Month: April 2022
What a Fractional Leadership Engagement Looks Like – Part 2
At this point, you understand at a high level why bringing someone onto your leadership team who’s built a business like yours before will help you. In Part 1, we illustrated a high-level Fractional Leader engagement with a real-life business example. Now let’s take a look at the some of the details involved in a Fractional Leadership engagement.
Accountabilities and Deliverables
You and your FL will agree to certain deliverables or areas of accountability and a time frame in which you expect to see the results you want. This is a critical element of any type of Fractional Leadership engagement.
Here are some examples of the deliverables one Fractional Chief Sales Officer (FCSO) included in an agreement:
- Lead sales team to achieve the company’s already-established targets for the year
- Participate in weekly leadership team meetings
- Document the sales process and ensure the team is trained in it and follows it
- Determine and implement measurables to which she will hold herself and the members of the sales team accountable
- Collaborate with the head of marketing to ensure all efforts are absolutely in tandem
- Evaluate current CRM/technology and improve or revamp as appropriate
- If a client has implemented the EOS management framework,
- Hold Same Page Meetings™ with the company’s Visionary (an EOS® term that usually refers to the CEO).
- Participate in EOS sessions with their EOS Implementer®, if applicable.
You and your FL will structure the accountabilities based on the FL’s proven process and your own unique needs. The important thing is that you and your FL get absolutely on the same page regarding the deliverables or accountabilities so there is no misunderstanding or crossed wires later on.
Fractional Leaders make three primary types of time commitments: X number of (i) days, (ii) half days, or (iii) hours per measuring period—that is, week or month. Some engagements even involve as much as half-time work; these individuals take on no more than one or two clients. Other FLs work with their clients only one or two hours per week or a half day per month.
You must agree with your FL on expectations when it comes to time commitment because you can’t define the accountabilities or deliverables without knowing how much time the FL has to accomplish them. As Gary Braun, owner of the FCSO firm Pivotal Advisors, says, you cannot expect your one-day-per-week FL to attend five meetings and still have time left over to create sales processes and manage a sales team.
You should also discuss with potential FLs their client load in general relative to his or her proposed time commitment. Mark O’Donnell, Visionary (CEO) at EOS Worldwide, cautions against entering into an engagement when the FL’s client capacity is filled to the max. As business ebbs and flows or an FL successfully enables you to grow, your needs may change.
“It’s set up for failure systemically when they have three to seven clients [if each are ten to fifteen hours per week]. They end up being forced to not do the right thing for one or more of their clients based on a nonlinear growth trajectory of all their clients.”
Another time-related factor is the fact that like everyone else, FLs need and want to take vacation from time to time. If they commit to a certain number of hours per week and a monthly retainer, they build in a mechanism for vacation time in their engagements.
Many Fractional Leaders charge a monthly retainer in exchange for a weekly or monthly time commitment. Some charge for each quarter in advance. And still others charge by the hour. Rates vary greatly depending on a number of factors:
- The time commitment
- The depth of the FL’s experience
- Whether the FL is an independent solo practitioner or using a licensed system (licensees generally charge higher rates than solo practitioners)
- Whether the FL is part of an Organizational Fractional Leader firm (OFL) (OFLs generally charge more than both licensees and independent solo FLs)
- The local or regional market (FLs in major metropolitan areas charge more than an equivalent person outside a metro area)
Because of the extreme variation in the size and type of companies, FLs’ experience level, and market rates in each geography, monthly retainer amounts vary significantly. It is therefore impossible to identify a narrow market rate for each type of FL.
Some FLs charge $2,000 for a half day per month or for one hour per week. Others charge $2,500 for a half day per week. Most charge $4,000 or $12,000 per month for a one-day-per-week commitment. I even know of some FLs whose clients pay about $15,000 per month for a one-day-per-week commitment.
Among those who charge an hourly fee, I have seen anywhere between $125 and $325 per hour. Some, both business owners and FLs, prefer the hourly model.
Finally, some FLs agree on a hybrid retainer/hourly approach with clients by establishing a retainer for X number of hours per week beyond which the FL will bill the client at an agreed-upon hourly rate. Another approach some FLs take is accepting a lower retainer in exchange for an equity interest.
Many FLs, like myself, require clients to pay for each half month in advance, on the first and fifteenth of each month. I personally offer a money-back guarantee on the payment for the first half month if the client and I realize that we are not a good fit.
