It’s being called “The Great Resignation:” the exodus of workers who’ve decided to quit their careers in pursuit of something better. And while most headlines continue to cover this from the standpoint of middle-class workers, it’s a problem that’s slowly but surely creeping into the C-suite. Like the subordinates they oversee, executive leaders are also turning in resignation letters at an alarming pace.
As traditional C-suite positions become vacant and go unfilled, many companies are pivoting. Instead of spending tens of thousands of dollars to prospect and onboard a new CEO, businesses are instead looking to fractional CEOs for answers. What they’re finding are innovative solutions at a lower cost.
What is a fractional CEO?
A fractional CEO is essentially a part-time executive. They might work 10-15 hours per week on high-level initiatives, or provide guidance for specific projects in an as-needed capacity. Essentially, it’s a CEO on-demand.
Fractional CEOs offer small and growing businesses several significant benefits—namely, expertise on-tap, without the massive salary implications that come with a full-time executive. It’s a way for growing businesses to tap into high-level expertise without hampering their balance sheet with a salary that’s hundreds of thousands of dollars (plus benefits and bonuses).
Even more appealing, fractional CEOs often come with cross-industry expertise. It’s a way to bring new insights, innovation, ideas and strategies to your company, without committing to a long-term CEO.
Why are fractional CEOs becoming so popular?
Fractional CEOs have been on the rise since the beginning of The Great Resignation. Here’s a look at some of the driving factors behind the pivot to hiring fractional executives, as opposed to full-time C-suite members:
- Competition. As more executives enter the available talent pool, there’s more opportunity to tap into leadership expertise. However, there’s also more competition. More companies are looking to onboard CEOs, which can mean getting into a bidding war for talent. Fractional hires demand less in the way of compensation and perks because their time and role are limited.
- Availability. Hiring a fractional CEO means having executive expertise on-tap as-needed. It also cuts the onboarding process down to a fraction of the time, to place an executive leader quickly. This is particularly beneficial to companies that need to fill a leadership void fast.
- Diversity. Executive leadership can span a wide gamut of styles, capabilities, experience and expertise. Hiring a long-term CEO means committing to a certain set of traits. But you might not need that expertise long-term. For instance, a growing-minded fractional CEO can advise you on expansion initiatives; then, a CEO with M&A experience can shepherd you toward an exit strategy for your business.
- Efficiency. Alongside cost efficiency, fractional CEOs also offer efficiency benefits in how they work. They can devote time and attention to specific projects that are pertinent to the company, or spend their time delegating appropriately to your in-house management teams. The ability to use a fractional CEO as-needed lends power to their role as a step-in executive leader.
Fractional CEOs also bring unique benefits to each business they consult with. The structure of their involvement gives small-to-medium-sized businesses the flexibility they need to reap the benefits of executive leadership, without prematurely tying themselves to a new executive officer.
How to engage a fractional CEO
Most businesses seeking executive leadership aren’t even aware that fractional CEOs are an option. They assume that hiring a full-time CEO is the only way to tap into tenured executive expertise. And, unfortunately, this leads them to undertake a protracted vetting process in pursuit of a full-time CEO that they might not need—or be able to justify the cost of.
The best way to approach a fractional CEO hire is to work with an executive placement company that understands the dynamic role of a part-time executive. Not only will an executive search firm have access to a significant talent pool, they’ll have the ability to pursue executives in the part-time, fractional capacity that a business demands—whether it’s a few hours each week or in a project-specific capacity.
Working with a search firm usually results in a fee when the business engages with a CEO; however, it’s a cost that’s well-offset by the benefits inherent in fractional leadership. And, in an even broader capacity, it’s still far less than the cost of engaging a full-time CEO.
Leadership needs are changing
One of the paradigm shifts that’s evident amidst The Great Resignation is that leadership roles are changing. There’s no substitute for good leadership, but the capacity in which businesses need that guidance is evolving. Especially in the face of remote work and decentralized teams, executive leadership for many small businesses has become an on-demand need. Fractional CEOs fill that demand, offering the best of both top-level leadership skills and an affordable, turnkey solution to surmounting specific business challenges.
