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Are Fractional Executives here to stay?

Is it just us are have you also noticed the rise of Fractional Executives in B2B SaaS? It seems like every week we get asked about the concept of Fractional Executives, the good the bad, and the ugly.

The trend is strong now, no doubt about that regularly we see established CEOs and companies hire Fractional Executives, which helps further spread the awareness of this engagement concept!

The big question we ask ourselves here at SaaSiest: Is this a sustainable shift in executive hiring, or merely a fleeting experiment?

After talking to some of our community members about this we’ve landed on 2 key benefits for anyone considering hiring a Fractional Executive. 

1. Test Before you buy!

The Fractional Setup is a great way for both the company and the Fractional Executive to try each other out! The reality is that a traditional hiring process is like a sales process, with the addition that both parties are selling to each other, at the same time. Both the executive and the hiring company focus on the positive, on the great things that will be accomplished, the goals that will be reached, and the personal, financial, and professional growth everyone will experience. Nobody properly displays problems and shortcomings, these are not part of the “sales call”, aka interviews. I bet you reading this some of you will smile, because you’ve seen it yourself, joining a great company until you stepped into the operations and found the dirty laundry and the cockroaches in the closet.

The Fractional Setup eliminates this to some extent because both parties commit to each other for a defined period which will only be extended if both parties find it to be a good idea.

There is a mutual interest to test each other out, before committing long-term, it is a win-win for everyone.

2. Get access to unique skillsets and expertise otherwise difficult to attain!

So you want to have an April Dunford or Elena Verna on your team, but can’t afford someone with that experience in a full-time role yet. This is where Fractional Executives come in, you can start a working relationship by committing to a few days a week, for a limited time length in time, all while enjoying getting access to the expertise of the Fractional Executive.

What you get in a Fractional Executive is access to specialized skills right when you need them, without a long-term commitment with reduced financial risk!

So what is a Fractional Executive:

At its core, a Fractional Executive is a seasoned professional who offers their expertise to multiple companies, but unlike full-time roles or advisory positions, they do so on a part-time, contract basis. This flexibility is one of the key distinctions from traditional full-time roles, allowing businesses to scale their executive input according to need.

Defining the Scope

This depends on your needs! The commitment of a Fractional Executive can vary significantly, anything from dedicating a few hours or days a week for some months, up to a year commitment to see through a project. A 3-month commitment is normally a minimum good timeframe if you want to access a top-of-the-line expert because this is the time some of their work will start showing progress and results, which they’d like to see through. 

The Right Fit

So when should you consider a Fractional Executive? They are best suited for strategic roles where they can leverage their experience to provide high-level guidance and decision-making. They often take on responsibilities like guiding growth strategies, overseeing major projects, or steering companies through transitions. However, it’s crucial to align their responsibilities with their limited time commitment.

While the Fractional Executive role started with Fractional CFOs we now see Fractional CMOs, CROs, and many other disciplines.

Structuring the Deal

There is no golden standard here I’m afraid as it depends on the commitment. As a guiding principle, you should understand that your compensation model regulates 2 things, risk management, and longevity. As a result of this, we see more “deals” being made where the compensation is a mix of cash and equity. The cash exercise is a way for the Fractional Executive to get paid right here and now, while the equity compensation secures a long-term interest for both parties.  This pay structure aligns their compensation with the company’s success, providing a mutual incentive for performance.

So what’s the Future of Fractional Executives

As many more SaaS companies continue to seek flexibility and access to specialized skills, the role of Fractional Executives seems poised for growth. However, whether this trend solidifies into a mainstream way of hiring or fades away remains an open question.

What is your take on this, would you hire a Fractional Executive?

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