What CEOs Need to Know About Fractional Leadership

Why Fractional Leadership is Gaining Ground

Our workplaces have become much more dynamic and so many things that used to be true are now in question. Long-term employment has been replaced with 2-4 year “experiences.” The gig economy – with side-hustles and part-time jobs are very attractive. Tariffs, supply chain issues, deportations, and higher interest rates have created disruption.

What may be the impacts on traditional C-Suite roles? Are there any trends that you need to be aware of?

Why Fractional Leadership?

Fractional executives are seasoned professionals providing part-time, high-impact leadership. The purpose of utilizing fractional executives is to transform / accelerate how a company scales efficiently while limiting the exposure and expense of adding executive staff.

The fractional leadership model delivers specialized expertise without full-time costs and is experiencing  a surging adoption across the country and across industries.

Is this a new concept?

As we look at traditional business growth, the normal trajectory is a move from: 

• not having a function or discipline within the business
• to outsourcing a discipline
• to potentially bringing a discipline in-house

A couple of longstanding examples would be in the disciplines of the finance and legal functions. We can naturally see both functions as services that can be outsourced – potentially for an extended period, if not indefinitely. 

In the finance example, a startup may start with an external bookkeeper to support the business and then progress to engaging a CPA and potentially to a combination CPA/Tax Advisor or have these as 2 separate outsourced functions. 

Current research shows that fractional executive adoption is projected to rise. U.S. businesses with at least one fractional executive will grow to between 25% to 35% by the end of 2025, with global fractional leaders doubling to 240,000+ by 2028.

What is driving recent adoption?

While the marketplace is changing rapidly, there are 3 competitive drivers that are causing CEOs to take a deeper look into the viability of supplementing their executive leadership team via fractional leaders.  

Cost-Efficiency and ROI

• Companies save 50–75% versus full-time hires, with fractional engagements delivering 10x ROI and 30% faster growth within six months.[1]
• Startups and SMBs leverage fractional leaders for critical projects (e.g., investor preparation, product launches) without long-term commitments.

Specialization and Flexibility

• Project-based leadership: Fractional leaders address specific gaps (e.g., fractional CMOs to accelerate SaaS go-to-market resets).
• Remote work enablement: 57% of executives work remotely (or their teams are in separate location), facilitating remote / cross-border fractional hires.

Strategic Agility

• Companies deploy fractional teams (e.g., CTO + CFO + CMO) to tackle multi-department challenges holistically.
• Fractional leaders provide unbiased insights for pivots
• 72% of CEOs have reported that they plan an increased use of targeted fractional leaders for specific innovation.[2]

Why should you consider this now?

There are forces at play that might drive your business to evaluate and consider building a plan for specific roles and adoption of including fractional leaders into your future organizational chart on either the short-term or long-term basis.

Economic Uncertainty

• If the last 5 years have taught us anything, one thing is that certainty and predictability of our economy is growing more elusive.
• Making long term commitments to full-time executive leaders is tough on multiple levels – you’re uncertain about timing of adding a new role; they are uncertain about making a career change during unpredictable times. 

Remote / Hybrid work

• For many roles, remote or hybrid work has proven difficult. Executive leadership is not one of these roles. Executives have grown accustomed to managing staff in multiple geographies. With clear deliverables and consistent updates with other senior leaders, fractional roles are considered good opportunities to utilize the best resource available – regardless of their locations.

Faster Pivots

• As I mentioned earlier, making long term commitments to full-time executive is tough in economic uncertainty, but you also tend to look longer and agonize over the choice because it must be the right choice. Fractional roles still high need to secure the right fit, but with less exposure than a full-time role.

Next week we will continue to look at this movement to usage of fractional executives. We will introduce a checklist / framework for you to walk through to help determine potential roles, timing, and decision criteria for full-time / fractional / outsource staffing.

As we explore this topic, I would love to hear (and address) any questions that you may have. Is there one of the following, or other question, that you would like to see addressed? Let me know!

• What C-Level jobs are added and in what order?
• What C-Level jobs are best suited for fractional leadership?
• How do I know when it’s time to add an executive role?

"Only Action gets you closer to your dreams - do something today that your future self will thank you for."

- RORY

[1] https://useshiny.com/blog/fractional-executive-services/ 

[2] https://kamyarshah.com/fractional-executives-impact-growth-trends-and-strategic-business-adoption/