How to Make Fractional Leadership Work

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Welcome to HBR in Leadership, case studies and conversations with the world's top business and management experts. Hand-selected to help you unlock the best in those around you. I'm HBR senior editor and producer Amanda Kersey. If you're leading a growing organization but can't justify the cost of another full-time executive, there's another way. In this 2024 episode of HBR's IdeaCast, host Curt Nickisch speaks with two experts about a fast-growing alternative.

Fractional leadership.

If you're not familiar with this idea, it's where leaders who might otherwise serve as full-time C-suite executives instead offer their skills to multiple organizations. They dedicate only a fraction of their time, a portion of their time, to each one. Can't afford a chief marketing officer or don't need one full-time? Hire a part-time one. But how do you know if this approach is right for your company? What challenges do you need to anticipate? To get the most out of working with a fractional executive? And if you're a senior leader, how do you know if a fractional role could be a good fit for you? Our guests today are experts on this growing practice. Their combined research and practical experience will help us understand how fractional leadership actually works and whether it's right for you and your organization. Tomoko Yokoi is a researcher and advisor at the Tonomas Global Center for Digital and AI Transformation at IMD Business School. She studies the impact of emerging technologies on organizations and work. And Amy Bonsall is the founder of Collective and a former leader at IDEO and Old Navy. And she currently works as a fractional chief product officer with several organizations. Together, they wrote the HBR article, "How Part-Time Senior Leaders Can Help Your Business." Tomoko, thanks for coming on the show.

Thank you so much.

And Amy. Thanks for being here.

Thank you. We're so glad to be here.

Amy, you currently work as a fractional chief product officer. And Tomoko, your research focuses on how this practice works kind of as an organizational system. I want to start by asking what drew each of you to this practice.

I just love how people are starting to actively and intentionally think about how they want to work. And that they actually want some flexibility in the types of work they do. And they're trying to do something about it. And I think that's what I find so interesting about this phenomenon.

Yeah. Amy, what about you?

What really drew me to this was I spent most of my career as a consultant. And what I appreciated about being a consultant was I was able to accelerate my learning and my offer to my clients because I was working with multiple companies on similar challenges. And that really allowed me to make, make a bigger difference faster. And then I went in-house, and what I enjoyed about being in-house was the sense of ownership that I had, the sense of camaraderie I had within the leadership team. And what fractional leadership offers to me is the ability to combine both of those things. So, as a fractional leader, I am very much a part of a leadership team, but also I can, I can be in that position for more than one company at a time, which allows me to accelerate my learning and give that right back to my clients.

Yeah, it sounds like you can kind of scale your impact but also draw boundaries too.

Absolutely. And then just really, you know, one of the things that you really do miss as a consultant is the sense of like, you know, this is— I am a part of this and this is a part of me. And you feel that as a fractional leader as well.

Can we talk just about the name for a moment? It sounds like a nice branding for part-time or temp work even.

It's, I think it's a fantastic marketing word. And I think because of this word, the movement has sort of latched on and resonated with a lot of people. And those in the fractional community have actually said because of this term of fractional, it's just been able to be adopted because it just resonated so well with many people.

Yep. And the term part-time is just tough branding because it sounds noncommittal or something?

Yeah, I think that's true. And then there's also something that part-time misses that I think fractional really nails on the head. To me, part-time implies a sense of sort of very boundaried connection to the organization. Monday, Wednesday, Friday, or whatever it is.

Yeah, set times, sure.

Set times. And fractional, the idea is, The company should not know that you're fractional. They should feel that you're there in all of the key moments. And so as a fractional leader, that means you're context switching a lot more. But to the company, they get this real benefit of feeling like they have a full-time person. And that's also why the part-time moniker doesn't quite fit.

So it's been growing, right? You note in your article that more than 110,000 individuals on LinkedIn this year identify themselves as fractional leaders. It was just 2,000 2 years ago. Why is it accelerating so quickly?

