veBINAR 2: 5 Reasons to Contract a Fractional or Interim Sales Leader

Well, very good. As I say, good morning, good afternoon, wherever you are. Greetings from San Francisco. My name is Andrew Miller. I'm one of the partners at the Vendux Group. I'm here with Henning. Great to have you. So just a couple of quick housekeeping notes before we get started. We're going to keep everyone muted for the duration of the webinar. There'll be a Q and A at the end. Use the chat function in zoom to submit your questions and we'll cover those during the Q and A. Today's topic of this webinar is 5 Reasons to Contract a fractional or interim sales leader. So I'm going to cut over to Henning. Henning, good morning. Can you please just introduce yourself briefly and then jump into the first key question for today. Why are there only five reasons to contract a fractional or an interim sales leader?

Absolutely. My name is Henning. Henning Srinam. I'm one of the co founders at Vendox and I need to mute people here, apologies, but. So I'm one of the co founders here at Vendax. And certainly over the course of the last almost three years, we've seen more than five reasons why fractional and interim executives are hired. Each founder, owner, CEO has their own reasons for contracting. And you know, we typically see different scenarios. There are probably three basic ones. Pre or early revenue, a small founder led sales team and then, you know, larger teams stuck at a certain plateau, 1 million, 5 million in ARR, needing a new skill set. Those are three basic scenarios in which we place. And the one commonality between all of those scenarios is the fact that there is a challenge, a problem, and in our case, a problem around sales.

Yeah. So what are the five reasons that you want to highlight?

Well, if we look at fractional and interim sales leaders, they have the right talent, they are immediately available, they come with an outside perspective, they're ready to take charge, and you only pay what you need. So those are the five reasons that I want to highlight today. And some of this might, some of you might think that that sounds too good to be true. So let's unpack those five reasons a little bit and talk about them. The first one I said was the right talent. So fraction of interim sales leaders as independent contractors have the right talent to get the job done because some of the best talent available is the talent that works independently. Because in order to be successful as an independent solopreneur, you must not only have the skills to do the task well, but also run your own business and execute it well enough to secure a referral or a testimonial, all geared towards the next gig. And it may be a bit Darwinian, but it's true that in an environment where only top notch professionals do well, the others fold their tent and find a job. And especially for the small and medium sized organizations that typically contract a fractional sales leader, the broader skills of an independent are essential to their success. Things like simultaneously and quickly assessing situations, staying focused on results, showing resilience in the face of adversity, and communicating well at all levels of an organization. To mention just a few of those skills.

So what you were saying earlier, it makes perfect sense. An independent contractor is a solopreneur and they run their own business. So as such they've got all the skills of a CEO running all aspects of a business. So what I was asking is about the second reason. Availability. With a recession looming and tech companies beginning to lay people off, shouldn't hiring be speeding up?

Well, I have not seen how more available talent actually speeds up the process. I think in some cases it's just the opposite. In the last six to 12 months, when there was some sense of urgency, a sense of scarcity of talent, some hiring processes went faster than normal. And with more talent available, hiring manager will again have more of a sense that the very best talent is just around the corner. But even under normal circumstances, hiring employees, especially executive talent, can take months, many months. The hiring manager needs approval, the job needs posted, then the wait begins. Applicants are identified, the interviewing, the vetting process, the offer, the notice period when you're hiring somebody out of employment, then when they're on board, it takes a few weeks and sometimes months to get a new employee onboarded, oriented and productive. I would argue that fractional interim executives can get you to a much quicker start because they're typically ready to be effective and on the job within a week or two. They typically run multiple fractional assignments in parallel and they're used to starting new projects on a short notice. So there is virtually very little or no ramp up time to make them effective.

Okay, so now after a much shorter hiring process, the fractional or the interim executive starts the engagement. What makes them successful and maybe even more successful compared to a full time hire?

