ve-Binar: Are You All In? The Commitment of a Fractional or Interim Executive

Good morning or good afternoon depending on where you're dialing in from. Great to have you here. My name is Andrew Miller, one of the partners here at Vendux. I'm with Henning Svinem, the founder and managing partner of the firm. Today's webinar is entitled are you all in the commitment of a fractional or interim executive? Really looking forward to this chat today, Henning.

Yeah, me as well. Thank you Andrew for facilitating this. This webinar for sure, for sure.

So just a couple of quick housekeeping notes. As Henning just mentioned, we're going to keep everyone muted for the duration of the and we'll have a Q and A at the end. Please use the chat function in zoom to submit questions and we'll cover those during the Q and A. So now onto the topic of the Vibana Henning Back in May we talked about control and how's the how there is this perception that full time employees are easier to control more than contractors. Is there a similar issue around commitment?

Well, it seems for some owners, founders or CEOs that we talk to there is. It does come up a few times in conversations. And then recently I received an email from from a startup founder. He sent it after we had discussed the option of a fractional sales leader. And by the way, with his permission, I'm quoting, he wrote, I'm not completely comfortable bringing in an outside non committed part time person to figure our sales process out at this stage.

How did you respond to that?

Well, I was intuitively going to respond out of the fact that we've been doing this placement of interim and fractional sales leaders now for three years. And I wanted to share my belief that those executives tend to be more committed because their future work relies upon referrals and a successful track record and because they are paid on the understanding of goals and objectives being performed and not merely based on attendance. But then I was wondering if that is actually true beyond what I believe, what I've observed in the last three years and commentary we receive from our clients. Is there true evidence that a fractional and interim executive is equally or more engaged and committed? Are there scientific studies? So what I did is not respond immediately, but I went out and did some research.

Okay, very interesting. So research on this topic. Who would be researching a topic like this? Maybe the SHRM organization?

Yes, the Society for Human Resource Management definitely is one. And I found a number of other studies coming from a more academic background. But I did start with the shrm and they start out by defining what is employee engagement and commitment. And sort of their definition of that is around employee satisfaction with their work and pride for their employer. That's one big aspect of their definition. The second one is that commitment and engagement is the extent to which people enjoy and believe in what they do for work. Lastly, it's the perception that the employer, their employer values what they bring to the table. Because this commitment requires an investment of time as well as energy, mental, emotional energy. Most people make this commitment with the expectation of reciprocity. In the traditional world of work, employees and employers have made this agreement. In exchange for the employees commitment, the employer would provide forms of value such as secure jobs, that's a long term commitment, or more shorter term fair compensation. That's the traditional model.

The traditional model. But you know, we all know today we're looking at such fundamental changes in the work context, the work, the workplace itself. And doesn't that weaken the applicability of this traditional concept of reciprocity? I saw a stat something like, you know, by 2027, more than 50% of all of the US workforce is going to be engaged in some form of freelance or gig work. So what are your thoughts or what does the research say about the impact then with the concept of reciprocity?

Well, definitely, it's definitely different. For starters, we'll have to look at the fact that temporary employment can take a broad spectrum of arrangements. There are fixed term, we talk about fractional and interim. There are on call employments, there are temp agencies, there are in house temporary placements, there are independent contractors. And then this temporary employment comes in at various levels of the organization. And as people on the call know, we're in the, in the executive placement part of this hierarchy. The traditional argument is that all of these external workers don't really need to identify with the company or embody its values. And that way of thinking is tied really to, I call it traditional, but it's outdated. It goes further because the outdated view is that external workers only fulfill ancillary supportive roles that are minimally important to the business, if any importance is tied to them. Today, however, and I'm going back to SHRM again because they did research and 64% or 2/3 of the organizations they quizzed about this state that external workers are critical for the company, critical for the company to meet their goals in operations, their ability to innovate, to execute their strategy. And because of that, because external workers, contractors often have now such a size, a rank and an impact, they really can't be considered a necessary evil anymore with minimal expectations towards their contributions. Instead, they need to be viewed and treated as a critical part of a company's workforce and be considered a key factor for success.

Yeah, for sure. Yeah. And you know, I think you and I are certainly in the midst of this in terms of the level of seasoned executives we place the clients that we work with. So what does the research tell us about levels of commitment in this context?

