Fractional Leadership Done Well
At the Grawe Group we have been offering fractional leadership services to our carrier and broker clients since our inception in 2020, and when we were all in house at one employer, we received fractional leadership help from various folks at various times over the years – we have been the client and the leader.
We started the firm because we sensed from many carriers and brokers they wanted extensions of their team more than they wanted hired guns. They did not have enough work to support a full-time lawyer, COO, or CFO, but they wanted someone available at a predictable cost, with predictable availability, and committed to being on the team. So, I created the Grawe Group to meet those needs, starting with outside general counsel services and later adding COO, CFO, and other executive services to carrier and broker clients.
I noticed recently a small flurry of articles claiming there is a growing trend of companies looking for fractional help (examples: What is fractional leadership and why is it becoming more popular? – Fast Company and Why Your Next CEO Might Be Fractional: The Rise Of The Gig Executives). I agree with the general sentiment – we keep growing as a firm, seeing more and more interest in our fractional leadership help. In our experience, fractional leadership is a great resource for businesses as long as the client and the leader are aligned on five key items: (1) scope, (2) timeline, (3) availability, (4) cost, and (5) fit.
- Scope of the engagement. Fractional leadership can start out strong even when everyone is not aligned on scope. Early on both sides are eager to get off to a good start. The client is usually eager to listen, and the leader is eager to help out, so there are often a couple of early wins even if the engagement scope is not spelled out well at the beginning. But the engagement falls apart quickly when scope is not aligned. Typically speaking the scope of a fractional leadership engagement is one of the following:
- An interim role to help the client get transition from a retirement/separation of one executive to the onboarding of a replacement. This is a placeholder engagement. A good fractional leader sees their role in this engagement as a steward – calm the waters, keep the business running as smoothly as possible, look for simple opportunities for growth and improvement. The fractional leader should not try to make major changes in processes, systems, strategies, etc. Instead, the fractional leader should focus on setting the long-term person up for success. Help the client develop a good onboarding plan, help the client clarify the job description, help the client keep the rest of the team operating well, assure customers and vendors that it is business as usual. A good fractional leader focuses on helping the client keep doing what the client does well, with modest improvements; the interim fractional leader does not come with their own playbook and a dictator’s mindset.
- A coaching role to help the client raise the team’s performance or onboard a new leader successfully. A good fractional leader works with the client to identify specific weaknesses and improvement plans. For example, a client and fractional leader may see the client is weak in their freight solicitation practices. The good fractional leader develops a plan to analyze the existing freight solicitation practices, helps the client track freight solicitation performance, helps the client identify ways to improve, and then establishes a coaching cadence with the team to monitor and coach up performance. More than just consulting, the fractional leader takes on the mindset of a member of the team. They speak the team’s language, they feel the losses and celebrate the wins as a team member, not as a distant observer.
- A management role to handle a certain scope of responsibilities for the client. This is the most robust fractional leadership engagement. The client is adding someone who has responsibility and accountability for KPIs. A good fractional leader still needs to fit within the client’s culture and overall strategic direction, but in this engagement the fractional leader has more discretion to bring their playbook to the team, make bigger changes, make personnel decisions, etc. This is good for the client looking for longer term help (e.g. > 6 months), but the responsibilities are still not full-time help. Every carrier and broker can benefit from a good CFO, but not everyone needs a full-time CFO. They may only need one 5 hours a week to oversee the accounting team, handle banking relationships, identify opportunities, and lead planning efforts. They may only need a lawyer a few hours a month to handle contracts and employment matters. They may only need a COO to help the CEO stay on track with projects or day-to-day management of a seasoned group. No matter the scope you need as a client, when you engage anyone on a fractional basis, make sure you and the leader are aligned on the purpose and scope of the engagement so everyone knows what success looks like.
- Timeline of the engagement. Open-ended fractional leadership engagements can be great – we have multiple fractional leadership clients that have been using us for over 4 years now. But even those engagements with open ended timelines have clearly defined scopes, availability expectations, and costs, and have strong culture fits. That combination makes them successful despite the open-ended timeline. We still recommend starting engagements with an end in mind. Even if the end is not defined by time (e.g., a 6-month engagement), when the client and the leader agree on the marks of the end of the engagement (e.g., when a full-time replacement is onboarded, when KPI X hits Y regularly, etc.) then the client and the leader can act decisively, and with urgency and energy.
- Availability of the leader. This is critical. A fractional leader, by design, is not devoting all their time and energy to one engagement. That design lowers the cost for the client. The tradeoff is the leader is not available all the time. The client and the leader must communicate well on availability and must be aligned. Business needs dictate the leader, and the client must be flexible – a mission critical event at a client may require 100% engagement from the leader for a day, a week, a month, and conversely the client must respect agreed upon availability in non-mission critical times.
- Cost of the engagement. Usually, clients looking for fractional help want some reasonable cost certainty, and the fractional leader wants reasonable income predictability. It does not need to be a complicated cost arrangement, but it is critical that everyone is aligned on cost, availability, timeline, and scope. If the scope creeps, if the leader’s availability narrows, if the timeline grows, communicate clearly to ensure everyone remains aligned on the cost.
- Fit of the fractional leader. The fractional leader is typically legally speaking an independent contractor, but that does not mean the client should not care about the leader’s fit. We have taken over engagements from other outside leaders for clients because the client and that prior leader never seemed to be on the same page and did not see the business the same way. Do not underestimate the importance of making sure the fractional leader you engage fits your team because good fractional leaders are members of your team, not hired guns.
We love fractional leadership, because we love working closely with clients, knowing their team members individually, knowing the client’s lingo, knowing their niche, knowing their strengths and weaknesses, and celebrating with them when they win, and feeling the pain alongside them when they lose. When you engage a fractional leader, look for the leader that adds to your team, not the outsider that fires ideas at you from a distance.