I think that COVID made a huge difference in 2 areas. One is I believe that the pandemic was a reckoning for many of us. Many people rethought what they really wanted out of life. And this idea of having greater flexibility, I think, really resonated. But also the pandemic really normalized the idea of working from anywhere and working remotely. And that fundamentally suits fractional leadership. You want to be there at the moments that you need to for each team that you're working with. And so that may mean, you know, Tuesday at 10, you're with Team A and Tuesday at 11, you're with Team B, which would be entirely impossible if you needed to be in person for both of those.

I'm just curious, do a lot of fractional leaders work remotely? Do they actually work in person? How does that practically work? And is that also kind of something holding the trend back?

Most of the executives we've spoken to are working remotely. In fact, I spoke with a woman who is currently looking into moving to Europe from the United States because with digital technologies and fractional, it would allow her to work from anywhere around the world.

I would say I know some people who definitely work in person as well, in a fractional capacity. And I think to your point, Curt, that, that means they're geographically bound, right? So I'm in the Tampa area. I know people who work fractionally in the Tampa area. I think that the, the bigger question in my mind is what is the future of remote work and how does it impact this? I think it speaks to one of the current potential gatekeepers or things that hold this back is companies, leaders being more comfortable with people being in person can constrain their ability to be open to the possibility of a fractional leader.

Yeah. On the other hand, as the fractional movement starts to accelerate, given that there's so many people who are wanting to become fractionals now, then you might have that possibility where it become so diffused and well spread out that then in those large cities, there will actually be people geographically already there. So there may not have to be remote working. But I think at the same time, the fractional executives themselves rely on the remote work needs to be there to some extent, so they can have the possibility to work with 3 or 4 companies at the same time. It's connected in some ways, I would imagine.

Yeah. So who are these fractional leaders? Like, what do we know about their experience, their backgrounds, and why they're seeking these less traditional roles?

So many of the fractional executives that we've spoken to have about 20 to 30 years of experience. They also position themselves as advisors to the C-suite and that they are also part of the C-suite. But in order to be a part of a C-suite in any organization, you have to be able to bring bring that experience along and be part of that C-suite. So, it's not a position that we've seen for early career stage people.

And what kind of companies are trying out fractional leadership?

Definitely, it's startups and SMB, small and medium-sized businesses. To some extent, it might be business units of bigger organizations. The only place we really saw it extend into much larger organizations And I have a hypothesis this will change, but the only place we saw that was in new to organization roles. So maybe it's an AI role or an innovation role if they haven't particularly had that in the past, or a data management role or something where the organization knows that they want that kind of support, but isn't frankly ready to handle a full-time leader in that capacity.

Do you have any specific examples of how companies are employing fractional leaders that you could share?

I had the opportunity to work for an early-stage startup and to really help them as they were ironing out what their product roadmap was and what, what exactly their product would offer. And what felt very beneficial from the founder's perspective was that I was working with him and giving him the skill set he needed both to answer that question, but also to be able to continue. Product is in evolution. You're constantly refining, learning, etc. And so I gave him both the answer to that question, but also the skills to be able to continue to go off and do that on his own. And I think that's a uniqueness of a fractional role in that you can come in and solve a problem quickly, but also build internal strengths, whether it's in the CEO or a team that you leave behind.

Yeah, I have a case. We actually interviewed a person, a business owner who had hired a fractional, and she shared with us a story about a situation that actually did not go well. And one of the reasons why she felt that the fractional— it was a marketing executive that she had hired— it didn't go well was that she felt that the fractional executive was coming in and just applying something that she was just using either from her past experience or from past clients or even parallel, parallel clients as well. And she felt that it wasn't really solving the problem that she had as a business owner. That provides a couple of different lessons, right? I think on one hand, the fractional executive, they do have they do bring this knowledge and wealth from other experiences. But at the same time, it's the question of how much can you shift and switch between your different clients. And in this particular case that the business owner was telling us was that she felt that that fractional executive didn't switch into the context of what she needed.

Got it. Yeah.

And I think one of the other things she had described in that example was that she felt that it was very transactional. And of course, if, when the fractional executive only has a partial, a fractional amount of time, there is that possibility that it can, it could become transactional in order to get the deliverable done. But at the same time, one has to work together to make sure that it doesn't come off as being transactional, although you're cutting and pasting from other, other jobs.

