Scaling Expertise

The game-changing impact of fractional professional services

by Jordan W. Gerheim

Today’s business landscape is dynamic. Companies are constantly seeking innovative ways to access top-tier talent while maintaining flexibility and cost-effectiveness. Enter outside or fractional professional services — a growing trend that’s reshaping how businesses approach executive leadership and specialized expertise.

The fractional services model has seen significant growth in recent years, accelerated by shifts in work patterns and business needs. According to a report by Business Talent Group, demand for interim or project-based executives increased by 170% since 2022.[1] A 2023 survey by Forbes found that 72% of CEOs planned to increase their use of fractional executives in 2024.[2] By 2025, an estimated 30% of midsize to large companies will have implemented some form of fractional leadership, according to a study by Gartner, which also predicts a 10% annual growth rate of the fractional workforce.[3]

What Are Fractional Professional Services?

Outside or fractional professional services represent a flexible approach to accessing high-level expertise without the long-term commitments of traditional full-time employment. This model involves engaging seasoned executives or specialists on a part-time, project- specific and/or hourly basis. These professionals, often with extensive experience, leverage their broad industry knowledge to serve multiple clients simultaneously, enabling businesses to tap into top-tier skills as needed.

Types of Fractional Roles

• While the concept of fractional services initially gained traction with Chief Financial Officers (CFOs), it has since expanded to encompass a wide range of C-suite and specialized roles. Common fractional positions include:
• CFO
• Chief Marketing Officer (CMO)
• Chief Technology Officer (CTO)
• Chief Operating Officer (COO)
• Chief Legal Officer (CLO)
• Human Resources Director
• Sales Director
• T Manager
• Project Manager
• Business Development Executive

Benefits to Businesses of All Sizes

Fractional professionals offer numerous advantages to companies and organizations alike, across the spectrum from startups to established enterprises:

Cost-Effectiveness: The cost savings realized by hiring top tier executives on a fractional basis in lieu of full time is particularly beneficial for small and medium-sized enterprises (SMEs) that may not have the budget for a full executive suite. Companies can save 30-40% in payroll costs compared to full-time hires.[4] Full-time employees come with additional time and expense costs, as well as costs related to things like fringe benefits (29.4% of salary) [5], recruiting costs, severance, training, onboarding and equipment. Unlike fractional hires, employees can require supervision and additional management costs, as well. Finally, fractional workers are typically paid hourly, per project or task, eliminating overtime costs.

Efficiency: Fractional professionals often bring a wealth of experience from various industries and companies. Their diverse backgrounds can provide fresh perspectives and innovative solutions to business challenges.

Earlier Impact/Reduced Downtime: A fractional service provider can provide immediate impact, while it can take up to six months for a company to reach its break-even point with a full-time employee. They can quickly fill gaps needed in a business, reducing the average 77-day wait time for filling a full-time position.[6]

Flexibility, Scalability and Reduced Risk: Fractional services can be scaled up or down based on need, providing more flexibility than full-time hires. If the arrangement does not work out, making changes or terminating the relationship is easier and without the complications associated with full-time employment.

Global Talent Pool: With the rise of remote work, this work arrangement allows individuals to hold multiple positions without having to relocate. It enables companies to tap into a global talent pool and select from the very best, experienced fractional leaders without being restricted by location.

Try Before You Buy: With this approach, businesses can assess a fractional professional’s fit within their organization, evaluate their performance and determine if they are right for a long-term solution. Focus on Core Business: By outsourcing certain specialized functions, fractional professionals allow the businesses’ core team to concentrate on their primary business activities and strategic goals.

Networking Opportunities: Fractional professionals often have established connections in their respective fields that they can leverage for the business, creating synergies, accelerating growth and expanding development opportunities. The best fractional professionals bring their expertise, experience, passion and network to each company with which they work as if it were their own. 

Outside and fractional professional services represent a paradigm shift in how businesses can access executive talent and specialized expertise. It is no longer just a trend, but a fundamental reimagining of organizational structures and work itself. This shift goes beyond cost-saving, representing a strategic revolution in how businesses access and leverage top-tier talent. It is leveling the playing field for businesses of all sizes, driving innovation and fostering adaptability in ways we’re only beginning to understand.

References

[1] resources.businesstalentgroup.com/high-end-independent-talent-report/talent-trends-2024
[2] linkedin.com/pulse/power-fractional-leaders-2024-talentohc-chqke/
[3] fpg.com/blog/a-closer-look-at-statistics-the-case-for-fractional-sales-leadership/
[4] forbes.com/sites/cherylrobinson/2023/12/08/why-companies-should-embrace-the-fractional-employee-business-model/?
[5-6] inspirehumanresources.com/blog/comparing-full-time-employees-to-fractional-experts-a-cost-benefit-analysis?

Jordan Gerheim is CEO of Outside Chief Legal LLC, (OCL), a firm specializing in protecting and promoting businesses and their owners as fractional chief legal officers and outside general counsel. OCL attorneys leverage over 80 years of combined experience in litigation, in-house and general counsel to support its clients as strategic partners. Gerheim, himself, is an experienced litigator and entrepreneur who serves a growing list of companies across many industries providing comprehensive counsel and fractional CLO services.