Fractional Leadership is Hot… and that’s a problem

Single-shingle freelancers, staffing firms, and online marketplaces are trying to repackage themselves as Executives on Demand

How to Quickly Evaluate the Quality of Fractional Executive Firms

A business blog recently declared, “The Future is Fractional,” and fractional leadership is “in”. 

Startups and growth companies are embracing the concept of leveraging interim, part-time, and project-based leadership. Companies understand that they can upgrade the experience and talent level of key executives and functions while paying less than the loaded salary of a full-time executive. Better to have a fast-moving superstar as your CFO, CTO, COO, CMO, or CHRO for 10 or 20 hours per week, the thinking goes.

The problem is that with an uncertain business climate in 2024, the market is being flooded with freelancers, single-shingle consultants, staffing firms, struggling life coaches, and unemployed middle managers repackaging themselves as fractional executives. 

Here are four ways to quickly evaluate the quality of the fractional executive you’re considering for your business.

1. Define the “Executive” – A manager, director, or vice president is not a c-suite executive. The experience, decision-making, leadership, and skills of successfully guiding multiple organizations through big strategic decisions are very different than being a middle manager or lower-level executive. Unfortunately, a rash of corporate layoffs is pushing many directors and VP-level employees into the consulting ranks. Dig in on bio pages, LinkedIn profiles, and CVs to evaluate the depth of executive experience being presented.

Consultants are notorious for overstating their abilities. Many consultants at prestigious firms will present themselves as serving in an executive capacity; however, many of these people were plucked off the “MBA farm” without ever working inside companies, let alone leading in a C-suite capacity. TechCXO, for example, requires that every one of its partners has demonstrated success as a C-suite executive at multiple organizations. 

Freelancers who may be fine implementers might also present themselves as executives. While good fractional executives are “doers” and solid execution people, they also understand strategy and how initiatives fit into overall objectives, positioning in a competitive landscape, and support a unique value proposition. If you suspect your resource is a freelancer, ask a series of broad-based questions about customer segments, pricing strategies, and delivery channels. Then, listen closely. 

2. Define “Success” – Executives generally agree that the objective of a business is to eventually sell it. When evaluating a fractional executive, look to see if they were integral to a team that had several successful exits, IPOs, capital raises, and other M&A activities. 

The contributions of marketing, sales, product, tech, and HR people may be a bit harder to quantify than an exit, but seek out hard numbers for product launches, customer/revenue increases, profitability, and ways the entire organization was impacted by an executive’s efforts. 

Client quotes and testimonials are great, but they don’t necessarily communicate the scale of the work provided. Instead, look for true use cases and success stories with some level of complexity that took place over a number of quarters. Try to spot truly transformational work that scaled an organization, turned around a stubborn problem, or opened up new markets. Ask if you can speak directly with those clients, too. 

3. Define the “Team” – Small teams or single-shingle consultants may try to hide the scope of their organizations by not publishing team bios. Be on guard for that on the firm’s website. Some unscrupulous marketplace traders who talk about only 2% of their applicants make the cut, use fake bios to present a false sense of scale. They quite literally reuse photos and bios to present a “team.”

Check bios and the breadth of an organization. A level of scale demonstrates success. You don’t want to get caught in a situation where you are relying on a single company founder or one or two principals. They may be a startup organization themselves and all the dangers of time constraints, inadequate bandwidth, cash flow, or other disruptions.

Search and staffing firms may talk about their extensive “networks,” but they are in the business of plugging one or two resources into a hole. That approach does not constitute a team with a bench. Also, executive search and staffing firms are marketplace-brokered resources (found online) vs. referred, vetted, collaborative partner-quality professionals. Many specialty consulting firms are owned by exec search firms offering fractional and interim work, but do not have cross-discipline teams and resources. That can get expensive and blow up the cost-efficiencies you are anticipating.