Yeah, of course you could argue my viewpoint is a little biased on this, but, but I think one of the reasons that an interim or fractional sales leader, an independent contractor, is more successful or can be more successful is an outside perspective that they bring what they bring. As a contractor Is objectivity to a client coupled with breadth of experience. Because they've been in many organizations before and have seen the things and have fixed the things that this new client is about to embark on. And they can see things that someone who is on the inside of an organization may not be able to see. They can put things in perspective relative to all the other experiences that they've seen. And their role is to assess and then provide candid recommendations and execute candid actions. And that's something that, frankly, a number of organizations struggle with. The outside perspective is broad because the executive has worked in multiple organizations before and has addressed multiple problems. It's a specific expertise that they bring. You hire a fractional or interim sales seer for that specific expertise that the organization is currently lacking. They speak freely, and they tell clients things straight up. There is no history or baggage that they have to be concerned about. They're generally less emotional when making difficult decisions. And as we all know, sometimes they're even brought in to make difficult and hard changes in an organization. And lastly, as independent professionals that are relying on their reputation as the key driver for their next gig, they are fully vested in the success of the client. And so they really come in with a strong desire to serve and to make a difference.

Yeah, thanks for highlighting. That's super useful perspective. Having worked with lots of third parties like advisors and consultants, I've certainly seen the value of not having all of the internal baggage. So in the context of consultants, do you see a difference between them and fractional or interim executives?

I do. A fractional interim executive is not a consultant. Or maybe better worded and better phrased, the role that they take is not consulting, because as an executive, you might be taking on consultants, consulting roles, or coaching roles, but those are different from a fractional or interim executive role, because as such, you come in and you take charge of an area of your area of expertise, the one that you're brought in for. As an executive, they have the track record of taking initiative. They are what I call organizationally aware. They know how to talk to different levels of the organization. They understand the dynamics within the team. They have excellent project management and communication skills. And you could argue that that's something that consultants bring or that they bring into a consulting gig as well. But they assume, as I said, executive responsibility with a clear mandate to act on the client's behalf. They're often overqualified for the assignment simply given that they've done the same thing before, and they know the challenges that they're tackling and they have addressed those challenges or those issues before successfully for other clients.

Yeah, got it. So let's, let's talk a little bit about cost. You mentioned that you only pay for what you need with a fractional or an interim executive. I think that was your fifth or last reason. So aren't these executives actually more expensive compared to full time hires?

Well, there are a couple of ways to look at this. Often if you compare just cash comp, cash compensation, they are more expensive. They look more expensive. But you have to look at, obviously compare the cash that you pay out to an executive on an assignment versus the total cost of a permanent employee, which as we all know is not just salary, but there are all kinds of peripherals. Social Security, holidays, sickness allowances, training, insurance company car, laptop, mobile phone, the recruiting and the layoff cost at the beginning and the end of an employment and probably many more that I've, that I've missed here. And they all come into that total comp picture that we need to look at to make the comparison against, against cash compensation of a, of a fractional or interim contractor. And then another way to look at it is opportunity cost. The, you know, if you decide not to hire because maybe as a business owner you cannot or don't want to afford the full time hire, or if you wait until you can, opportunity costs could be missing revenue. It could be the cost of making bad decisions. In a lot of cases, a founder may not have sales leadership experience and so they, they run trial and error scenarios until they get it right and there's an opportunity cost associated with that. Then founders might spend their time inefficiently doing things that they're not really good at and where they really don't have the experience in. And they might be spending that, they could be spending that time on something else where they could have a much bigger impact. So cash comp versus total cost and opportunity cost are two ways to look at this. And in both cases, the interim or fractional executive comes out ahead. But then most importantly, because a lot of the assignments that we do are fractional or part time, you only pay for what you need. I used that phrase before. If you have a small sales team of two or three reps, or if you're building your sales organization from scratch, the skill set, the strategic leadership skill set might not be needed full time. It's only needed for a short time or for a fraction of somebody's time. And so it's a limited duration, a limited intensity of the assignment. And so that is A great place to utilize independent talent. So in addition to doing the comparison cash versus total and opportunity cost, it's this notion of the fractional where you only pay for the time and the intensity that you need.

Great stuff, Fanny. So just in the interest of time, I'd like to open up the floor. If anybody's got any questions, wants to engage in a conversation, please put your question into the chat field. And as you might be preparing to send a question or two in, I think I've got one more for the moment. Henning, if contracting is a much faster process, are companies less careful do you find, and therefore potentially prone to make more bad hiring decisions?