Both sides need to have that collaborative mindset.

Yep.

And what are we learning so far about where this works best? Like, for instance, can this work for any type of role at any company?

Yeah, I think it depends, right? I think we've seen it in the finance and accounting stages for sure, but we've spoken to fractional executives from all walks of life, marketing, product, as Amy is a, a chief product officer, and also with the chief operating officer, and also with human resources. One of the other, uh, area, some additional companies and organizations that are interested in fractionals, which we've heard of, are also venture capitalists and also nonprofits, companies or organizations that may not have the, the, the runway or the assets to be able to pay a senior executive at a full-time rate.

The reason it started with CFOs is because as a company is growing, the founder or the leadership team is looking at where do they need complementary skills? What things do they want to offload for themselves? And finance is almost always one of those things we don't want to do any longer than we have to. But I think that's a nice and instructional way to think about like how a leader might be bringing on fractional leaders is really looking at what skill sets do they know someone else can do better than them as they grow.

So the benefits for companies are clear. Fractional leaders can bring in some new ideas. They have this expertise. And this approach can, in some ways, democratize access to senior talent for smaller orgs or ones that are growing and just need a certain amount of expertise for a certain amount of time. What are the downsides of fractional leadership?

I think one thing especially startup founders struggle with is this idea that someone I am trusting to help me grow my organization has multiple demands, multiple expectations, multiple pulls on their time.

They might have 3 different calendars.

Exactly. And I think what I've heard from startup leaders is this idea of like, can I trust someone? Can I trust that they have my best interest at heart if they are not full-time dedicated to my company.

Yeah, I, I think when we speak to some of these fractional executives, they, they have it— the clear communication seems to be a big criteria for how they manage their time. And I think a lot of the executives, they said, they always said that they are like, um, a lifeline for some of the CEOs they work with. So if the CEO, uh, needs them and they need their advice, they're they're on the telephone immediately.

Got it. Communication is important. Accountability is important. And because this is a new and growing management practice, it's, you know, the playbook isn't totally written yet.

Absolutely.

Yeah, for sure.

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OK, so let's turn to advice. So let's say you're an organization that's fractionally curious. How do you know if you could benefit from having a fractional leader? What questions should you be asking to prepare yourself for the decision?

Yeah, I think probably the first one is the most important, where you really have to figure out what's the work that needs to be done rather than what is the role we need to hire for. And that's a big mind shift change for a lot of organizations because organizations are used to just hiring for a role and then just making sure that that role can cover whatever needs that may be. But with fractional, one has to think about what exactly is the work to be done and to think about that very intentionally in the beginning. And then once that has been defined, it would be much easier to define that fractional engagement.

Got it. Because it might, if they define that as a lot of work, they may need that full-time leader.

That's right.

And just to pick up on your question there, Curt, in terms of what questions should you ask yourself before you even know, I think it's about is there an area of business that would help in your growth if you could accelerate it? If you could put an expert into that area, maybe it's marketing, maybe it's product, maybe it is finance. If you had expertise in that area, would it help accelerate your business growth? And I think that that can be a very business-centered way to frame it up.

Let's say my company has answered those questions and we decide to hire a fractional chief marketing officer, for instance. How do I find good candidates? Is there a fractional worker agency to go to?

More than one.

Yeah, already?

OK. There are so many. In fact, we interviewed someone for the article Michael in January who was just starting a fractional brokerage.

Oh, okay. So you got brokers, fractional headhunters.

Exactly.

That's right.

And when I wrote to him, I think it was last month, and had said, hey, can I send you someone to speak to? He said, I'm pulling in 1,000 people per month. I can't speak to everyone anymore individually.

Wow.

And so that just speaks to the acceleration of people who are craving this kind of work and really to the imbalance of supply and demand right now. There are a lot of leaders who would like to be fractional leaders and far fewer companies who are ready and excited about this opportunity at the moment. We think that's changing.

So let's say you go out and find some, some candidates. How do you How do you choose? Are the criteria different?