Others require a whole month in advance. And some require payment for each quarter in advance to take their clients’ minds off money and onto the work they should be doing together since the fees are already paid.
Length of Engagement
Engagement lengths vary from just one quarter to years-long. There is no typical amount of time because the reasons business owners retain an FL vary so significantly.
Those who lose a full-time member of the leadership team or who are just beginning a search process may retain an FL as an interim solution during the process. Such engagements may last only three to six months and end with the successful transition to the FL’s full-time replacement.
Other business owners retain fractional talent because they need an FL’s expertise and leadership but cannot yet afford someone full-time. Engagements like this often last one to two years or longer. They end when businesses’ finances and operations start to require full-time focus and commitment. Once they’ve onboarded the right person, usually with the FL’s help, the FL can help with the transition and step out of the way.
Accountabilities and deliverables, time commitment, cost, payment terms and length of engagement form the foundation of a FL engagement. To help you further define what the best FL engagement is for your business, in Part 3 we’ll discuss a strategic vs tactical FL as well as the categories of FLs, such as organizational, Independent and Licensee Fractional leaders.
Fractional Chief People Officer or Secret Superpower?
“Everyone talks about building a relationship with your customer. I think you build one with your employees first.”
— Angela Ahrendts (Senior Vice President, Apple)
When scaling your business, who is the first person of contact when you need an experienced executive but can’t afford one full-time? You may look for a Fractional Chief Operating Officer or a Chief Marketing Officer. But while you think of whose help you need, there is one person you probably didn’t think of — a Fractional Chief People Officer (FCPO).
FCPO Kaleem Clarkson from Blend Me Inc. told me that he’s currently working with a manufacturing client who wasn’t big enough to justify hiring a full-time CPO. They are in the middle of transitioning to a hybrid-remote work model. Kaleem first performed a workplace flexibility diagnosis. He discovered during the process that their newly hired employees found it far more difficult to learn their job while not physically in the office.
Historically, new employees learned their role on the job by sitting next to a colleague and learning from observation and trial and error. Under the new hybrid-remote work environment, new team members were floundering and unhappy. It would not take long before they began leaving. Among other recommendations, Kaleem walked them through documenting their standard operating procedures making them available digitally so employees can access them no matter their location. Kaleem’s firm is now helping them migrate those new processes into an intranet they keep up to date in real time.
The owner of that business is not alone in struggling with employee dissatisfaction because they are too busy to fully take care of their people. A Gartner survey found that only 13% of employees are fully satisfied with their experience. Engagement and satisfaction are lacking. That is why business owners recognize that they have lost their connection to their most important asset — their team.
As you can see, CFOs and COOs are important, but so is an FCPO.
What the Heck is a Chief People Officer?
But first, what does a Chief People Officer do? A CPO, or head of people’s operations, is essential for guiding your crew and being the glue that holds your team together. They have the skills needed to motivate your employees. Their main focus is improving how your people feel about work, a seemingly nebulous concept, but attributable to tangible increases in both productivity and performance according to almost 70% of CPOs, according to a newly released Adecco Group survey.
Chief People Officers essentially work to hire, train, and manage people-centered activities and staff. They specialize in professional development and performance management. They differ from the HR generalists (whether full-time or fractional), who focus on more administrative and compliance tasks. FCPOs, like full-time CPOs, usually supervise your HR generalist, whether full-time or fractional.
A CPO will also work to communicate the companies’ goals and values and keep everyone connected to them. A good CPO will serve as an advocate for the company to attract and keep the best talent.
Motivation Is Essential
You may think, “If they are doing the work, who cares if they’re unmotivated? We all see results.” False. People who are underpaid or feel unmotivated or unappreciated are more likely to stay with you and not call in sick. That is even more true now during the “great resignation.”
How can a CPO help with motivation? Good question. To understand the answer, it’s important to understand that you’re a majority (about 83%) of people spend up to a third of the workweek in meetings. People are so busy they barely have time to get work done or even breathe!
Now imagine someone helping you clearly communicate your core values and giving people direction.
How would a CPO help your business?
Kaleem Clarkson explains, “It’s critical for leadership and management to be intentional about creating these opportunities to build and maintain both social and professional connections.”
If visionaries and the people who carry out the magic have the same intent, human and financial resources can go hand in hand.