For example, you don’t want a CFO-level executive handling your Accounts Receivables and Payables. You’re overpaying for that resource. You want to see a mix of talent at different levels and rates that might include a VP of Finance, Controller, Accounting Managers, and AR/AP coordinators.

Similarly, you wouldn’t want a CTO to be doing all your security, development, coding and project management work or your CHRO to directly do your recruiting and compliance work. A team with a blend of talent and rates is a good indicator of a well-established and high-functioning firm that can provide real-time and cost efficiencies.

4. Look for a Variety of Delivery Models – The classic monthly retainer arrangement or project-based pricing is familiar, but they also show a great deal of limitations. Freelancing, staffing, and firms with limited resources and delivery people are often locked into those models. 

A true executive on-demand firm has greater flexibility. It may discount rates up front for warrants and equity on the back end. It may offer a mentoring and coaching model. It may also offer specific, time-constrained training options. 

In a company’s lifecycle, they may need to push hard on recruiting talent but then may need to pivot to lead generation, sales and growth, or perhaps to raise capital. A multi-discipline executive on-demand firm can provide those resources and shift priorities and spending to the client’s needs. 

Fractional leadership may well be “in” for 2024, but for those firms who have been providing this unique model and approach, it’s been in style for decades.

Oscar Wilde said, “With age comes wisdom.” After working as a CFO for more than 30 years with nearly 100 companies, mostly startups, I’ve begun to identify some of the key early attributes of a topnotch management team. A great management team doesn’t necessarily guarantee success, but without one, you’re almost guaranteed to fail.

Of course, the second part of Wilde’s quote is, “But sometimes age comes alone.” So what are the hallmarks that distinguish a tier-1 management team from others?

The Chief: It starts with the CEO. Experience certainly helps, but there are plenty of outstanding, young CEOs. Successful CEOs rely on their strengths and leverage the strengths of the team around them. In a fundraising pitch, for example, I’ve seen CEOs do nothing more than open and close the meeting. In between, the heads of sales, marketing, product and finance all have a chance to shine and highlights the team.

Hire Great People: I often say that I’ve made a career out of hiring people smarter than I and managing them well. Successful companies and their managers are not afraid to hire A players and they never settle for B players.

Recognition: Great companies highlight and celebrate their successes as a team. “Catch people doing something good”. This might be cash compensation, a call-out at the all-hands company meeting or it could be something with intrinsic value only. At one company, we used a baton to celebrate success. The baton would sit on the recipient’s desk and became a coveted symbol of achievement.

Accountability: Of course, with recognition must come accountability. People need help and coaching if they are not meeting expectations and you can be sure that the rest of the team notices when a teammate is lagging. Holding people accountable for their goals fosters an environment of high achievement and success.

Decision Making: Seek input from a variety of sources but move efficiently to make decisions. Once made, communicate those decisions
clearly and succinctly. Most people are afraid to make decisions, but a leader embraces the challenge and is not afraid to be wrong.

Culture: Perhaps the most important, but the hardest to manage. Culture requires buy-in and starts with the senior management team. Culture is a continuous process that needs to be nurtured. While the management team can help guide the process of building and maintaining a strong culture, they do not have to implement specific programs. There are personality types in every company that help establish company culture. Ask for their advice and allow them to make proposals (e.g. The Fun Committee).

Great management teams operate in an environment of high expectations and welcome candid discussions and feedback. How does your team stack up?

Learn more about Chris Thomajan, TechCXO’s Managing Partner – Boston

Remote Knowledge Workers Increasingly Engage in ‘Pretend Work’ Performances

Hours Wasted Daily on Elaborate Electronic Theater to Satiate Guilt Pangs, Traditional Bosses and Clock Watchers

Return to Work Effort May Make “Digital Clown Shows” Worse

For decades movies, tv and comics portrayed the elaborate masquerades created by office cubicle dwellers pretending to look busy in case the boss walked by.  Many were funny and some iconic because of how much truth they held. In one Dilbert comic, the Pointy-Haired Boss declares, “We need a sense of urgency.” Wally, in a moment of honesty, replies: “I spend most of energy pretending to work, but I can add a layer of fake urgency if you really need it.”