I would say two things. One is it's really helpful to have someone who's grown up in the field of marketing versus someone who has, say, grown up in operations and switched to marketing or something like that. The reason for this is that often what you're asking a chief, a fractional chief marketing officer or fractional anyone to do is to both be your strategic partner and your tactical sleeves rolled up partner. So you want someone who's as comfortable sort of getting in and doing some of the, you know, social media, for instance, as you are someone who can be a strategic partner to you. Number 2, I would say you want to know that that person has experience in context switching. So consultants are classically trained in this. Other people might have those experiences from other aspects of their lives or ways of working, but you want to know that they can switch in and out really easily because that will benefit you as a leader.

And I think it is important to be able to ask some questions about how they might work if they're working part-time or on a fractional basis, and to also ask questions about their expectations about the role's longevity. Because of course, what defines a fractional role is that it may not be a permanent role. So with that, you can really sort of dig into the motivation of why they're applying for that role.

All right, so finally, after you found someone that you want to hire, how should you integrate them into the organization and make sure there's accountability and structure for their work? Like, what's the process that you recommend here?

This is probably one of the most delicate pieces of this, actually. And I think it comes back to the sort of the definition of what this is. A fractional leader ought to be considered a part of your leadership team. Number one, include them in the key leadership touchpoints, much like you would do for a full-time hire. Make sure that they have the opportunity to build relationships with everyone in the organization that they need to work with, et cetera. But really, part of the, the fractional will do a lot of the hard work to make sure that they are there at the right times and in the right moments. But the reality of being in a fractional role is that they're— you're not there every single hour of every single day. And so your job as the leader who brings them in is to make sure that they are in the right points when they need to be and that you are giving them the context they need to be able to do their job on an ongoing basis.

Yeah. Is there a problem with I forget what this is called at agencies, right? When you— when a company hires like an advertising agency, there's like a— it's not scope creep, but it's a—

yeah, scope creep. Yeah.

Is it scope creep? They will just exploit an agency, like come up with a new presentation, please do another ad for this. And, and it's hard for agencies to say no. Is that an issue here where fractional leaders do feel pulled or people feel like full-timers?

It's absolutely an issue. I can speak from experience here.

Okay.

I'll tell you what I've learned and how I approach these things at this point. One of the things I've realized, it's really important going into this relationship to— and it is a relationship, by the way, with all of the intricacies and communication challenges and opportunities. But one of the things I've learned going into it is that together with— it's usually a CEO who hires me— together with that person, I want to sit down and say, here are the realms in which I will support. And those realms can be quite broad, but almost always in our initial documentation is these are 2 or 3 key things that are really important to driving the organization forward. And then I make sure I have an accountability session with the CEO once a week at least, where we're checking in and saying, okay, these were the priorities we started with. Are these still right? And so, what you're doing as a fractional professional leader is really constantly coming back to, hey, have I got my prioritization right?

So Amy, kind of got to start it there from the individual perspective. What does it take to be successful in this type of role? How do you structure your time, your presence effectively? How do you know that this working relationship is right for you?

Yeah, strategically, my goal is I want to show up when they need me for the meetings that they need me in and, and to be there seamlessly for them so that they are not feeling like, where is this person that I need?

One of the things that some of the fractional executives had told us was that many of the people who find their way to fractional are coming from long corporate careers. And one of the things that they have to people identify before they go into fractional is what are they good at? And what will, you know, what will be their brand, that one skill that they want to really tell people that, you know, this is what I'm really good at, and this is how I can help contribute to your company. And so defining what you're really good at, and it's difficult after a lengthy corporate career where you become a bit of a jack of all trades, but finding that sort of expertise, is also a good first step.

Got it. So really lean into the part where you can make the most impact.

I would just, I would just add to that 100% agree. What that impact looks like depends on the stage of the organization, the stage that the organization is in, right? And so knowing what your sweet spot is and what, what stage of an organization's growth you can best help. Really helps you narrow in on the kind of role that would suit you best.