Yeah, we mentioned the concept of reciprocity earlier. In the traditional setting, in a temporary setting, this commitment of an employee is simply replaced with other types of bonds because that's what commitment is, it's a bond. The traditional ones like sustainable work relationship, job security, career development, they don't apply to a contractor in the short time frame they spend in a company. Does make it more transactional and the obligations and the bonds are more transactional rather than being relational in the traditional sense. Transactional obligations can be shorter term, like fair compensation, a fair fee structure, but they can also be longer term, for example, receiving a testimonial at the end of the engagement or receiving a referral. To your question, what does research say? Well, if you were expecting to see a lower commitment or a lesser value around the transactional type of bond, that can actually empirically not be proven. There are several studies that have found indeed that temporary workers can sometimes display even higher levels of commitment than permanent workers. And most of these studies actually found very few statistically relevant or significant differences between temporary and permanent employees. And in this really or around this really important relationship between organizational commitment, trust and fairness, the things that make a great work culture, the research shows that that's equally important and equally existent for both temporary and permanent employees.

It's really interesting. Hang earlier you mentioned that for temporary contractors, their future work relies on referrals and a successful track record. Is there research that validates that statement?

Yes, there is. And I'm citing here Yvonne von Rosenberg, she's a researcher on workplace commitment and she calls what she's observed and research a substitution of organizational commitment. The, the transactional obligation or the transactional bond for a contractor that I mentioned earlier can be of long term nature, focused on career and profession. And so her research has shown that for a fractional or interim executive that is investing their time and their skill in several part time, short term, parallel engagements, their main attention has to shift towards securing future assignments. It has to, because that's how they're able to win the next assignment. And they do this, they shift that attention through their performance and through building their professional reputation.

Okay, just a quick message out to the group with us. Please be thinking about questions and you know, as soon as you're ready, just put those in the chat box. Henning, I hear on a regular basis from the executives that we work with. I've heard many of these folks say I don't want to be associated with a failure, a failing business. So it feels to me that as a senior executive, we're even more invested in this concept that you're referring to in terms of reputation.

Yeah, well, I think so too, because if we narrow the focus from all temporary workers to just temporary executives like fractional or interim CEOs, CFOs, CMOs, CROs, or VPs of sales, these tend to be very seasoned individuals and they've held permanent leadership roles for the last 20 or 30 years. And they're now coming into an organization to take a very similar leadership role, just on an interim or fractional basis. And the executives who hold these roles are intensely committed to doing good work. I mean, the first reason is they're just wired this way. I mean, there's a reason why they've held leadership roles throughout their career. They're wired that way, then they are committed for a relatively limited period of time, and that makes it easier to stay on course. Six or 12 months is a period that most of us can foresee. Five to ten years, not so much. Many things can happen. And very simply, very important, these senior executives understand the impact of both their arrival and their departure because. Because they have seen the good, the bad and the ugly of people, changes in the organizations that they've been with in the past. And as they value their reputation, they're not going to make any sudden moves that will reflect badly on them.

Yeah. So with all of this research, did you eventually respond to the founder who sent you that email that you referred to earlier?

Yes, of course I did. I shared some of the research, some of the links to the documents that I found, as well as the conclusion, my three top observations of why contracted interim or fractional executives are more committed and more engaged than many of their permanent peers. The first one is reputation is key to securing the next assignment. The second is they are keenly interested in expanding their network and obtaining a referral from every assignment. And then thirdly, they're sometimes in a try before you buy situation where the temporary assignment may lead to a longer term employment. And those reasons are. At least two of these reasons are always in place. And therefore I believe that interim and fractional executives are at least equally committed if not more committed and engaged to working towards achieving the goals of the organization that they were contracted for.

Cool. Very good. Well, that. That's terrific. Really insightful, Interesting topic. Just looking at the chat bar here, couple of messages. So let me ask the first question. I just, I want to shift over to the Q and A session now. Henning. So at the highest level, this subject of commitment, right, if you're the client, the employer, and we're listening to them, the subject of commitment actually could be considered a bit of an objection from a prospective client when considering the pros and cons of, of bringing on a fractional executive. So what's your thought on Is this really. Is this an objection? And how does this stack up against other possible objections when you talk to a prospective client and they're thinking about bringing on a fractional leader?

Well, I do believe it is an objection. It is one of those thoughts or concerns or one of those perceptions that founders, owners, CEOs have when they consider the contractor route. I believe it lines up very well with other objections because they all come down to return on investment. And, you know, like so many things in the business world, there is no guarantee, There is no guaranteed return. And so as people are getting ready to make the investment, they're using their knowledge, their past experience, their perception to assess whether the investment will yield a return and yield the return that they're looking for. And the question of commitment is very foundational in this scenario because the expectation is that somebody who is not committed isn't as performant and providing as much return as somebody that is. And so the question is not to say, or the rebuttal for the objection is not to say this doesn't happen.

Or.

The commitment is not important, the work will be done. The rebuttal is really to go back to what we reviewed the last 20, 25 minutes, which is that there is no scientific evidence that says that there is a lesser degree of commitment. It's a different commitment, but the commitment is still there.

And at least from the executive point of view, going into a fractional or an interim situation, the commitment is certainly there from the perspective of delivering results, because in the end, the client really wants results.

Correct?

