by Dawn Werry, Partner and Chief Marketing Officer at Chief Outsiders
Recently, I was the fractional CMO for a company going through a tremendous amount of growth, both in sales and headcount. In fact, the company more than doubled its workforce in 12-months time. For most of that time, at the helm of this company was a leadership team that consisted exclusively of fractional CXOs, including a fractional CEO. There was no full-time CEO, CMO, or CHRO, there was simply no C-suite executive to be found on payroll.
Many of us are familiar with the “gig economy” and rely on it for package delivery or car services. But the gig economy has also changed the game for knowledge workers, including C-level executives, who now partake in this new economy as “fractional” CXOs.
Although the pandemic was not the force that gave rise to fractional executive employment — in fact, fractional executives have been around for decades—it did accelerate an existing trend toward companies attaching less value to where people work and how many hours they put in the office and, instead, focusing more on outcomes. Fractional CXOs fit perfectly into this change in mentality. What are the different scenarios in which it makes most sense to hire a fractional CXO? Here are five:
1. Top leaders (often the founders) are ready to take a step back and scale up.
Fractional CXOs are often hired during a period where founders or the top leadership are wearing too many hats and realize their time and skills are no longer sufficient to help the company achieve the next stage of growth. They may not want their role in management replaced by a full-service management team overnight, but will often prefer to first employ fractional CXOs that give them a taste of what working with a management team can look like. In a few years, the fractional CXOs can be replaced by a full-time management team.
2. The CXO role is new and leadership is not quite sure what qualifications they need.
Often, what a leader or founder thinks they want in a new hire is not what they find they really needed a few months later. Or, the role evolves as the company grows. Bringing in fractional CXOs—whether it’s one position or a full management team—gives companies that are new to executive management the opportunity to test out and refine the role before committing to a full-time hire.
3. The company is too small to warrant hiring full-time CXOs.
Does any mid-size company really need full-time high-level CMOs, CFOs, and other CXOs whose strategic acumen is needed every day of the week? It often does not, even if the company has the financial means to fund a full-time management team.
A fractional CXO is easy to bring in without a long-term commitment and costs. Unlike full-service hires, a fractional CXO does not come with a steep hiring fee (which, in my experience, can be up to 40 percent of a CXO’s expected first year salary if using a recruiting agency), benefits, or an expectation of severance if things do not work out as planned. In fact, the Society for Human Resource Management recently cited a study by Link Humans stating that the cost of a bad hire could be around $240,000.
4. The company wants to get started quickly.
Hiring a full-time CXO isn’t just costly, it takes time. Data from Jobvite shows that the average time to fill an executive position is 71 days. I have seen companies take months — or even a year or more — to find the right talent. A fractional CXO is easy to hire and ready to jump on day one. So, a fractional executive can be a quick way to get your growth started while you wait for the right long-term hire.
5. A specific skill is needed for a one-off project.
Fractional CXOs shine when companies are short of a critical skill that is temporarily needed. For instance, if you are a company that is anticipating an acquisition for the first time in your existence, does it then really make sense to put M&A expertise in the job requirements of your CXO? For these types of one-off needs, fractional CXOs are what makes most sense.
While we shouldn’t expect fractional CXOs to completely displace full-service hired executives, there are many situations where fractional executives can reduce the time, cost, and risk associated with bringing in new talent. When looking for the right fit, companies should consider not just what industry or specific experiences the CXO has had, but also the cultural fit and fresh perspectives that person can bring. In fact, CXOs that come from other industries often provide insights on best practices your industry has not even considered yet.
Dawn Werry is a Partner and Chief Marketing Officer at Chief Outsiders, the nation’s leading fractional CMO firm focused on mid-size company growth. She works with industrial and B2B companies to discover untapped growth opportunities, using insights to develop and launch products that meet emerging market needs.