The Rise of Fractional Leadership

A Curated Career Conversation with vChief Founder, Madeleine Niebauer

In today's fast-paced and ever-evolving business landscape, companies are constantly seeking innovative ways to access top-tier talent and expertise without the commitment of full-time hires. Enter fractional leadership, a rapidly growing trend that's transforming the way organizations approach C-suite roles.

To shed light on this exciting development, we sat down with Madeleine Niebauer , the founder of vChief , a leading provider of fractional executive staffing solutions. Maddy shared her insights on the benefits of fractional leadership for both companies and executives, the challenges and opportunities in this field, and the future of this dynamic model.

Let's get started...

Understanding Fractional Leadership

Sarah Johnston (SJ): For those who are new to this concept of fractional leadership, can you tell us a little bit more about how this is defined?

Maddy: Fractional executives are experienced professionals who offer their specialized expertise to businesses on a part-time basis, typically working anywhere from 5 to 20 hours a week. When we refer to "executives," we're talking about C-suite level roles, including CFOs, Chief Marketing Officers, Chief HR Officers, and even, in some cases, fractional CEOs. It's important to distinguish fractional executives from interim executives. While both offer part-time leadership, interim executives are usually brought in for a shorter, more defined period, often to bridge a gap during a transition or crisis.

Benefits for Companies

SJ: Why would a company be interested in hiring a key leader in a fractional capacity? Why not just go through the trouble of onboarding someone in a full-time role?

Maddy: The key advantage for many startups and small businesses is that they often don't require a full-time executive. For instance, a company that's been operating for a few years might need a full-time accountant, but not a full-time CFO. However, they would still benefit from having some financial expertise to ensure they're analyzing the right data and making informed decisions. In this scenario, a fractional CFO would be a valuable asset to the team.

Benefits for Job Seekers

SJ: A few months ago, I worked with a fantastic job seeker who had a background in marketing at a large multinational company, managing multibillion-dollar budgets. Her goal was to transition from a senior manager role to a CMO position, specifically in a high-growth startup environment.

The challenge she faced was that many of these companies felt she lacked the "scrappy" mindset required to lead marketing efforts with limited resources and smaller budgets. To address this, she took on a few fractional CMO roles in different industries to broaden her experience and demonstrate her ability to work with leaner budgets. Today, she's successfully working as a full-time CMO.

So, it's clear that job seekers value fractional roles for professional growth and expanding their horizons. But what other benefits might attract someone to a fractional position? What's the appeal beyond skill development?

Maddy: Flexibility is definitely a major draw. Fractional roles offer the freedom to work when, how, and where you want, which has become especially important since the pandemic. It's a fantastic part-time option for parents or anyone pursuing other passions who prefers to work around 20 hours a week.

Also, the variety can be incredibly stimulating. If you have multiple clients, either concurrently or over time, you gain exposure to a wide range of companies and industries. Someone with a marketing background in consumer goods, for example, could branch out into tech or pharmaceuticals. It's a fascinating way to apply your skills in diverse settings.

The Rise of Fractional Work

SJ: From my experience working with senior executives, I've noticed a significant surge in interest for fractional work. In the last six months alone, I've received more requests for fractional resumes and resumes tailored towards fractional roles than I probably have in the past five years combined.

Given your deep understanding of this industry, what do you think is driving this shift? What's behind the sudden increase in people seeking out fractional work?

Maddy: I believe the concept of fractional work has always existed, but the term "fractional" itself is relatively new. People were engaging in this type of work previously, but it might have been referred to as outsourcing or consulting. So, part of the shift is simply linguistic.

However, the COVID-19 pandemic certainly accelerated this trend. The widespread shift to remote work opened up possibilities for fractional roles, which often offer remote flexibility. Even if a fractional role is local, it typically doesn't require daily office presence.

Furthermore, the uncertainty of the pandemic made companies hesitant to commit to full-time hires. Fractional work presented a solution, offering flexible support that could be scaled up or down as business needs evolved. This proved particularly valuable during those unpredictable times, prompting more companies to explore this model.