Well, if bad or good hiring was only determined by the length of time it takes, then you might be able to argue that. But I don't think that that is something that is a determining factor here. I think speed is just an indication of the process that a business embarks on. And if the process involves an outside recruiter, if it involves six people interviewing, if it involves, you know, at least having five candidates, if it involves hiring somebody out of current employment situation, that turns into a lengthy process. And likewise as a business, if you're ready to engage a fractional contractor, you define your hiring process equally, you define up front who, who is interviewing, what skill sets are you looking for. And out of those factors comes often a much faster decision that isn't equally that can't be said to be better or worse than a longer full time hiring process. And to wave our own flag here just a little bit, one of the things that we do with Vendax as a matchmaker is that we work with pre vetted executives and we help founders identify what exactly they need to achieve in terms of skills to achieve the goals that they set out. And then we find executives that bring all of these skills to the table.

Cool. I'm going to go to a couple of the questions now in the chat bar. One of them is what is a typical fractional cso? Assuming this is a chief sales officer, what is a typical fractional cso? Generally charge by the hour. And then a related question is how long does a typical interim CSO require last in a role?

2 great questions and 2 questions that don't that are really hard to answer with a precise number. So the second one first about the duration, what we're seeing with all the placements that we've done so far in the three years that we've been in business, they average out to be to be about 10 months. That's our current average of all assignments that we're doing and that we have done, one of the reasons it's 10 months is because most of ours are fractional and fractional assignments tend to be longer than shorter term interim assignments. I do believe that our average will actually increase a little bit, maybe end up being 12 months by the end of this year just because we have more executives in longer term projects. But it's a mathematical average and we have had assignments as short as a month or two and as long as two years. But in regarding the question about the fees, there are so many factors coming into play when it comes to the fee structure. And just this morning I saw some fees being shared in a networking group that I'm part of that were a little different from what we're seeing here. I guess the best way to answer it is that the factors are obviously how intense is the assignment? How many hours a week, how many days a month are we talking about here? What are the challenges that the company faces? How complex is the assignment because that drives the necessary skill set and then the type of the seniority that the executive needs to have. And I give one quick example here. We had a client recently that was looking for someone to drive a change management process in an existing established sales team. I mean, that's obviously a job for someone who has done that before, who is a communicator, who can speak with executive authority and communicate with an executive authority. That's a different price tag compared to maybe the task of writing a sales playbook with little interaction with the actual sales team. I'm always challenged to now put some meat on the bone and give a number. But I would say that an assignment, a fractional assignment that is a day, a week, or 20% of somebody's time can be anywhere from 5 to $12,000 a month.

Gotcha. There's a, there's another question here, Henning. As for the hourly cost of fractional of a fractional executive, what is the, what's the ballpark range that you would be guiding for?

Well, it's equally whether it's expressed in fee per month or fee per hour, it's the same factors that influence it most of the time. Hourly rates. I would only look at hourly rates really when it's more of a less intense coaching, maybe training kind of engagement, maybe two hours a week. That's when I would look at an hourly rate. We've seen hourly rates from 80 to $450. And the more common range is somewhere in the neighborhood of 150 to 250 and if it's just an hour a week, maybe $300 an hour.

Yeah, these are tough questions around pricing guidance. These can be very specific, very client and opportunity specific. I have totally different kinds of question kind of question from the client's perspective. So I'm working with you. I'm thinking about a fractional or an interim exec and I'm wondering how can I bring somebody in as a fractional or an interim executive who doesn't know anything about my product, my company? You know what, what are the risks associated, if any, with having somebody on a part time basis who doesn't really know the product?

I would and I've been asked this question before but from clients or in networking leading up to assignments. And the starting point is the question of what you want the executive to accomplish, what is the problem and what are the things that the executive will do while on the assignment to get to a solution and if it is a I'll take this example I cited earlier that the change management in an existing sales team and change management would be around more process, better structure, more aligned messaging. And in that case I would argue you don't really need detailed knowledge about the product or the clients. You have to be able to quickly adapt to the scenario. But you don't need to be the person with the most product knowledge or the most market knowledge that's not what you brought were brought in for. And that can be different if the assignment does require that product or customer knowledge and if it does, then we would bring in somebody that has that depth, that has that product knowledge, that has worked in this space before, that understands the decision making process with clients that has worked with the same decision makers before. So at the end it's all a question of establishing the right criteria that the executive has to meet and then bringing in somebody that checks all those boxes.

