagements.
Fractional Executives are typically overseeing a function that the leadership team does not have expertise in. This leads to vague goals, like “we need marketing help.”
Successful engagements go deeper and target a specific sub-organization or problem. For instance, “the sales team is underperforming” or “we’re struggling to hire engineers.”
The founders are often unsure of the exact goal, so it’s important for the Fractional Executive to help establish specific goals. This is often done with a paid discovery period before the formal agreement begins.
As an example, Doa recently joined a company that was seeing a pattern of poor engineering hires. She worked with the leadership team to break this problem down into two parts: hiring and management.
For the hiring portion, she offered to create a hiring process and an evaluation matrix, train current engineers on interviewing skills, teach the founders how to screen candidates, and source in her networks over the course of six months. Their co-created goal was 1-2 additional hires in the first six months.
This level of specificity justifies the cost, clarifies value, and establishes clear goals and boundaries for both Fractional Executives and leadership teams.
Why Companies Should Consider Hiring a Fractional Executive
Of course, we don’t want these pitfalls to prevent you from considering a role for yourself or your company. Over the past two years, small and mid-sized companies have begun hiring fractional executives for a variety of advantages.
While we’ve walked through the benefit to the individual leader considering a Fractional Executive role, there’s clear upside for companies who take a bet on these roles.
Yousuf Bhaijee walks us through three that come top of mind:
- Cost Effectiveness
- Access to Specialized Expertise
- Reduced Risk of Hiring the Wrong Executive
After sitting in the seat of a Fractional Growth Leader a handful of times, Yousuf was surprised by how much higher the ROI of a Fractional Executive can be. He cites this as primarily the result of the cost of relationship building that comes from a Traditional Executive engagement.
In a mid-size to large scale company, he estimates at least 25% of a leader’s time is spent on communication and relationship building with either direct reports or cross-functional relationships. These relationships are key to a leader’s long-term success within an organization.
But as a Fractional Executive, this is rarely a key objective of their role. Instead, the relationship building falls on the shoulders of the team they are mentoring or working with to move the needle. As a result, Fractional Executives can dedicate far more time tackling the challenges at hand and producing tangible value.
Access to Specialized Expertise
One of the most difficult aspects of recruiting in the overall startup ecosystem is finding a leader who can be the exact right leader for every stage of the business. We all recognize the skillset required of a publicly listed company is vastly different from the skillset required of a mid-size company CMO or early stage startup CMO.
Few companies strike gold with a unicorn leader who can work their way through every stage. The beauty of Fractional Executives is the opportunity to bring in the right leader for the stage your business is at. The benefit here extends to both the company and the Fractional Executive: The company can work with the leader they need to conquer their current growth stage without concern for how they’ll navigate the next chapter. Meanwhile, the Fractional Executive can focus on engagements that continue to match their unique set of expertise.
Bonus Culture Benefit: By nature of their role, a Fractional Executive mentors full-time team members and models the strategy and outcomes that drive the business forward. This can help build pathways for internal company talent to be promoted to a role of greater responsibility owning the work after the Fractional Executive wraps up their engagement.
Reduced Risk of Hiring Wrong Executive
As the industry continues to navigate the economic downturn, companies often react in two ways: reducing full-time headcount and bringing in contractors, or reducing contractors and bringing in internal resources.
Either way, any company reducing headcount will benefit from the growing pool of leaders available to help companies get from one stage to the next without a full-time salary or long-term cost risk associated with hiring the wrong executive.
And in scenarios where pressure is high to do more with less, Fractional Executives can come in and make impact much faster than the usual 6+ month hiring cycles associated with bringing in a permanent leader.
Bonus Benefit: Yousuf also mentions the imbalance the downturn has created in supply and demand. Fractional Executives help alleviate the pressure a burnt out executive from a previous role may be feeling. Instead of jumping right back into a full time commitment, a Fractional Executive can test the waters with a company and rehabilitate themselves while contributing immediate value. As a result, both the executive and company can assess if there’s a mutually beneficial opportunity to work together permanently through the fractional engagement.
Want to hear from a Fractional Executive directly? Fractional CTO Karen Sun shares more below.
Conclusion: The Fractional Executive Future
Flexible work is on the rise — and both individuals and companies can benefit from it. Engaging Fractional Executives to solve specific problems or run specific sub-organizations allows companies to quickly expand, experiment, or improve in new areas. These executives are more hands-on than advisors but efficient enough in their leadership style to make an impact without working the traditional 40+ hours a week.
This arrangement also allows for greater equity and fulfillment for experienced leaders while providing efficiency for growing businesses. Sometimes these arrangements transition into a full-time executive role, and sometimes they sustain as fractional roles for years.
Regardless of the duration, the Fractional Executives we spoke with used their newfound time to support nonprofits, mentor underfunded companies, find personal fulfillment, or better balance family and work.
We hope this article has been helpful for you. Reforge prides itself in working with a number of Fractional Executives, many who spend a portion of their flexible schedule with us to build or lead programs, engage with our members, or create content. If you’d like to hear more from them, subscribe to get their wisdom straight to your inbox.