Pretending to work is not new.  However, elaborate presentations in what’s being called ‘productivity theater’ among the 20-30 million US-based remote knowledge workers is becoming an all-new art form in the digital world.  The purpose of these online work plays is to give the appearance of constant and conspicuously visible busyness. 

Favorited tactics of digital presenteeism include:

• intentionally sending emails in the early morning and late evening 
• remaining logged on Slack at all hours, 
• blocking out big swaths of time on fake meetings in Google calendar and 
• joining irrelevant Zoom meetings with the mic muted and the camera off while doing just about anything else outside the call.

Among those who have continued to work significantly or exclusively via remote, its estimated that an average of 67 minutes per day are spent on these performance antics, according to a new report by software companies Catalog and GitLab. 

Post Labor Day 2022, companies like Apple, Comcast, Prudential Financial and Peloton are nudging employees to return to work, if not completely than at least a couple of days per week. The Wall Street Journal called Labor Day a “line in the corporate sand” which is “the best chance to finally lean on workers to return to the office this year.”

“Pretend to Work Somewhere Else”

 Some companies are shoving rather than nudging. Recently, Elon Musk told employees in a memo they are expected to return to work or “pretend to work somewhere else.” His memo subject was “Remote work is no longer acceptable,”and he wrote, “anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. This is less than we ask of factory workers.”

Is Work from Home More Productive?

Mr. Musk may have been operating from the old school perspective that working remotely from home is a way to loaf without being seen.

However, a study published in Nature looked at data from 60,000 Microsoft employees and found remote workers were actually more productive for short-term projects. The study did point out those same employees did not perform as well for longer-term projects. A potential cause for that dynamic may be the lack of team interaction and collaboration. 

Also, over time, distractions from family members to pets and errands may become more prevalent for those not accustomed to remote work.

Factory Mentality and Guilt Pangs

For their part, workers say they do feel pangs of guilt if they deviate from a 9-5 routine or take breaks from work with a walk, attending to personal business or just daydreaming.   To compensate for the insecurity that comes with working from home in casual dress, elaborate performances of appearing constantly busy ensue.

These feelings of insecurity or guilt stem from a factory mentality prevalent in the 1980s, according to Cal Newport, who wrote the best-seller Deep Work. The factory mentality attempts to achieve high production by constantly applying effort to a mechanical system, like an assembly line. A plurality of workers say they believe management and company leadership prefer a traditional in-office culture with lots of activity buzzing about.

Many knowledge workers are pushing back. They have come to enjoy benefits of work-at-home, including more work-life balance and quality time with family, and less commuting stress and wasted time.  Apple has again asked employees to return three days per week.  Some of the company’s employees have gone so far to form Slack channels of advocacy groups. Among the largest at Apple with as many as 2,800 members called “Apple Together”  are pushing back against return-to-office plans.

Solutions based in Remote Work Veterans

TechCXO, which provides on-demand executives and teams to companies of all sizes, has been leveraging remote and hybrid work models since its founding in 2003. Their interim and fractional executives  include CFOs, CTOs, CMOs, Heads of Sales, COOs and HR Executives.  These executives on demand are expert and building hybrid teams and delivery models that work for organizations who want flexibility for employees but also want projects and initiatives driven to completion. 

Project Management experts at the firm are frequently incorporated into complex product and IT deliveries that efficiently combine in-person and remote task deliveries and thus eliminating the need for pretend remote performances.  

Source: Microsoft

Far be it from us to criticize talented people earning significant compensation. However, we were a little taken back when we read a Wall Street Journal article “Behold, the New Starting Salary for Some Graduates Is $100,000 (March 10, 2022)” detailing how some college seniors were walking from the diploma ceremony into a six-figure starting salary in consulting firms.

