Pretty much every start-up I’ve worked in has had a portfolio Finance Director or CFO. It’s a concept which has been around for a long time, and it makes perfect sense.
In most smaller businesses, there’s not five days’ work for a senior finance person to do – and you don’t want to pay FD rates for someone to do the bookkeeping. However, you do need an FD to oversee the whole process, provide advice and help out at busy times – such as year-end or during fundraises. So, it makes sense to have someone on hand to do that – typically by paying them for a few days a month or a week.
So why hasn’t that extended to marketing? Technology? HR? Sales? Product?
Well, it has. Just quietly.
I firmly believe that fractional is the way to go for many smaller businesses. It’s a cost-effective way of getting huge experience and diverse skills into your organisation.
You can hire fractional people at most levels of seniority, but where fractionals come into their own is near the top. We’ll look below at whether they are really C-Suite, but let’s call them that for now – Chief ‘X’ Officers – whether that’s sales, marketing, revenue, finance, HR, product, or technology.
What is/isn't a fractional C-Suite member?
Occasionally, fractionals are confused with interims but that’s really not the case.
An interim hire is just what the name implies – someone to get you through a period without someone (because of sabbatical, illness, parental leave) or between hires. They often are required to maintain the status quo or sometimes to fix a specific problem. But their tenure is limited.
Fractionals are also confused with consultants. There’s a fuzzy grey line between fractionals and consultants, but typically, a consultant is hired on a project basis and isn’t someone who represents your business. They’re always seen as ‘external’ (which can be very helpful in certain situations). Consultants typically advise but don’t lead.
A fractional CXO is someone who takes a leadership role in your organisation (though under UK IR35 regulations, won’t typically manage a team).
The fractional is usually contracted to work for a number of days a week or days a month, and as the name suggests, that’s unlikely to be 5 days a week.
They will usually deal with the ‘high value’ tasks of the role and are less likely to be involved in day-to-day execution. So for example, a fractional CMO may plan a content strategy, defining the structure, approach, tone of voice and more, but they’re unlikely to actually write the articles.
The fractional CXO is there to:
- Lead the strategy
- Ensure the right organisational elements are in place (think people and/or infrastructure)
- Put the right processes in place to deliver the strategy and manage KPIs
- Oversee the execution
- Coach and mentor the team
Why use a fractional CXO?
If you have enough work and enough budget for a full-time CXO, go ahead and hire them.
However, in my line – marketing – I see a lot of businesses which, frankly, can’t afford the £100-150k salary of a CMO. If they hire someone at that level, it’s likely to be all or nearly all of the marketing salary budget, so that CMO ends-up writing blog posts and iterating Facebook ads. Someone has to do it, after all.
And after a year, everyone realises this isn’t sensible.
That business still needs someone to set and lead the strategy, to get the organisational elements in place, create the processes, manage KPIs, oversee execution and to coach the team… it’s just not a 5 day a week job.
Fractional gives you that flexibility to hire the best people but without paying huge salaries and all that goes with it – NI, pensions, laptop, car, health insurance and more. Check out my cost of employment calculator here.
Think of fractional as a service model – so you’re getting senior marketing expertise as a service or senior technology experience as a service. You’re essentially paying as you go for c-suite experience. That has to put you at a competitive advantage.
When to use a fractional C-Suite member?
Often fractionals are brought in when the business reaches an inflexion point. That could be around fundraising, product launches, periods of growth, pivots or a key member of the team leaving, for example.
These are the points when many founders think about how to drive the business forward.
Think, for example, about a business which has just raised finance and is about to hire a large number of coders and a few sales people. For a small business, hiring half a dozen or more people is a real challenge.
Do you have your hiring processes set-up efficiently? What about onboarding? Are your contracts robust?
There’s lots to do, but you probably don’t want to hire a full-time Head of People to do it – instead, think fractional.
I worked recently with a business who were pivoting from serving smaller businesses to enterprise clients. That required a shift in a number of processes. Simply changing marketing processes could have been done by a consultant. However, working as a fractional in the business for a couple of days a week, I was able to get under the skin of the business and get involved in deeper business decisions and processes.
Can a fractional really be part of your C-Suite?
How you deploy a fractional CXO is up to you and them. Many I see – and some of the roles I have had – aren’t really c-suite, but still focus on strategy and deployment.
If you divide the tasks your c-suite currently does between “true c-suite” and “other stuff”, you’ll find the proportion of exclusively c-suite activity pretty low. But if you hire a senior CXO for just a few days a month or a few days a week, you’re likely to ensure they engage in the high-value c-suite activity for most of that time
How to choose your fractional CXO?
As with any hiring decision, you need to think about matching skills, experience and attitude.
It’s also important that you make a personal connection with any fractional CXO you’re looking to hire. Get on a call and speak to them – but think of this as a partnership discussion, rather than a job interview. This person is going to help you run your business better, you’re going to need to work closely with them.
A word of warning:
Try to work out if this fractional is really a fractional. There are a lot of people who are between jobs who think jumping on the fractional bandwagon is a way to make some money before they bag their next full-time role.
This is important – a lot of fractional contracts are open-ended, giving a few weeks or a month’s notice – you don’t want to be left in the lurch when your fractional CXO gets a better gig.
Has this person gone to some effort to brand themselves as fractional on their LinkedIn profile? Have they invested in their website? Have they worked with other clients?
Sadly, there’s not a trade association for fractionals (yet), but there are still steps you can take to ensure you hire the right person.
In summary
Fractional is a new way of working for many but it can be profitable for many small businesses, startups and scaleups. It gives you access to experience and skills at a fraction of the cost of employment.
Don’t think of it as a short-term fix, but as a longer-term way of growing your business capability.
And, if you go down the fractional route, make an effort to ensure the right personal fit with you and your organisation.
Good luck – I’d love to hear your experiences!
A version of this article first appeared in StartUps Magazine.
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