Finally, the Affordable Care Act has played a role. It enabled people to step away from traditional W-2 employment because they could now obtain healthcare through the marketplace, reducing their reliance on employers for that benefit.

Finding and Navigating Fractional Roles

SJ: Other than your firm, VChief, what are some of the other big players in the market that recruit fractional leaders and place them in fractional roles?

Maddy: There's a wide range of fractional executive providers out there, often specializing in different areas. While we initially focused solely on Chiefs of Staff, we've expanded our services. Some providers cater exclusively to CFOs, such as CFOShare and Pro CFO . In reality, there are likely hundreds of these companies, many with a local focus. If you're searching for one, try something like "Fractional CFO in Durham" or your specific location.

For marketing, Chief Outsiders is a well-known name. In the tech sector, Tech CXO provides fractional executives beyond just the CIO role, offering a range of C-suite support for tech companies.

Although not strictly executive roles, we often partner with Executive Assistant (EA) agencies since our fractional Chiefs of Staff frequently collaborate with EAs. Two EA agencies we frequently refer clients to are Base and Belay .

Lastly, Toptal , while not explicitly a fractional provider, offers on-demand talent, particularly in the tech industry for developer-type roles. They're a major player in that space.

SJ: Beyond working with an agency like yours, what are other ways that people can find out about fractional roles? Should people literally call up the CEO and say, "Hey, would you consider a fractional position?" or how do people go about this in their job search?

Maddy: Working with an agency can be a bit different since they often handle business development and other administrative tasks for you. However, many people choose to operate independently in this field. When asked about our biggest competitors, I often point to the independent sector as a whole.

If you're going the independent route, networking is key. I wouldn't recommend cold-calling strangers, but don't hesitate to leverage your existing network. Reach out to leaders you know for informational interviews, letting them know you're offering fractional services and asking for advice on how to spread the word. Their insights can be invaluable as you establish yourself in this new role.

Updating your resume and LinkedIn profile to reflect your fractional work is a must. Additionally, consider creating a simple website showcasing your expertise and services. Templates make this process easier than ever.

To further establish your professional presence, it's wise to set up an LLC and obtain business liability insurance. These steps position you as a legitimate business entity, which can be more appealing to potential clients compared to being solely an independent contractor.

SJ: I was chatting with a CFO the other day, and he told me that just by mentioning his new fractional CFO services to a few friends, his schedule filled up faster than he anticipated. It really proves your point - tapping into your network and letting people know what you're offering is a powerful way to uncover these opportunities.

Maddy: Sarah, it's hilarious, but that's exactly how VChief began! I initially thought, "Just a few clients, and I'll be good." But as I started talking to people, it hit me – this was way bigger than me juggling three or four clients. This was a real opportunity. So, I quickly shifted gears from being a fractional chief of staff myself to becoming more of a matchmaker.

Challenges and Considerations

SJ: I got a question from one of my followers the other day. He said, "This whole fractional leadership thing sounds great in theory, but it also feels like I'd constantly be looking over my shoulder, worried about finding the next gig. That's pretty scary." He went on to say, "I've always had a W-2 job, and that security has been really important to me."

I'm curious, is this a common concern you hear from people?

Maddy: Yeah, it's a valid concern, and I wouldn't want to downplay that. That person is spot on. What it means is that this kind of work isn't for everyone. Some people, for financial reasons alone, just can't handle the uncertainty of not having that regular paycheck. It's also about personal comfort levels. Some thrive on the insecurity and unpredictability, embracing the endless possibilities. Others need more stability.

So, I won't deny it – the biggest downside of fractional work is the constant need to think about your next project. You don't always know how long a project will last when you start. You might sign a six-month contract and end up working with the same client for four years. It's hard to predict.

Managing your time across different clients can also get tricky, and onboarding new clients takes time and effort. You either need the energy to do the networking and business development yourself, or you have to work with an agency that will bring clients to you. That's a key distinction to consider.