Cool. There's another question here Henning. In an interim situation, how does the CSO put up front that they do not expect or want the job on a long term basis?

So I would say that this goes back to setting the expectations even before taking this role and entering this role. So one of the things we talk about with a founder, owner CEO when scoping an assignment is the question of what is your mid and long term vision? Do you look at this as a project? Is this a limited time? In some cases we do hear that the founder, owner CEO says yep, I would like a person that is interested and that might end up being becoming a full Time employee. And if that's the case, we go back when we match and look for executives and talk to the executives about that interest. And if that is not a, if that's something that the executive is not interested in, we wouldn't be placing that person. So I think it all is a matter of setting expectations right from the beginning. Now sometimes when you're in it in an assignment and the question didn't come up before, but now it does come up because maybe the business owner really likes the executive, but the executive isn't thrilled about staying full time or permanently, you just have to say this isn't for me. I'm here to, to help you get this ship righted and on course and then I will help you find my replacement. And I think that's one of the big benefits of starting fractionally is the fact that if you are a business owner or a founder or CEO that has less experience in hiring full time sales leaders, having someone on your side that has done the job now for some time, that is familiar with the company and that has hired him or herself, sales leaders before use that expertise. And that is one of the core principles of an executive in this space is to know how to replace themselves at some point of the assignment.

Yeah. Interesting. I've got one more pressing question and if there's anybody else that has any questions, please put, put your question in the chat bar. But Henning, have you seen successful cases where fractional or interim leaders can build strong and effective teams versus a full time internal executive building those teams?

Well, it's difficult to have the comparison because often within companies it's an either or approach. You either hire a sales leader full time or you contract somebody fractionally and then they're tasked with doing the same thing. In the cases where you actually have a direct comparison is when one gets replaced by the other. When you have a fractional sales leader doing some groundwork and some strategic work being replaced by a full time hire and then you can compare or the other way around, you have a full time hire that was not successful and then a fractional contractor comes in and takes over. And that later scenario is actually one where we've done a few placements. It's this trial and error that I mentioned earlier under opportunity cost that businesses go through and founders go through when they don't have necessarily the experience or don't have it yet. And so they hire and fire sales reps or sales leaders and go through the experience. Since we've done those later cases, I can definitely Say that we've seen the success of fractional executives in building those teams in all the things that we touched on before, like the fact that they have likely built a number of different sales teams in a number of different organizations before. Those are all things that will likely make them very successful in that task. And if you want to do the comparison to a full time hire, then it's not so much the type of employment but rather the past experience that your that play a part here. So a fractional that has done that several times before in different environments is likely more successful than maybe someone that was promoted from within to now be the sales leader, but for whom building the sales team is the first time around and then you have the trial and error.

Great. Well, really interesting, very useful, really enjoyed this. I know there's a number of people here. Oh, do we have room for one more question? Let's go with this. Are there any liability concerns with a fractional, with fractional or interim executives, say for a lost business opportunity or a sale? That's an interesting question.

That's an interesting question. We talked a while back about the element of control. How do you control a full time employee versus a contractor? And under that banner, the same, the same pieces, the same opportunity applies in setting up the contracts between those two. And so if liability is a concern with an employee, it is a concern with a fractional or if it's not, then it's not. So I think that again is not so much related to the type of employment, but rather the specific individual and the liability. In that case, the example was loss of a customer or not winning a customer or a deal. If it's a full time employee, there's really no, no way that you can hold someone liable for it unless you, you put provisions into contract. So that's how I would think about this. Think about it from a contractual basis.

Yep, good, good, good perspective. So there's, there's a number of folks here. So whether you represent present fractional or an interim sales and business leader, or you are potentially on the client side interested in the possibility of bringing on a fractional or interim executive, please feel free to reach out for any kind of an exploratory conversation that you'd like to have. We are easily available. Reach out directly. Go to the website. But for the moment, thank you very much for your time. Henning. Thank you. Thanks for the great questions and the engagement. And until next time for our next webinar, have a great rest of the day. Great rest of the week. Stay healthy thanks, everybody.

Thank you.