Interim and Fractional Executives: The New Face of C-Level Leadership
Engaging on-demand executives to reduce risk and accelerate growth - the key to finding the right talent in 2023
By Sydney Gallo
Current economic conditions combined with an exceptionally tight labor market have presented new challenges for businesses seeking to replace or add talent to their C-suite. It’s now more difficult than ever to find the right talent to replace executives or add additional leadership to existing teams. As a result, businesses are more frequently turning to the use of seasoned, on-demand Executives-as-a-Service to fill their senior leadership gaps on a short to medium term basis. Accordingly, Interim and Fractional executives are deploying into all business sectors, but what are they and how can they help your business?
What is an Interim Executive?
Interim Executives are experienced business professionals, often C-level leaders, that an organization hires on a full-time basis for a specific period of time. These individuals are hired by one company at a time, and their assignment is typically between three to six months, though they may extend many months longer. Interim Executives act as temporary leaders within the company and assume all responsibilities that come along with the leadership position they are filling.
What is a Fractional Executive?
Fractional Executives are similar to Interim Executives, but they are hired on a part-time basis, for an unspecified amount of time. Given the open-ended, part-time work, Fractional Executives often have placements at multiple companies, of varying lengths. Typically, rather than taking over a role in its entirety for a set amount of time, a Fractional Executive’s experience is leveraged, as needed, for ongoing projects; their engagement comes to an end when the company is no longer in need of their guidance. There are also some circumstances, usually in early-stage companies, where Fractional Executives do take on all of the traditional responsibilities of a C-suite role. In these cases, the workload is much lighter, not full-time, thus allowing them to take on assignments from more than one company at a time.
What are the Benefits of Hiring On-Demand C-Suite Executives?
1. Unique Expertise
Interim and Fractional Executives are seasoned leaders with a decade or more of experience collaborating in their respective fields. They have worked with a number of companies and have often times held principal positions across multiple industries. These consulting-minded professionals have served as partners to countless executive teams, board members, and investors, and have been exposed to an array of diverse business problems and growth plans. Organizations are looking for intelligent and accomplished executives who have already managed comparable circumstances and can think fast and act faster. On-demand executives do exactly that – they leverage their unique expertise to drop into an organization without disruption, evaluate the company’s needs, and drive the business forward.
Hiring an Interim or Fractional Executive is a capital efficient way to build your business, as they are paid by-the-hour, on an as needed basis. Consider this: you hire an interim CFO to assist your existing financial team navigate the IPO readiness process. For six months, your consulting CFO is working 30-40 hours per week, ensuring everything on your public company readiness roadmap is complete. Post the IPO, your on-demand CFO’s working hours are tapered over time to about 10 hours per week. Your company is not locked into the long-term cost of a fixed salary, and even better, your company is not responsible for the overhead costs associated with the added benefits and severance that comes along with a full-time employee.
3. Reduced Risk
With worsening economic forecasts, looming risks of new coronavirus variants, increased emphasis on ESG reporting, and a sharp rise in C-suite executive turnover rates, the importance of hiring the right, transformative leader, is more critical than ever. Hiring an Interim or Fractional Executive gives you the time and space to select the right long-term leader for your business. Executive search processes can be lengthy, and unstable markets often result in a greater number of failed hiring attempts. Studies show 60% of executives fail within the first 18-months of being promoted or hired.1 C-suite executive hiring mistakes are expensive, costing businesses up to 213% of the failed executive’s salary.2 Experienced Interim and Fractional Executives eliminate this costly risk by jumping in quickly to fill your company’s leadership gap, while you search for your full-time executive. On-demand executives, with a proven track record, can also train potential successors, who may not be prepared to take over the C-level post at the time of turnover. On the contrary, sometimes companies find the on-demand executive is the right fit for their business, in which case, companies have the opportunity to bring on the Interim/Fractional Executive as a seasoned full-time employee.
4. Trusted Advisors
In hiring an on-demand executive, the trust and verification leg work has been done for you. Interim and fractional placement firms have taken the time to vet the executives on their bench from a background review standpoint. They also have direct feedback and case studies from clients of similar size, stage, and industry, to further endorse the quality and skill sets of their executives. In contrast to executive search firms, there’s no lag times or expensive contingency fees for on- demand hires. The process is seamless – once you determine that an interim or fractional hire is the right decision for your business, placement firms, like LS Associates, can connect you with qualified executives from their bench until you find the best cultural fit for your team.
Trends for 2022 and Expectations for 2023
In 2022, CEO turnover reached its highest peak in 20 years.3 In the wake of unprecedented and ongoing pandemic stress, C-suite executives have left their posts to invest in their mental health. Many C-level executives are becoming less interested in running the marathon of being a full-term employee and instead are opting for the shorter, project-based, interim sprint. Similarly, as businesses attempt to navigate the uncertain economic forecasts, high inflation rates, and increased digitization of post- pandemic times, many businesses are finding the cost, flexibility, and minimized risk involved with interim and fractional leaders to be quite an appealing alternative to the status quo.
As we enter 2023, the uncharted conditions do not appear to be changing any time soon, but growth cannot wait. Forbes Business Development Council member, Matt Bradley, warns the key to ensuring greater business continuity for any organization is “to get ahead of the risks that threaten business stability.”4 As businesses look for ways to spark new growth and outrun competitors in this unpredictable market, Interim and Fractional Executives can offer a fresh, experienced perspective combined with a reduction of risks and expenses associated with a long-term commitment.
LS Associates provides experienced, interim and fractional C-level leaders who can immediately partner with your executive team, board members, and investors to solve your complex business problems and facilitate the growth of your company. Reach out to our team to find out how we can bring innovation and positive change to your business today.
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