Fractional Leadership: Building a C-Suite for the 21st Century

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Fractional leadership is finally having its moment. Google searches for Fractional CMO are up by over 80% in the last year, while searches for Fractional CTO have increased by more than 200%.

And yet, fractional leadership is anything but new. So what’s going on?

It’s a sign of changing times, changing priorities and, most of all, changing needs. Companies want more expertise, more capable leadership, but not at the investment of full-time hours or compensation. The fractional model is the answer.

Fractional leadership (and EOS!) was key to scaling Hunt A Killer. At any given time, there was at least one person on the Senior Leadership Team who was fractional – and they were fully integrated into our Accountability Chart, immersed in our culture, and accountable for results with a wide range of authority and decision-making power.

What is the Fractional model?

In a previous edition of this newsletter, I wrote briefly about fractional leadership and how it’s one of the ways a Visionary can land a cost effective Integrator. But it’s not just Integrators that are available through the fractional model… it’s the entire C-suite.

The Fractional Leadership (or Fractional CxO model) is a form of strategic staffing that allows organizations to access high-level executive expertise and leadership on a part-time or interim basis that is fully integrated into the organizational architecture and accountable for results.

Gino Wickman and Mark C. Winters talk about the Fractional model in their 2015 book Rocket Fuel:?

“[Fractional] can be a way to create immediate impact by adding the much-needed capabilities that you are currently missing while softening the financial blow of biting off the full-time hire all at once.”

But the underlying principle of the model goes as far back as the 1980s when private equity firms started embedding key leadership roles into their portfolio companies to improve performance metrics and deliver immediate results.?

Since then, it has been changed and updated to better reflect the needs of our time and the current market landscape. It’s been called active management, value creation, and operational improvement, among other terms.

In 2024, however,? it’s called Fractional Leadership and it now reflects the needs of the 21st century C-suite.

Fractional, consultant, interim: What’s the difference?

There’s a lot of noise surrounding the meaning and the job of a fractional leader. One of the biggest misconceptions I’ve seen is that fractional leaders are strictly part-time, and that they always split their time between companies.

This isn’t true. While some fractional leaders do work part-time, others will join an organization on a full-time basis but on a fixed-term contract, often 6-12 months but can be as long as 18-24 months in some cases.

I’ve also seen fractional leaders being compared to freelancers, consultants, interim C-suite executives, advisors, and more. And while some of those comparisons make sense, others are a product of misconceptions.

Starting with the worst offender…

Fractional leaders are not freelancers.

Freelancers are free agents who do not represent the company in any way, shape, or form. They are independent contractors who remain independent as they carry out the specific project they were hired for.

On the other hand, fractional leaders are part of your Accountability Chart, take on the same challenges and duties that a full-time leader would, and are nearly identical to full-time team members in their function.

I point this out because it’s not unheard of for companies to hire freelancers when what they really need is a fractional leader.

Fractional leaders are not consultants.

I can see how some might mistake fractional leaders for a consultant. From afar, both appear similar as they often work part-time to offer guidance and support in a specific business area.?

But the functional similarities end there. Consultants advise and aren’t responsible for the execution of their recommendations. Fractional leaders, on the other hand, are responsible for results, just as any other employee of the company. Consulting is also generally more expensive (on an hourly basis) compared to fractional leadership.

Fractional leaders are not interim executives.

On the spectrum of temporary positions, interim executives are the closest to fractional leaders but still not quite the same. Unlike freelancers or consultants, interim executives are already part of the organization but the role is often symbolic, rarely involves big strategic changes, and has historically been driven by a top-level leader leaving without a direct successor.

Fractional leaders, on the other hand, are significantly more hands-on and similar to a newly appointed permanent CEO than a CFO taking on the reins while the board chooses the next financial leader.

Knowing the Person Behind the Title

If you’re considering hiring a C-suite executive through the fractional model, you need to learn about these individuals, who they are, and what motivates them. They need to be a ‘right fit’ and a more traditional interviewing process is appropriate.