Qualities of a CPO
A CPO’s role will vary based on the company’s needs and requirements because every organization is different. They must be flexible and expert in change management.
What qualities make a CPO successful? They must be organized, and lead through their skills as an organizational leader. Other qualities include being a talent architect, data/technology advisor, culture influencer, they must have emotional intelligence, and lastly, be authentic.
How do these qualities fit together? They must be open with employees and relate to and support them. They should be able to influence and communicate shared values with clients and employees.
If you’re struggling with your team’s performance, happiness, morale, alignment, or motivation, consider meeting some fractional Chief People Officers and see what solutions they offer. You might be surprised.
About the Author
Esther Wolf is a writer in Long Island, New York. You can contact Esther here.
What a Fractional Leadership Engagement Looks Like
Sometimes, illustrating the concept of Fractional Leadership by way of a real-life example can help make it easier to grasp its true value. Consider the following example of one business owner’s experience to better understand what FL engagements look like.
Jack1 owns a design construction firm that focuses on medical offices, employs about 40 people, and has $14 to 16 million in annual revenue. His attention to detail and nearly obsessive commitment to quality work led him to essentially teach his sales, design, and construction teams that all decisions had to go through him. Every deal required his approval and input. He was intimately involved in design proposals and construction projects. Mistakes were unacceptable and his people did not really know how to predict what he would consider a mistake. It was his view that it was safer to run everything through him for approval.
The firm had hit a blockage. They tried to continue growing, but no matter what they did, they simply could not push past that $14 to $16 million revenue ceiling. But they could not figure out why this was happening.
Last year, Jack took his family on a resort and cruise vacation for the first time in about five years. They had an amazing time. It was so refreshing because much of the time, particularly on the cruise, there was little or no cell phone reception, so he was able to truly enjoy the time with his family without interruption.
As a result of his time off, Jack returned to work well rested and rejuvenated. But, to his horror, Jack discovered that basically nothing had happened during his absence. Not only had his team made no sales, but they had also lost several of their prospects who needed to the work to move quickly. When the salespeople or designers could not move their projects forward, the potential customers simply went elsewhere.
This was a huge wake-up call for Jack and his team. They finally realized that because he had made himself indispensable to every single sales, design, and operational decision, he was the bottleneck creating the ceiling against which his firm was hitting its collective head. The team hadn’t built any processes or metrics to ensure that people made sales, completed designs, and constructed medical offices the right way, every time, with or without Jack’s involvement.
Inspired by the wake-up call, Jack retained a Fractional Chief Sales Officer (FCSO) to act as the company’s head of sales. The FCSO created a true sales process by clearly documenting the right and best way to do things. He also helped the sales team establish metrics so they had specific actions they knew to take every day and every week to ensure they made enough sales to achieve their goals. He helped the design team do the same thing.
Because of the systems, processes, and metrics the FCSO helped the company put into place and which he oversaw, Jack was able to start redirecting salespeople’s and designers’ inquiries to the right people. He started taking himself out of the equation so the team could sell design construction contracts without him. They started to see their revenues break through that $16 million ceiling and finally had the bandwidth to expand into other types of construction.
At this point, you understand at a high level why bringing someone onto your leadership team who’s built a business like yours before will help you. And if Jack’s situation leading up to his outsourcing a seasoned executive to bring his company’s business growth to the next level sounds at all familiar to you, it might be the right time for to consider hiring a Fractional Leader.
Learn more about each of the five types of Fractional senior executives: the Fractional Chief Marketing Officer (FCMO), Fractional Chief Sales Officer (FCSO), Fractional Chief Operating Officer (FCOO), Fractional Chief Financial Officer (FCFO) and Fractional Chief Technology Officer (FCTO).
- Owner’s names has been changed.
Why Fractional Leadership Works
Now that we’ve introduced each of the Fractional Leader (FL) roles with a high-level overview, what does it mean for your business to have an experienced leader swoop in when you’re stuck and guide you to your destination? A strong leader who has “been there and done that” knows what to do and how to inspire your troops to charge.
The biggest reason Fractional Leadership works is you’re bringing someone on your side who’s already gotten past the point where you’re stuck — and they’ve usually done so multiple times. They shortcut you around bottlenecks and obstacles so you can break through and go way beyond where you could on your own.