Big Salaries for Investment Banking and Tech, Yes, But Consulting?

Wage inflation is real in a tight labor market. Investment banking always draws big bucks and tech firms are getting more aggressive in their courting of talent, particularly for emerging platforms in fintech and cryptocurrency.

Also, as the IPO market has cooled a bit with its most sluggish start in six years, employees who hoped for a future windfall may be looking for more upfront money. But it was this paragraph in WSJ that got us going:

McKinsey & Co. and Boston Consulting Group also bumped their bases to a new floor of $100,000, according to My Consulting Offer, which tracks the sector’s salaries. Rookies at Bain & Co. can expect to make six figures, too, says Keith Bevans, Bain’s global head of recruiting.

The age of the average TechCXO partner and staff skews a bit older in large part due to our value proposition that when you get a fractional or interim TechCXO executive, they have sat in a c-suite chair already. Maybe we’re just a bit resentful of the younger set, but we’ll get over it.

TechCXO Opens Philadelphia Office

Executives On Demand Firm Led Locally by Jim Corr and John Capobianco

TechCXO®, a pioneer and leading provider of industry-relevant, part-time, fractional and interim executives and teams, today announced that it is establishing a Philadelphia presence led by veteran finance executive Jim Corr and growth and operations expert John Capobianco.

TechCXO was recently named to the Inc. 5000 list of the nation’s fastest-growing private companies for the 13th straight year. (View Press Release)

TechCXO was founded in 2003 on the premise that companies can benefit from having the best executive talent available and serving as their CFOs, CEOs, COOs, CMOs, CROs, CSOs, CTOs and other executives on a part-time, interim or fractional basis. Companies can also outsource entire functions to TechCXO, including Finance & Accounting, Operations, HR and Sales and Marketing. TechCXO also provides executive and team coaching support.

Thousands of startup and growth-stage companies have called on TechCXO due to its unique, cost-effective model that enables ready access to top talent without high costs, mandatory long-term commitments or lack of availability.

“Philadelphia is a key market for our expansion plans, and with Jim and John, we have the right people to lead our efforts here,” said Kent Elmer, TechCXO’s Managing Partner. “Not only are they distinguished and effective executives and advisors, they are both terrific networkers focused on building an ecosystem of entrepreneurs, investors and valued service providers.”

“Philadelphia’s entrepreneurial energy is exceptional. The increase in startup investments has been significant, and there is a fast-growing emphasis on innovation in regional industry strengths like fintech, health care and biotech,” said Jim Corr. “In TechCXO, we have a peer network of incredible executives who have successfully led companies as their CEO, COO, CFO, CRO, CTO and other executive roles. The firm’s track record of growth and success is phenomenal. We are ready to begin growing in Philly immediately.”

“There are so many built-in advantages for Philadelphia as a tech hub. There is a robust Incubator, Angel, Venture Capital, and Private Equity Investor network. Then, there’s a world-class education infrastructure of colleges and universities. Rents and housing are relatively low-cost. Young, creative people who come to school here are staying here for the lifestyle,” said John Capobianco. “Couple all that with a culture of hard-work, hustle and grit and you have something special here.”

About TechCXO

TechCXO is a pioneer in providing high potential companies across the country with industry-relevant interim, part-time and fractional executives on-demand. More than 3,000 companies, from startups to the Global 1000, have entrusted TechCXO to help with their critical functions by calling on TechCXO executives as their CFOs, CEOs, COOs, CSO, CTOs, CMOs, CHROs and other executive roles. TechCXO’s major practice areas are: Finance & Accounting, Product & Technology, Revenue Growth, Human Capital and Executive Operations. TechCXO has appeared on the Inc. 500/5000 Fastest Growing Private list every year since 2008. For more information about the firm, please visit https://www.techcxo.com.