The Benefits of Hiring a Fractional Finance Executive

In my previous post, I explained what a fractional or interim financial executive does, how the position differs from a traditional hire and some situations in which your company might benefit from considering a fractional financial executive. In this blog, I want to explore in more detail some of the key benefits a company can realize from hiring a fractional position, especially in this time of such dramatic global change. Remember that one of the high-level benefits of considering a fractional hire is that these executives come with a unique, world-tested combination of skills and experience that allows them to see the challenges facing your company through a different lens that might offer new perspectives. 

High-Level Experience

By definition, fractional financial executives have years and often decades of C-suite experience in various companies and industry sectors. Many have even run started and built their own businesses, so they understand fully the pressures facing start-up companies or companies looking to pivot toward new markets or opportunities. 

This diversity of experience gives fractional executives in-depth knowledge of the business verticals, processes, and compliance issues, making them an invaluable resource in most business environments.   

Cross-Industry Experience

Cross-sector experience gives fractional executives a unique perspective on business problems and solutions, which can help a business reinventing the wheel when confronting common challenges. Because they are constantly moving from challenge to challenge or even managing multiple challenges simultaneously, fractional executives are continually learning, staying current with trends and best practices, and trying new technologies with an eye toward optimizing results. 

As Professor Nora Silver, faculty director of the Center for Social Sector Leadership at Berkeley Haas has noted that cross-sector experience enhances any executive’s value. “Building upon experience in one sector with work in another exposes” fractional leaders “to a new set of factors that potentially impact an industry or organization.” Bringing this broadened, expansive knowledge to a situation makes a fractional executive “more valuable” than someone who has spent their entire career with one company or in one sector. 

“Another benefit is that when you work with constituencies and peers in another sector, you get better at communicating with a wider range of people,” which tends to enhance the communication and problem-solving skills of a fractional leader. Working within diverse networks hones the skills necessary to communicate effectively, understand organizational cultures quickly, and find ways to bring people together during transition or crisis.

Focus on Results

Hired to deal with a specific challenge or problem, a fractional executive arrives in a company with a clarity of focus to deliver results without the distraction that can clutter the desks of traditional financial officers. As fractional marketing executive Art Saxby explains, the mantra of the fractional executive should be “don’t confuse the thing you do every day with the business you’re in.” Fractional financial officers are technically strong at what they do, but they are also more than this. They bring perspective to a problem that allows them to step back and consider what is best for the organization, the roots of the challenge ahead, and the best of the many possible solutions. This perspective allows for decisions to be result-focused at a time when, more than ever, results are especially impactful.

Over the years, Saxby continues, the growth of fractional executive hiring “has really accelerated because there’s more of an understanding of the concept that you don’t need to buy all your assets. There are really good assets that would be better to rent.” The more complicated business structures became, and more globalized markets evolved, the more “companies started to realize, I can’t have an expert in all these fields. The idea of working remote is suddenly much, much more understandable, and acceptable. The COVID thing has pushed a tremendous number of companies into Zoom meetings, into remote meetings, into working from home, and realize that maybe you don’t actually have to see everyone all day, every day. The fact that someone can be working from a different coast, working from a different location, is much, much more acceptable. And the fact that I’m going to need something really, really important right now, but I probably don’t need that skillset forever.” 

If a company is looking at a significant pivot or deep transition,” they need someone who can assess the broader business environment, search out opportunities, for example, for a merger or acquisition that make sense strategically. A year downstream, that need might shift as processes need to be integrated or economies of scale optimized. But the reality in today’s business environment, Saxby observes, is that “a lot of times in the corporate world, you can’t get another head approved. Politically, you really can’t bring someone in at this level because there are career progression paths for other people in the organization. But you need someone in there right now who doesn’t need to be micromanaged…. Someone you could hand a piece of the business to and say,” Get this thing done.” Somebody who’s done it before” and knows how to generate results cost-effectively. In other words, a fractional financial executive fills this role perfectly. 

Perfect for Scaling Up

Start-up companies face a tough challenge: expanding their skill sets to negotiate the complex business environment within a limited operating budget.  Although the roles of a fractional CFO and Controller are related, they are not identical. Knowing what to expect from each is crucial when considering bringing a fractional executive into your business. A fractional financial executive is a win-win solution, providing years of experience, focused decision making, and particular skill sets at a fraction of the traditional cost. 

For the start-up, the flexibility to call on fractional advice only when needed rather than paying a permanent executive who might or might not have all the skills necessary to leverage start-up opportunities is a creative and fiscally responsible solution to a common challenge. Because you only pay for a fractional executive when that person is “on the clock,” a start-up can reap the benefits of result-driven leadership at a fraction of the traditional cost. 

Conclusion

Doing business today is like navigating uncharted waters. Having an experienced financial executive as part of the C-suite leadership of your business is no longer an option: it’s a necessity. Fractional executives deliver all the benefits of a traditional hire at a rate that makes sense for both parties.  

Regardless of the challenges your business faces, a fractional financial executive is a sound investment.