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.