Traditional full-time employment is no longer the norm. The accelerated change in the workforce over the past few years has driven the rise of the fractional employee. These workers engage in part-time or temporary positions, reshaping industries and significantly impacting the economy.
The fractional model has infiltrated the gig economy, allowing businesses to hire workers for specific tasks or projects within the C-suite roles. Deloitte reveals that half of all Gen Zs and just over one-third of millennials work a second part- or even full-time job. And ADP data shows that in 40% of companies, one in four workers is a gig worker. Already, 16% of Americans earn money through gig platforms.
“You get to have a high-level strategic executive thinker that you might not need on a daily basis,” Abby Sugar, fractional employee expert, shares during a Zoom interview. “You don’t need to be paying a super high monthly salary for somebody if you’re not that large enough yet. As a solo founder, or maybe in a startup, the founder and a technical cofounder are building the code, and you need support, vision, funding, or help. Maybe it’s your first company, maybe it’s your third company, but you know that there are 500 things to do all the time. And so you need a higher level person to help you strategically execute and bring on a fractional COO instead of a lower level person at a low hourly rate.”
Over the past decade, Sugar has worked in the startup world, witnessing firsthand how the gig economy, fundraising and entrepreneurial mindsets are shifting and shaping the workforce. In a fractional sense, she works with brands, including The Standard, to help them elevate their business models. Additionally, she was featured as one of Forbes Next 1000 honorees in 2021.
By leveraging fractional work, businesses can scale their workforce up or down as needed, ultimately leading to increased efficiency, profitability and innovation.
Working With Fractional Employees Develops Leadership Skills
The barriers to entry for starting a business have significantly lowered. Individuals with specialized skills now have access to companies they necessarily wouldn’t in the past, allowing them to monetize their expertise on a project-by-project basis. This has led to the emergence of industries that thrive on the fractional work economy.
As fractional work increases in popularity, so does the rate at which founders must develop trust and fine-tune their communication skills. Like a consultant, fractional employees may only work on a specific project, making it difficult to develop trust over long periods; clear communication establishes the boundaries and expectations from the start.
“Make sure that you’re looking for communication,” Sugar states. “That’s always at the top of my list for everything. When you’re hiring a fractional COO, CMO, or CFO, it is a very high level—make sure that you trust that person; look for someone who is independent. You shouldn’t have to hold their hand.”
The Cost
An entrepreneur or founder is expected to work on all facets of the business, especially during the early stages of launching. As workloads increase, the idea of hiring staff is ideal; however, not all founders can afford a team of full-time employees.
The fractional business model saves payroll thousands of dollars or 30-40% over hiring a full-time employee. One major benefit is having this strategy work as a full-time job interview without losing costs with onboarding.
“It depends on what your priorities are,” Sugar comments. “I always say that everything is time versus money. If you don’t have the money, you’re going to have to spend the time. So if you don’t have the money right away to hire somebody to help you or to hire somebody to help you with operations, then you’re going to have to do it [the task]. But if you don’t have the time and have the money, don’t waste the time doing something someone else can be doing for you.”
Adapting To A Fractional Workplace Culture
As with anything in business, there are pros and cons to hiring a fractional employee. Some positions are like consultants regarding a fractional staff member who may only be in the office for a short period or work fully remotely; this leaves little time to garner long-lasting relationships. Companies must cultivate an environment conducive to building relationships and developing trust.
A significant technique for building a positive work environment is awarding accomplishments and not micromanaging. Part of the appeal for people to work in a fractional role is the autonomy they receive because of their particular skill set(s).
“Hire slow, fire fast,” Sugar concludes. “At the end of the day, it’s your company. Set your expectations and clearly communicate what you want accomplished. Then, get out of the way. Trust in the person and process, and in yourself that you did what was right for the business and growth of the organization.”
Fractional roles open up more opportunities in the company both on a personnel side and in cash flow. Let the benefits of hiring fractional employees elevate your brand.