When you first start a business, you’re the chief everything officer. Strategy, finance, marketing, hiring, tech support — it all comes down to you. As your company grows, you hire staff, delegate responsibilities and bring on other leaders. However, there can be difficult hurdles when you need someone with expertise, but you’re not ready for a full-time hire.
While outsourcing might bring to mind offshore, seasonal or temporary workers, you can also outsource high-level roles to find the appropriate mix of experience and cost. In turn, these professionals can offer strategic insights that make your company more efficient and free up your time, allowing you to focus on what you do best.
What types of high-level roles can you outsource?
Outsourcing leadership roles isn’t always a good idea, and some positions, such as chief executive officer (CEO), are best kept in-house. However, outsourcing C-suite positions can be a good idea if you don’t yet have enough work or can’t afford the six-figure salaries that full-time executives generally command.
These fractional executives give you a fraction of their time and cost you a fraction of what you’d have to pay an employee. You may be able to hire an individual for a specific project or retain their services on an hourly or ongoing basis. There are also companies that offer fractional executive services, giving you the support of a team of executives rather than a single person. Either way, these may be called outsourced, virtual or fractional CXOs.
Three executive roles that you might consider outsourcing are:
Chief financial officer (CFO)
Many small and medium-sized businesses have a bookkeeper or accountant and perhaps a full-time controller who leads the finance department. However, those positions tend to focus on accurately recording and reporting the financial information after the fact. A CFO takes a more strategic and forward-looking approach.
For instance, the CFO could help you determine your finance-related key performance indicators (KPIs), the metrics that drive your business’s revenue and growth, set up systems to track these, and benchmark your performance against competitors.
A fractional CFO can also create forecasts and budgets and offer suggestions on where to invest or cut expenses. Depending on your needs, they may also review and prepare your financial statements to prepare for an audit, loan application or funding round.
Chief human resources officer (CHRO)
If you’re quickly growing and struggling to hire enough people — or high turnover is costing you money and leading to delays — you might want to consider bringing on a fractional CHRO.
The CHRO can help set and lead your company’s hiring, training, retention and culture-building efforts. They may also be able to advise you on the latest trends, such as a shift to a remote or hybrid workplace, and ensure that you’re complying with local, state and federal laws. Some CHROs also offer to coach other executives or can help you create training programs, which can have a lasting effect after the engagement ends.
Chief marketing officer (CMO)
Marketing is essential to almost every business, but it can be challenging to figure out how much you should spend on marketing — and which spend gets you the best return on investment (ROI). A fractional CMO could offer direction and clarity if you’ve been jumping from one idea to another or are stuck on a single strategy and rarely test other options.
Like a fractional CFO, the CMO can also help you determine and track the KPIs that are important for your marketing efforts. While it can be nice to watch your vanity metrics rise, you should focus more on the metrics that directly lead to sales.
What should you consider before hiring a fractional executive?
As with hiring part- and full-time employees, you’ll want to interview candidates and organizations to find one that’s a good fit. Here are a few questions to consider:
- Do they have the right experience? Many professionals who take on outsourced or fractional roles have served as executives or consultants before, sometimes for multiple companies. However, you also want to ask about their industry experience and why they think they can help your business.
- Is a remote executive okay? Some of the services are called virtual CXOs because they exclusively work remotely, and you might want to consider a remote consultant to broaden your potential candidates. But if you want or need in-person meetings, you could look for someone locally or try to arrange for the person to occasionally work from your office.
- Can you follow through? Outsourced executives tend to focus on strategy and analysis that requires experience, and within a few months, they may develop and leave you with a great plan. While they may be more involved than an external consultant and could even lead a team, you’ll need the staff to follow through. After all, it doesn’t make sense to pay them for functional work that someone else can do for less.
- Can you afford their services? While you won’t be taking on a full-time salary and don’t need to pay for their benefits, executives with several decades of experience don’t come cheap. You may need to budget at least several thousand dollars a month, depending on the role and your needs. In some cases, fractional executives agree to work for a smaller flat fee plus a percentage of the revenue growth they help you achieve.
Make the most of the engagement
While your fractional executive might be working part-time, don’t consider them a part-time employee who you’ll keep on indefinitely. Ideally, you’ll have a specific need or goal that they can address and then move on.
You should be clear about the desired outcome from the start and discuss the length of the contract before it begins. If you want to continue working together at the end, you can continue with a new contract and goal. Or, you might find you’re ready to keep things running on your own and are well on your way to needing a full-time hire.
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