To start, the fractional model applies to every part of the C-suite. COOs, CMOs, CTOs, and CFOs are among some of the most common positions being filled with fractional leaders. But fractional leadership also works great in more specialized roles like CISO, CDO, and CRO due to the limited supply of talent and high demand for expertise in these areas.

But who are these people?

Fractional leaders are typically high-level executives with 10-25+ years of experience on average, many of whom have previously served as full-time C-suite executives.?

Although motivations are different, the decision to pursue a fractional career usually stems from a desire to continue serving, just in a more limited capacity. Most of these leaders have already accomplished everything they originally set out to do and are comfortable in their new position (but not everyone wants to settle down!).

Some leaders want to continue to apply their knowledge and expertise to new projects, meet new people, and build a community – and they don’t want to wait around till retirement to do this.

The fractional model provides the framework for accomplished leaders to do all of this.

When and Why to Choose Fractional Leaders

The fractional model is a product of its environment. Companies today need senior executives to help lead the way, either in very specific business functions or in identifying North Star goals and paving the way to achieve them.?

This is especially true for small to mid-size organizations ($5 million to $50 million in revenue with 10 to 250 employees) where the majority of the strategy work is done by the founder or CEO while also overseeing almost every other department.?

In a recent episode of Confessions of an EOS Implementer, Adrian Dayton and I spoke about how the biggest source of unnecessary friction in a business is the founder taking on too much work. Fortunately, this is also the point where companies take one of the biggest leaps toward growth, going from a founder-led company to a leadership-driven company.

But why would you want a fractional leader in your team over a full-time hire? There are five big reasons.

1. COST

Hiring high-level executives is cost-prohibitive for the vast majority of SMBs. The fact is, not every founder has a quarter of a million dollars (or more!) to hire an experienced COO, CTO, or CFO, but they still might very well need their expertise.

The fractional model helps make this happen while providing a transparent framework to manage the relationship. The model is also very effective for startups where hiring a fractional leader allows them to delay the investment of a full-time hire without compromising growth.

Here is an example of managing G&A – the efficient way:

Back in 2022, a Visionary/CEO friend of mine was hiring technical talent (developers and engineers) to build proprietary software based on the company’s needs. Ideally, you’d have the CTO take charge here, drafting project requirements and identifying talent gaps.

But understandably, the company was hesitant to hire a full-time CTO for a relatively short-term project. So I made some calls and put him in touch with a Fractional CTO for a 6-month role. This was the perfect solution for their business. The company reduced its non-core expenses during a critical post-pandemic market push while also getting the technical guidance and strategy they needed for a big, albeit short internal project.

2. IMPACT

Hiring a full-time executive helps companies make mindful strategic decisions but having a fractional leader delivers immediate specified results.?

Fractional leaders come in fast, make a positive impact, and stay only for as long as you need them. They know how to hit the ground running and have developed processes specifically designed for integrating efficiently within your organization.

Here is an example of when execution speed outweighs all else:

In 2019, a friend’s company’s IT infrastructure collapsed in the middle of a technical migration (moving from a monolithic architecture to cloud-based microservices). They had backups and redundancies but chaos was creeping as the development team worked without direction and the senior leadership team wasn’t sure how to help.?

They considered hiring an agency to briefly take over but I recommended a Fractional CIO for 6+3 months instead. The new CIO came in, completed the migration, and stayed on for another three months to smoothly transition and help with new hires and internal strategy.

3. OWNERSHIP

Fractional leaders have ownership in key deliverables and projects – making the individual accountable to outcomes. They have the authority to make decisions, execute strategies, and have direct reports within the enterprise, just like any full-time equivalent.

Here is an example of this in the real world:

An acquaintance started a manufacturing company and had nailed their molding process down to perfection. However, the company still relied on founder-led sales and wasn’t quite ready to commit to a full-time hire to oversee a dedicated sales team.?