Sometimes the best way to illustrate something is to go to those who have been there done that, so I spoke with many small business owners about Fractional Leadership. Here are but a few brief examples that I discuss in length in my book.
Wil Schroter, founder and CEO of Startups.com, the world’s largest startup launch platform and cohost of the Startup Therapy Podcast, explains that in the startup world, Fractional Leadership “is just called hiring.”
There’s no way I could possibly afford the kind of Chief Operating Officer or Chief Marketing Officer (CMO) I need. I bring them on in exchange for maybe a quarter point of equity because early equity is the only kind of currency I have at that point. And the truth is that I don’t need that CMO to run my pay-per-click anyway. I can find someone on fiverr to do the grunt work. What I need is for her to tell me what’s around every corner, which company I need a partnership with, and “By the way, here are the contacts you need to talk to.” She’ll send an email that will take 15 minutes of her time and save me a year of my time. That guidance and those relationships are worth their weight in gold.
Kwame Christian, Esq., Director of the American Negotiation Institute and author of Finding Confidence in Conflict, told me that he uses a Fractional Chief Financial Officer (CFO) in his company because it allows him to bring extensive experience and an objective perspective into his business but without the full-time cost:
My Fractional CFO manages the entire financial side of our business. He has that high-level expertise, but we don’t need to pay for full-time.
His benefit is also objectivity. I think it’s easier to be more objective about the company when you have a little bit of separation. My background is in psychology, and I do some implicit bias training from time-to-time because bias is just a natural state of the human mind. I have preconceived notions about my own business. So I tell him, “Listen, I’m biased. This is the way I’m seeing it, but I’m probably missing something. What am I missing?” He can see things a lot more objectively. It’s been really helpful to have that outside influence.
The bottom line for most considering a FL is that they need a leader in the fractional role. For people who are used to having to figure everything out for themselves, hiring a Fractional Leader can almost feel like cheating. They worry they’re doing something wrong by bypassing the obstacles and skipping straight to effective (though often not easy) solutions. Although this feeling is natural, it causes them unnecessary pain and makes their progress toward their own dreams much longer and harder than it has to be.
Leader, Not Worker Bee
Tactical, frontline-type work is a distraction from a Fractional Leader’s main value proposition. Fractional Chief Sales Officers (FCSOs), for example, generally do not make their own sales. Fractional COOs do not personally lead highly technical system rollouts. And FCFOs do not personally do your bookkeeping, A/P, and payroll. Instead, FLs set up systems and processes that cause the people in your organization to do their jobs far more effectively than before. They then train and oversee those teams. This ultimately gets you far more results than one person, even one who is very skilled, can accomplish on their own. The power of FLs is their experience and ability to focus your organization’s resources on your priorities.
You probably built your business by being a “doer” who gets as much accomplished as is humanly possible. Your leadership team always did the same. The problem is, as the saying goes, “What got you here isn’t going to get you there.” Even though the “all hands on deck,” “get ’er done” culture got you past the critically dangerous startup phase, you’ve now reached the stage in your business where that does not work anymore. Isn’t that why you’re frustrated and reading about Fractional Leadership in the first place?
Get Focused on the Right Things
Whether you use an FCSO to focus your sales process and message on what resonates with your target market, an FCFO to make the right decisions based on financial experience, analysis, and data, or a Fractional Chief Technology Officer (FCTO) to build and iterate the right product, focus is key. Because FLs have seen what works and know how to drive implementation, people use them to focus their limited resources on the right things for maximum impact and scalability.
The information herein is a partial excerpt from my book, Fractional Leadership, which is a consolidation of my personal experience as a Fractional Leader (FL), retaining other FLs in businesses I managed or manage, interviews with FLs on my podcast, Win-Win—An Entrepreneurial Community, and my network and relationships with other FLs.
My experience in operations and being a Fractional Leader in companies running on EOS certainly contribute to my knowledge of operations. I am not, however, a subject matter expert in marketing, sales, finance, or technology. I’ve written these topics with reliance on business owners and FLs in those fields — from a 30,000-foot perspective.
Check out my blogs discussing the five main types of FLs: Fractional Chief Marketing Officer (FCMO), Fractional Chief Sales Officer (FCSO), Fractional Chief Operating Officer (FCOO), Fractional Chief Technology Officer (FCTO) and Fractional Chief Financial Officer (FCFO).