SJ: Sometimes, companies bring in fractional leaders specifically to shake things up. They need someone who can come in, make tough decisions, and execute quickly – even if it means being the "bad guy."

If you find yourself in that situation, it's important to protect yourself. So, what can you do to safeguard your reputation and career if you know you're walking into a potentially dicey situation? Any advice on how to avoid becoming collateral damage?

Maddy: The most important thing is to be aware of what you're getting into. Imagine walking in expecting everyone to love you, only to be tasked with layoffs and a massive reorg. It'd be a nightmare! So, definitely ask the tough questions before taking on any new project.

But once you're in, building relationships quickly is crucial, like with any fractional executive role. Take the time to connect with people, either in person or virtually, to understand their work and get to know them as individuals.

In these tricky situations, honesty is key. Be upfront and say, "We have some hard work ahead, and some of it will be challenging." People generally dislike the unknown, so naming the difficulties upfront can earn you respect.

Interviewing and Expectations

SJ: From a candidate's perspective, let's talk about how interviewing for a fractional role might be different from a traditional W-2 interview for a full-time CMO or COO position. What should someone expect in terms of the questions, the focus, or the overall vibe?

Maddy: I don't think the interviews are drastically different. You'll likely encounter similar types of questions, but companies hiring fractional executives really want to see that you're ready to hit the ground running from day one.

They're not looking to coddle you or provide a lengthy onboarding process with a 90-day plan. They're hiring an expert to solve a specific problem, and they're often paying you by the hour or day, so they expect you to be productive quickly.

The interview process is your chance to showcase your expertise and past accomplishments, highlighting why you're capable of stepping into the COO role immediately. If you haven't done fractional work before, sharing examples of projects you've owned and how you quickly drove change can be really impactful.

SJ: I know every company has its own unique needs, but when you think about it broadly, are there any qualities or characteristics that tend to stand out in fractional candidates? What are most organizations looking for when they hire someone for a fractional role?

Maddy: The ability to work autonomously is definitely key. You're not expected to run the whole show, but you do need the professional judgment to know which decisions you can make on your own and when to involve stakeholders. It's about quickly assessing who those stakeholders are and figuring out how to get their buy-in or build relationships to be effective right away.

So, being autonomous, reading the room, and building strong relationships are all vital. Of course, having the actual functional expertise for the role is crucial too. You need to bring the skills and experience to tackle the specific challenges the company is facing.Compensation and Pricing

SJ: Let’s talk about compensation. How are most compensation packages structured for fractional leadership roles? How are they different from W-2? Are people typically getting benefits or they getting retirement? What is this look like? Granted I realize it’s different depending on if you’re a CMO or your chief of staff or CEO what are you saying typically what is market?

Maddy: It's pretty common for folks in fractional roles to work as 1099 contractors rather than W-2 employees, although some agencies might hire W-2s. So, you typically won't get benefits, which is something to keep in mind when setting your rates. Also, remember that you won't always be billing clients for every hour you work.

When it comes to pay, fractional roles can vary widely. You might see hourly rates from $100 to well over $500, or even day rates exceeding $5,000. It all depends on your level of expertise and the specific role.

So, think about what you'd earn in a similar full-time position. If you're working through an agency, you might make a comparable hourly rate, maybe slightly higher to account for taxes.

But if you're going solo, you should charge at least two or three times your W-2 equivalent. This covers the time you spend on business development, invoicing, and other admin tasks, plus benefits and taxes.

Hourly rates can get pretty high, but it really depends on the role and your experience. That's how I'd approach figuring out your rates.

SJ: Pricing yourself is definitely one of the toughest challenges for people new to fractional work.

Maddy: It's so true! Even when I started VChief, I was clueless about setting rates. Thankfully, I had a mentor who was incredibly open and honest about money. She sat me down and said, "Maddy, let's talk about what I charge and how to think about this." It was such a game-changer, and I wish we could all be more transparent about these things – it would help so many people.