So if someone decides to make the transition from a traditional full-time senior leadership role to a fractional role, what adjustments do they need to make in the way they work? You know, do they need new skills or is it mostly a mindset shift?

Yes and yes. It's both. I will say just, you know, I'm helping someone do this right now. And one of the things that I encourage is titrating into it. Don't try and go all in all at once. Maybe try and get what I call an anchor client, someone who's— maybe it's 4 days a week, maybe it's 3 days a week, but it's enough to cover your base costs and just start with one. Start with one, and it allows you to learn some of the skills that you need in order to work this way. It allows you time to set up an LLC or whatever you might need. Depending on your jurisdiction. It allows you to play with the boundaries that you need to create to have a non-full-time role. It allows you to understand what it means and, and, and what, what meetings you want to attend, what meetings you don't, etc. And it gives you a little bit of space to sort of make mistakes in that realm so that you gain the confidence to be able to take on more.

And I think there's an ecosystem popping up related to fractionals. So there are communities, the ones that we're in is Fractionals United. There are also educational programs that we know of, it's called Voyager University. And they're also delivering, you know, just even one-day seminars on how you transition from a corporate life into a fractional world. So there are a lot of resources out there and the community is willing to help and provide information for those who are fractionally curious and want to take the step in.

So to close, let's return to the bigger picture. We've already seen huge growth in just the last couple of years and the number of people who want to have fractional roles. What has to change within companies and organizations to scale this and make it more mainstream or just more of a common practice?

I think just awareness. Of course, I have some bias here being a fractional leader, but I think that's really the way to see it for many companies is it is an opportunity to access leadership that otherwise you couldn't afford at an earlier stage or at a younger growth stage for your company. So I think number one is simply awareness. And then number two is helping companies build skill sets in incorporating and bringing in people who are not there every hour of every day. And that, that is a change in the way that they work.

Yeah, to add on that, I think companies need to think really long-term strategy about their human resource policy and their talent because as we all know, demographics are changing. People are living for longer, even though our company structures have not yet caught up. If you're a company trying to look into sort of long-term human resource strategy, we have so much senior executive talent on the table. As we all get older, we still hopefully will lead still very productive lives beyond 65. And the question is, I think this type of alternative working practices is also a way to retain this expertise within companies and to also make sure that you— there's some, you know, ways that you can still participate in the workforce beyond these mandatory retirement ages as well. So I think there's that sort of long-term mindset shift that would need to take place. And that would be a really interesting way for companies to just adopt a very different mindset.

Yeah, I was definitely thinking about that as you were talking about how this can just be a different kind of bridge to retirement for a lot of senior executives with a lot to offer, but just not the energy or time or will to take on a full-time role, right?

Yep, that's right.

Tomoko and Amy, it's been really great. Thanks for coming on the show.

Thank you for having us.

This has been such a pleasure. We could talk for hours on this. So thank you for inviting us.

That was Tomoko Yokoi and Amy Bonsall. Together, they wrote the HBR article, "How Part-Time Senior Leaders Can Help Your Business." HBR On Leadership will be back next Wednesday with another handpicked conversation from Harvard Business Review. If this episode helped you, share it with your friends and colleagues. And follow the show on Apple Podcasts, Spotify, or wherever you listen to podcasts. While you're there in the app, consider leaving us a review. And when you're ready for more podcasts, articles, case studies, books, and videos with the world's top business and management experts, find it all at hbr.org. Produced by Mary Dooe, Anne Sanny, Hannah Bates, and me, Amanda Kersey. On Leadership's team includes Maureen Houck, Rob Eckhardt, Erica Trexler, Ramsey Cabaz, Nicole Smith, and Anne Bartholomew. Music is by Coma Media. Thanks for listening.

If you've ever hired for your small business, you know how important it is to to find the right person. That's why LinkedIn Jobs is stepping things up with their new AI assistant so you can feel confident you're finding top talent that you can't find anywhere else. Hire right the first time. Post your job for free at linkedin.com/onleadership, then promote it to use LinkedIn Jobs' new AI assistant, making it easier and faster to find top candidates. That's linkedin.com/onleadership to post your job for free. Terms and conditions apply.