Instead, they brought on board a fractional CRO to oversee the company’s sales functions. She developed outbound strategies, guided middle managers to train the sales staff, and helped the company hold its own in a fiercely competitive market.

4. FLEXIBILITY

Sometimes leaders lead from the assembly line but that’s neither typical nor sustainable in the long-term.

The truth is, not every position requires 8 hours a day, 5 days a week to get the job done. Leadership positions like CMOs, CFOs, and CTOs are there to make sure the trains run on time. And so, a portion of fractional leaders choose to split their time across multiple companies.?

This is a godsend for companies with seasonal needs:

In one of my communities, I learned about a consumer product company that made it an annual tradition to bring in a fractional CMO prior to holiday season.?

He would join 3 months before the peak season to prepare the company, build viral campaigns, and optimize ad spend, among other things. Then stay for a month after the season ended to discuss the lessons learned and how they can improve for next year’s peak.

It was a surprisingly efficient way to manage a temporary surge in workload and benefit from high-level expertise without the cost of a full-time hire for the rest of the year.

5. RISK

Financial costs aside, hiring full-time employees comes with a long-term commitment. Even after taking all of the right steps and using the right tools, there is always a risk of things not working out, either due to changing priorities, personality differences, or simply a lack of performance.

If that happens, off-boarding a senior executive always comes with the risk of introducing instability and uncertainty to the work environment.

On the other hand, fractional leaders are inherently less risky due to the way the fractional model is designed. There are clear goals set from the beginning and an equally clear exit strategy for the end. Founders also don’t have to worry about the usual costs of off-boarding a senior leader (which can be crippling for some).

In the case of an imperfect fit, replacing a fractional leader is also much faster and less expensive than replacing a full-time hire. Case in point:

A solo-founder friend (who adopted EOS on my recommendation) hired his fractional COO but things weren’t perfect. They made compromises yet there were still small differences in vision and role that kept throwing the company off-balance.

I sat down with him and we reevaluated the entire Accountability Chart, taking into consideration the company’s new needs. We found that what he really needed was someone to manage the entire day-to-day as he was sitting in multiple 'seats' himself, rather than just the operations team.

So, he spoke to the fractional COO who left after 6 months (as initially planned) and a fractional Integrator was onboarded instead. The transition was incredibly smooth and my friend swears by fractional for his relatively small leadership team.

How to Succeed with Fractional Leadership

While founders, CEOs, and Visionaries should be mindful of the “part-time/fixed-term” nature of the fractional model, they are encouraged to treat fractional leaders as they would any of their other colleagues. In fact, for the vast majority of day-to-day operations, business owners won’t see any differences between full-time hires and fractional leaders.?

That said, these five key strategies will help make fractional leadership much more effective in any organization:

1. Look for shared values

Before you begin the search for a fractional leader, stop and think about the challenge your company is facing and how a fractional leader might solve it. I urge you to read The Hardest Hire You’ll Ever Make (and How to Do it Right) , even if you are not looking for a fractional Integrator.

The article talks about the process of finding, meeting, and onboarding your ideal Integrator and a lot of the advice applies perfectly to other positions as well. The main takeaway is to not rush in.?

Use the EOS tools you have at your disposal and ensure alignment between fractional leaders and the organization's overall mission, values, and operating procedures.?

2. Foster trust and autonomy in decision-making

The fractional model helps small companies access far more senior leaders than they could generally afford on a full-time salary. Additionally, when you onboard someone of this caliber, you’re not only getting their domain-specific knowledge but also their industry connections.

Let them do their magic. Hiring a fractional leader and micromanaging them defeats the purpose of hiring an expert.

Remember, you must have hired this person because you saw something in them. Have trust and let your leadership team lead with their expertise. Fractional leaders in particular?are far more likely to perform better when they receive a high level of autonomy and trust.?

Use your own freed-up time to focus on the big picture, communicating the vision that charts the course.?