Setting Expectations and Boundaries

SJ: So, Maddy, when someone is considering a fractional position, what's your advice for having those crucial conversations with stakeholders before signing on the dotted line? You know, those chats that make sure everyone's crystal clear on the person's role and responsibilities – so they can hit the ground running and be successful.

Maddy: Once you've been chosen as the person for the role, it's your chance to say, "Hey, I'd like to chat with a few more folks." This could mean casual conversations with the people who hired you – they obviously know the ins and outs – but also with their direct reports and others at different levels in the company. Depending on the role, you might even want to talk to clients or vendors.

Sure, you won't get the full picture until you're actually in there, and sometimes tough decisions need to be made once you are. As a company, we've even had to fire clients with toxic cultures. Don't be afraid to walk away from situations that are just plain ugly.

Every organization has some level of red tape that can slow you down, but you don't have to get tangled up in every bit of workplace drama. There's a benefit to being somewhat removed from that.

The Future of Fractional Leadership

SJ: What are the most sought-after fractional roles in the market today?

Maddy: That's a great question. In my experience, the fractional CFO role is one of the most common, because it takes a while for a company to reach the point where they need that level of financial expertise full-time. Chief Marketing Officer is another big one.

We were the pioneers in the fractional chief of staff space, but now there are other players in the market. When we first launched, people were puzzled – they'd ask, "What's that?" and "Why would you do it virtually and fractionally?" But hey, there's a market for all sorts of things, right?

SJ: Lately, I've noticed a ton of articles about the fractional job market. It makes sense, with all the economic changes and budget shifts happening. And if we do head into a recession, the demand for fractional work could skyrocket.

Speaking of which, a follower recently asked me if it's a good idea to charge less than your usual rate when you're just starting out in fractional work, like for your first client. What are your thoughts on that?

Maddy: Sure, you could do that. But I wouldn't necessarily lead with a discount. Start by charging what you believe you're worth, and then, if you're not getting much traction, you can always offer a discount to those who seem interested but balk at the price.

It's easier to lower your price later than to try to raise it. Imagine you take on a project expecting it to last three months, but they want you to stay for three years. If you started by charging $60 an hour when you really wanted $200, you're going to be kicking yourself.

SJ: Another follower had about contracts. They asked, "How do you structure a fractional contract to make sure everyone's on the same page, and to prevent scope creep or the role turning into a full-time gig?"

Maddy: Scope creep is a real thing, and if you're charging on a project basis, you have to be super careful about it. Hourly or daily rates offer more protection against that. You can even set up a retainer agreement where they pay you for a certain number of hours per month, whether you work them all or not. There are ways to structure contracts to safeguard your time.

As for preventing scope creep, being crystal clear in the scope of work is key. Outline exactly what questions you'll answer and what deliverables you'll provide. But even then, some creep can happen, which is why hourly or daily rates have their advantages. Of course, there are also benefits to the other approaches.

SJ: Another follower asked a really interesting question: do you ever see companies that are looking to expand internationally and specifically seek out fractional executives to help them navigate those new markets, like maybe entering EMEA or APAC while already having a presence in North America?

Maddy: That's a great question, but to be honest, it's not something I have a ton of experience with. Most of our clients are based in North America. We've had a couple of international ones, but not many.

That said, I can definitely see the value in it, especially if you're hiring someone from the specific region you're targeting. They'd have those local connections and networks, which could be a huge advantage. I'd be surprised if that wasn't happening already.

Conclusion

The rise of fractional leadership is reshaping the way companies access top talent and how experienced professionals approach their careers. As Maddy's insights reveal, this model offers a win-win scenario for both organizations and executives, providing flexibility, expertise, and cost-effectiveness.

Whether you're a company seeking to optimize your resources or an executive looking for a fulfilling and flexible career path, fractional leadership is a trend worth exploring. As the market continues to evolve, we can expect even more innovation and growth in this exciting space.