For most founders, the answer to the question posed above is simple: yes.
The right C-level executive can be transformative for an early-stage startup. They provide an instant, invaluable injection of knowledge, skills and experience.
As for ‘full-time’, what other type of leader are you going to get? Part-time? Casual? Freelance? A work experience kid?
Oddly, yes. Minus the work experience bit.
Let’s talk fractional leadership.
Change is the only constant
Things change quickly in early-stage startups. Agility is key to a) survival and b) success.
Hiring a full-time leader is not an agile move. Full-time hires aren’t just for Christmas – they’re long-term and rather costly commitments. Incredible ROI, but pricey nonetheless.
Worse, even the best C-level exec can go from asset to liability if your startup needs to pivot or faces financial pressures.
Enter fractional hiring: on-demand leadership designed to be as agile as the startups who use it.
Working full-time at the pointy end of the organisational pyramid is an intense existence. Fractional leaders have chosen to trade unrelenting for a-little-relenting.
They usually work a few days or a couple of dozen hours per week. They are technically contractors, but act as full-time leaders. They’re a part of the team, and take on all the responsibilities of a full-time leader.
Because they work less, they cost less. And perhaps most importantly for early-stage startups, their employment arrangement is more flexible than that of a full-time leader.
That’s not to say that full-time C-level executives don’t have their place – they do. They’re simply not the only option.
Options bring choice, so which is right for you? To find out, let’s take a look at the pros and cons of full-time vs fractional leaders.
Full-time C-suite executives
Pros
- Complete commitment: Full-time leaders are fully committed to your startup, five days a week. They can provide consistent oversight throughout the work week, and the constant contact means more time to drive stakeholder alignment and one-on-ones.
- More time at the wheel: With more hours to play with, a full-time leader can build stronger, more nuanced relationships with team members at all levels (though as four-day work week trials have shown, just as much can be done in reduced hours).
- Deep integration with company culture: As permanent fixtures in the organisation, full-time leaders have a significant role in shaping and reinforcing the company culture, allowing them to fully immerse themselves in the company environment, values and ways of working.
Cons
- High fixed cost: You’ll pay a full-time salary that recognises the knowledge, skills and experience that the leader brings to the table. You’ll also have to cover benefits (superannuation, sick days, annual and other leave) and potential equity compensation.
- Inflexibility: If your startup is facing financial pressures or needs to pivot, leadership change can be difficult. You can’t quickly or easily part with the leader or drop their hours. It may be overkill for startups that don’t need full-time expertise in all areas.
- Potential for burnout: Startups are high pace, high pressure, and the spectre of failure is a constant. Overtime can be unavoidable. This is why full-time leaders are so prone to burn out. It’s also why so many former full-timers are transitioning to fractional work.
- Stagnation: Startups benefit from fresh perspectives. Even the best full-time leaders can run out of ideas, leading to potential stagnation.
Fractional C-suite executives
Pros
- Lower cost: Fractional executives work less, so they cost less – often dramatically so. The most capable fractional execs can squeeze a week’s worth of thinking/doing into 1-3 days.
- Ultimate flexibility and scalability: Choose how much your fractional leader works. Adjust the engagement contract as needed. Enjoy more flexibility than a full-time hire, and more skin in the game than a consultant.
- High-level expertise: Get on-demand expertise without the overbearing commitment and hefty price tag. Fractional leaders offer deep and diverse C-suite experience in a more convenient package. You get access to high-level industry experience that might otherwise be out of reach.
- Objective, cross-industry perspective: Fractional leaders have more freedom to be honest and direct. Enjoy a perspective untainted by internal politics and power dynamics.
- Reduced risk: Fractional leaders represent less of a commitment, so less of a risk. They grant your early-stage startup invaluable flexibility: you’re more able to adjust, pivot or undertake a hard reset.
Cons
- Limited availability: Fractional leaders aren’t always there, and may not be available for urgent issues or decisions, which can potentially slow down some processes. It might also be challenging to align schedules for important meetings or events.
- Cultural “outsider”: Fractional leaders are only in the trenches part-time. Less time on-site means less opportunity to absorb and influence company culture, which could potentially mean having difficulty building deep relationships with all team members.
- Potential conflict with full-time staff: In larger organisations, there could be confusion about reporting structures or decision-making authority.
- Split focus: Fractional leaders often work with multiple companies, which could divide their attention. There’s a risk they might prioritise other clients if conflicts arise.
Full-time vs fractional: how to determine your ideal leader
Pros and cons laid on the table, which leader is right for your start-up: full-time or fractional?
Bad news: there’s no single, simple answer. Your choice will depend on your goals, limitations and preferences.
Good news: a few key considerations can help you identify the best option.
- Where are you going? Consider the stage that your startup is currently at – seed, early, growth, expansion – and where you aim to be in the not-too-distant future.
- How are you getting there? Plan in hand, identify your business’s pain points, and the specific areas where you require executive expertise. Are your staff constantly asking for strategic direction or extra bandwidth where you don’t necessarily have a headcount?
- What are your limitations? Consider the time and money you have at your disposal. What are your budget constraints? How quickly do you need to see a return on your leadership investment? How much agility do you need to retain?
By answering these questions, the ideal form of leadership should begin to take shape.
Shepherd: fractional leadership for startups
The rise of the gig economy and a renewed focus on work-life balance has led to a growing acceptance of alternative leadership models.
The shift towards more flexible work is real.
At Shepherd we’re helping to power it.
That’s good news for startups: you get transformative leaders in a more flexible and cost-effective package. Shepherd grants your startup access to the execs you need, on terms that work for you.
If you’re ready to grow, we’re ready to help.