3. Define clear roles and responsibilities?

Defining clear roles and responsibilities helps manage expectations and is the first step to establishing the groundwork for open communication, conflict management, and feedback.

I am not asking you to put blind trust in your newly-appointed fractional leader. Instead, I recommend following up on trust with results.

In other words, balance flexibility, trust, and autonomy with a commitment to delivering outcomes. Although fractional leaders will identify clear objectives from non-specific goals, it’ll just be an additional step for them. So try and provide them with specific goals if you can.

4. A shared sense of accountability

The philosophy of shared autonomy and responsibilities also includes a shared sense of accountability. As the founder, Visionary, or Integrator, it’s your job to create an environment that supports this way of thinking.?

Use the Accountability Chart, Meeting Pulse, or any of the dozen or so EOS tools and exercises designed to build and maintain accountability.

If you’re facing communication or compatibility problems with the senior leadership team at a broader level, check for culture issues within your organization. One of the most common problems SLTs face is the lack of vulnerability and trust – address it as quickly as possible.

Don’t forget, fractional or not, all leaders are accountable for the success of the company.

5. Exit strategy

It might seem counter-intuitive to think about the end before you’ve even got the ball rolling but a fractional leader is typically a temporary solution and both parties need and deserve transparency on what the end state looks like.

This will help in setting achievable objectives and to be on the same page on expectations and timelines

Having an exit strategy helps you prepare for three possible scenarios:

1. Seamless handover at the end of term/contract
2. An early departure
3. Converting to a full-time role

What’s the catch?

So far, I’ve talked almost exclusively about all the good but there’s also some 'watch outs'.

Fractional leadership has been picking up steam for many years and while you may find many fractional leaders quickly, finding the Right Person for the Right Seat can be tricky – and that’s the catch.

A staggering number of business leaders are making the move to a fractional (or portfolio career, as some call it) and that is somewhat diluting the market, making it harder to tell the greats from the goods.

You can make this process easier by searching in your network and through word of mouth or with a company that is specifically designed to match business owners with fractional talent. For instance, Talent Harbor runs on the EOS Process and uses tools like the Accountability Chart to identify the seats you need, vet candidates for you, and fill talent gaps instantly. You can learn more about what we do and how we do it here.

And with that final piece of advice, we’ve come to the end of this breakdown of the fractional model. Here’s a quick recap of the main takeaways:

• Fractional leaders come in fast, make a positive impact, and stay only for as long as you need them.
• Fractional leaders can either work on a part-time arrangement, dividing their time across multiple companies, or on a fixed-term contract where they work only with one company for a short period.
• Regardless of the exact arrangement, fractional leaders help set the company on the right path, get traction, and focus on outcomes without any long-term commitments.
• Fractional leaders are inherently less risky, less expensive, and more flexible.
• A fractional leader will embed themselves in the organization, just as any FTE would.?
• To succeed with a fractional leader, companies need shared values, trust, clear roles and responsibilities, and a shared sense of accountability.
• Planning the exit strategy is an important step in onboarding a fractional leader.
• The most difficult part of working with a fractional leader is finding the Right Person for the Right Seat. Working with a company that specializes in leadership search and fractional services (like Talent Harbor ) is a great way to reduce stress and ensure a quality fit.

P.S. Want to work together? Here are a few ways:

1/ Already running on EOS? I am putting together a small vetted group of business leaders who operate on EOS. Apply for the Spring Cohort here . (only open to Visionaries, Integrators and Core Function Leaders)

2/ Need an Integrator or Core Function Leader expertise without the FTE budget? Schedule a Zoom with me here to learn about Talent Harbor’s fractional and professional staffing for businesses operating on EOS.

3/ Are you an EOS Implementer and want to be a guest on Confessions of an EOS Implementer ? Submit a guest form here.

4/ Vetting Certified EOS Implementers and want to know who’s the best? Send me a DM.