Correct.

It is about the results. It's not about time spent. And when we think back to any employment situation that we've been in or employees that we've dealt with, there is always a certain sense of I'm being paid for presents, I'm being paid for eight hours a day. I'm being paid to keep this chair warm. And all of these partial commitments or partial considerations from an employee point of view do eventually translate to something or don't apply in the contractor world. And so they have to be replaced by something different. And that is performance. Performance meeting goals that have been set before. Being task oriented, being short term results oriented.

Yeah, yeah, exactly. So I've got an interesting question here coming in. Do you have data that supports whether or not the contractor is more likely to challenge leadership because they don't have all of their marbles in one organization? This seems to be a benefit to me internally. I have seen long term employees afraid to speak the truth sometimes and then. Yeah, so let's deal with that.

Yeah, that's. Personally, I think that point is absolutely true and valid and a key difference between an employee on the inside and an outsider coming in. I mean there is a reason companies for, for centuries bring in outside opinions when they need to go through change processes. I'm unaware of any research that would talk to this specifically around fractional or interim executives, but I'll go and do some research on that topic and we'll share that on, on our webinar website when there are any results, when I come across anything.

Great point. Another one heading here. With the shortage of experienced trained leaders on the market, the time and investment for the hiring organization to find the right one, how should we package the low risk fractional solution as a temporary committed solution for the individual until the right leader is found for a smooth transition? So this is around. Yeah, it's packaging, presenting, articulating a low risk solution here for an interim leader.

Yeah, I mean we've done placements in that exact scenario where the company was out headhunting recruiting a permanent leader and they needed somebody to step in in the interim. I think from a, you know, I'm not sure I understand the word packaging correctly here, but I, I would maybe call it positioning. From a positioning point of view, that is probably less of a change management implementing, change type position. It's more a role where you're keeping the lights on and where you're executing against existing processes with existing staff. I think that is more what an interim position is about or an interim role is about.

Do you, you know, on this point, I suppose a side question is do you ever see a situation where an interim leader is brought in to also help in the whole recruitment process for the more permanent individual to be in that role?

Absolutely. And one of the reason that makes perfect sense is because we're talking about senior executives who've Who've hired throughout their entire career who are subject matter experts in their area. In our case, that would be sales. And when the founder or owner or CEO does not necessarily have that experience, it is key to involve someone in the hiring, in the interviewing and hiring process that has done that before for this very role, in this very function.

Yeah. And who may be dispassionate and more objective and you know, not, not vested in any particular way other than for the best outcome.

Perfectly put. There is those are other reasons to involve an outsider in, in the, in the process. Absolutely correct.

Here. We're just getting clarification from Michelle. So packaging equals marketing the fractional solution as a product for a temporary solution. So it's the selling and the marketing of the interim short term solution.

Yes, Michel, I appreciate the question. Now I understand a little better. There is an element of productizing the solution. And so far I have found that it's equally beneficial and helpful as it.

Is.

Difficult and a struggle if there is a, a clear, clearly defined focus area for the fractional executive. Like for example, to say we want to bring you in to hire our sales team or we want to bring you in to write our playbook, in that case, having it productized, meaning you know exactly what the playbook's going to look like. You can provide an outline and there is a sort of a fixed rate for creating a playbook or fixed rate to say per hire or the first two hires cost you this much and the third one this much. That would be productizing. And that's helpful. But it starts with the question what does the business want to accomplish? And not in every case is it that clear and that limited. There are enough other cases where it's a less defined in an ever changing scope for the assignment. In that case, productizing it is difficult.

Having a question about the research. So you, you did a lot of research on this subject. Do you have sources? Is there some place that you can provide or share the sources of the research?

Yes, I realized that. I talked about it, but other than one name, I never even mentioned the name of the researcher or the institution. So how about if we put this. Put if I put a list out together with the recording of this video on our, on our webinar page. And we'll send a link to all participants as soon as that's out there. And that should be this afternoon or tomorrow morning.

Cool. Great. Very good, folks. Any other incoming questions, topics that you want to bring up, suggestions for a future webinar? Now's the time otherwise, just, you know, you have our contacts. Feel free to email henningndux.org or andrew.millerendux.org we are, has your client changed its position?

Yeah. So the client who sent the email, Michel, the answer is no, he did not change his position.

Good question. Excellent. So, yeah, we are, we're growing, we're getting busier. Demand is out there. Looking forward to engage in one form or another with all of you over time. Thank you very much for your participation. Great questions. And we will do this again next month with the next subject. And please feel free to send feedback, questions or suggestions for the future. But again, thanks very much. Great to see you here and we'll see you next month. Thanks, Henny. Thank you very much for your time and input and contributions.

Absolutely. Thank you, everybody. Thank you, Andrew.

Bye bye. Thank you. Bye, folks.