Interim and Fractional Executives – The New Face of C-Level Leadership

Mar 28, 2023

Guest Blog by Sydney Gallo, Manager of Business Development and Operations, LS Associates

Current economic conditions combined with an exceptionally tight labor market have presented new challenges for businesses seeking to replace or add talent to their C-suite. It’s now more difficult than ever to find the right talent to replace executives or add leadership to existing management teams. As a result, businesses are turning to the use of seasoned, on-demand Executives-as-a-Service to fill senior leadership gaps. Accordingly, Interim and Fractional executives are deploying into all business sectors, but what are they and how can they help your business?

What is an Interim Executive?

Interim Executives are experienced professionals, often C-level leaders, that an organization hires full-time for some period. They’re hired by one company at a time, and their assignment ranges from three-to-six-months, though they may extend longer. Interim Executives act as temporary leaders within the company and assume responsibilities that come along with the leadership position they are filling.

What is a Fractional Executive?

Fractional Executives are hired part-time, for an unspecified amount of time. Given the open-ended, part-time work, Fractional Executives often have placements at multiple companies. Rather than taking over a role entirely for a set amount of time, a Fractional Executive’s experience is leveraged, for ongoing projects; their engagement comes to an end when the company no longer needs them.

What are the Benefits of Hiring On-Demand C-Suite Executives?

1.       Unique Expertise

On-demand executives are seasoned leaders with decades of experience collaborating in their respective fields. They have worked with several companies and have held principal positions across industries. These consulting-minded professionals served as partners to countless executive teams, boards, and investors, and have been exposed to many diverse business problems and growth plans. Organizations are looking for accomplished executives who have managed comparable circumstances and can think fast and act faster. On-demand executives do exactly that – they leverage their expertise to drop into an organization without disruption, evaluate company needs, and drive business forward.

2.       Cost-Efficient

Hiring an on-demand executive is capital efficient as they are paid hourly, on an as-needed basis. Consider this: you hire an interim CFO to assist your financial team in navigating the IPO-readiness process. For six-months, your consulting CFO is working 30-40 hours per week, ensuring everything on your public company readiness roadmap is complete. Post IPO, your on-demand CFO’s working hours taper to 10 hours per week. You’re not locked into the long-term cost of a fixed salary, and your company is not responsible for overhead costs associated with benefits and severance that comes along with a full-time employee.

3.       Reduced Risk

With worsening economic forecasts, new coronavirus variants, increased emphasis on ESG reporting, and a rise in C-suite executive turnover rates, the importance of hiring the right leader is more critical than ever. Hiring an on-demand executive gives you the time to select the right long-term executive for your business. Executive search processes are lengthy, and unstable markets often result in more failed hires. Studies show 60% of executives fail within the first 18-months of being promoted or hired.1 C-suite hiring mistakes are expensive, costing businesses up to 213% of the failed executive’s salary.2 Experienced on-demand executives eliminate this risk by jumping in to fill your company’s gaps, while you search for your full-time executive. On-demand executives also train potential successors, who may not be prepared to take over the C-level post at turnover. Moreover, sometimes companies find the on-demand executive is the right fit for their business, in which case, companies can hire the on-demand executive as a full-time employee.

4.       Trusted Advisors

In hiring an on-demand executive, the trust and verification legwork has been done for you. Interim and fractional placement firms have vetted the executives on their bench and have direct feedback and case studies from clients of similar size, stage, and industry, to further endorse the quality and skillsets of their executives. Contrary to executive search firms, there’s no lag times or expensive contingency fees for on-demand hires. The process is seamless – once you determine that an on-demand hire is the right decision for your business, firms like LS Associates, can connect you with qualified executives from their bench until you find the best cultural fit for your team.

2022 Trends and 2023 Expectations

In 2022, CEO turnover reached its peak in 20 years.3 In the wake of unprecedented pandemic stress, C-suite executives left their posts to invest in their mental health. Many executives are less interested in running the full-term employee marathon and instead are opting for the shorter, project-based, interim sprint. Similarly, as companies navigate uncertain economic forecasts, high inflation rates, and increased digitization of post-pandemic times, many businesses are finding cost, flexibility, and minimized risk involved with on-demand leaders to be an appealing alternative to the status quo.

As we enter 2023, the uncharted conditions don’t appear to be changing any time soon, but growth cannot wait. Forbes Business Development Council member, Matt Bradley, warns the key to ensuring greater business continuity for any organization is “to get ahead of the risks that threaten business stability.”4 As businesses look for ways to spark new growth and outrun competitors in this unpredictable market, on-demand executives can offer a fresh, experienced perspective combined with a reduction of risks and expenses associated with a long-term commitment.



About the Author

Sydney Gallo is a Business Development and Operations Manager at LS Associates, an Interim and Fractional Executive Advisory firm. She previously served as a Senior Research Manager at FirstThought, LLC. Sydney graduated from Northeastern University in 2019 with a BS in Behavioral Neuroscience and Business Administration.

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