Economy & Business
The rise of fractional roles and leadership
Fractional roles and fractional leadership are still evolving but it seems likely that they will become increasingly common in the future
By Paul Shelton
It's been over three years since the World Health Organization declared Covid-19 a pandemic and many employees were pushed into remote work.
While some have since returned to the office, others have decided to continue working from home. Some have seen colleagues quit and move on to new jobs during what has been referred to, in some countries, as the Great Resignation, a term less common in Taiwan than perhaps the US or other Western countries.
Nevertheless, it is as though the world of work has flipped upside down. The generally accepted consensus is that remote work has had positive impacts. Workers gain flexibility with their schedules. Working parents get more flexibility with their family life and it has also had the very positive impact of allowing people with disabilities greater access to work options.
Commuter driven businesses have probably suffered from remote work and there is talk of almost empty high-rise office buildings in some major cities. That is a lot of very expensive real estate laying empty. One social commentator suggested that countries with high homeless rates should seriously look into converting empty office buildings into affordable public housing, a most intriguing concept.
Even though the general local Taiwan impression is that working from home is not favoured by local management a PwC Taiwan study found that Taiwanese workers mainly focus on monetary compensation, being able to be themselves at work, and being physically and psychologically cared for. This study found that some 70% of them favor hybrid arrangements in which they can work from home on some days of the week. This from a country that still “enforces” make up days in compensation for public holidays.
Globally, 54% of workers think their job can be done remotely, and 41% of Taiwanese workers share this view. However, sharing this view and being actually allowed to work remotely may be two ends of a long spectrum especially given the sheer preponderance in Taiwan of small and medium enterprises which ultimately employ some 80% of Taiwan’s workforce.
Regardless of Taiwan’s current position, the global workplace is transforming from traditional, in-house employment to external expertise. With the rise of what is called fractional hiring, many businesses are outsourcing to gain deep expertise and the ability to scale at the project and executive level.
The fractional hiring trend seemed to find its initial footing in the financial area and hiring fractional Chief Financial Officers (CFOs) and in the technology area hiring fractional Chief Information Officers (CIOs). But demand is on the increase, and we are now seeing fractional roles and fractional leadership increases across other functional areas including sales, marketing, human resources, legal, compliance and other leadership areas.
Fractional roles refer to positions within a company or organisation that are not full-time positions. These roles can be part-time, project-based roles or a blend of the two. These roles are often designed to fulfill specific functions or tasks on a limited or as-needed basis, without the commitment of a full-time employment contract.
Both parties in a fractional role should have some form of written memorandum of understanding just in case things don’t work out as expected. Fractional role participants should also have a full understanding of how the labour law works in their respective jurisdictions so as not to fall foul of relevant regulations, regardless of how the role is expressed. Just because individuals in fractional roles are often not regarded as regular employees of a company, it is always best to obtain your own advice on issues such as legal entitlements and of course, taxation.
Fractional roles allow companies to bring in specialized expertise for particular projects or tasks which, at that point in time, don't require a full-time employee. For example, a company might hire a fractional CFO, marketing consultant, or HR specialist to address specific needs of the company according to its size, state of development or future plans.
There can be a real cost saving for companies using fractional roles. The company may find that it is only paying for the services they need when they need them. This can be more economical than hiring a full-time employee with benefits and a regular salary.
There is mutual beneficial flexibility for both the employer and the worker in fractional roles. Employers can scale up or down the engagement as required, and workers can take on multiple fractional roles or freelance positions, allowing them to diversify their work and income. This diversification is particularly important as employees of all levels report difficulty in obtaining the traditional full-time job. The ability to take on multiple roles and positions lessens the risk of either unemployment or under-employment.
Fractional roles are not limited to particular industries or countries. Fractional roles exist in an increasing number of fields and fractional workers may serve as advisors or even part-time executives.
Provided the labour law in a particular jurisdiction does not impose the provision of benefits like health insurance, retirement plans or paid-leave, companies can reduce their overhead costs by hiring fractional roles.
There are a surprising number of workers who see benefit in fractional roles. Some are simply not interested in the old 9 to 5 role and lengthy commute or may be tired of the perceived monotony of a role with a single definition. This pool of workers allows companies to tap into this expertise and is especially valuable when a company needs experienced talent for short-term or specialized projects.
Some commentators also see these fractional roles as essentially “on-demand services”, but companies need to be aware that the talent pool can be limited, and good forward planning is needed if a company intends to be able to use these fractional role on-demand services.
Hours worked in fractional roles can vary as can the nature of the work involved. Flexibility is the key word for both sides of the fractional equation. These roles can be an integral part of a company's workforce strategy, helping them efficiently manage their talent pool and adapt to changing business needs.
Fractional leadership is also known as fractional executive or part-time leadership. In this situation, a company or business employs or engages experienced leaders or executives on a part-time, as-needed basis rather than hiring them for full-time, permanent positions.
Fractional leaders can hold high-level c-suite roles, such as CEO, CFO, CCO. Fractional leaders provide their expertise and guidance to the company in a flexible capacity. They can also act as mentors to more junior company executives.
Fractional leaders tend to be seasoned professionals with extensive experience in their respective fields and it is their expertise and leadership skills that make them attractive to companies.
As with other fractional roles, fractional leaders work on a part-time, project-based, or temporary basis and may have multiple clients or projects simultaneously. Fractional leaders need to ensure there is no conflict of interest if they take on multiple roles simultaneously.
Again, cost-effectiveness can be an attraction when engaging fractional leaders. Companies get the benefit of top-tier talent without the overly burdensome financial commitment of a full-time executive salary and benefits package.
As with other fractional roles, fractional leaders provide flexibility for both the company and indeed for the executives themselves. Fractional leaders can be particularly useful for strategic planning or to fill temporary leadership gaps. Fractional leaders, in turn, can choose the projects and clients that align with their skills and interests.
Fractional leaders can working closely with a company’s existing leadership team and board of directors to drive business growth, addressing specific challenges and are typically focused on delivering specific results or achieving defined objectives within a set timeframe. Their compensation may be tied to performance and outcomes. Fractional leaders expect to be paid for their expertise.
Fractional leadership is particularly valuable for startups and small and medium-sized businesses, or companies undergoing transitions or transformations. This should make fractional leaders an attractive prospect in Taiwan.
Fractional executives, usually with long experience in their fields, typically work with two or more clients at a time. The part-time leadership positions take advantage of their expertise but avoid the 24/7 pressures of the typical executive role, giving seasoned professionals more autonomy in their lives.
Hiring fractional leaders also allows companies to skip the imprecise recruiting and onboarding process to go straight to doing the work. It arguably also returns the ownership of the recruitment process to the hiring manager and away from AI/algorithmic processes that have gained some traction in recent years. Hiring a leader should not be the work of an AI system. It’s the work of trust and knowing that the job is in the right hands, even if it is only for a limited period of time.
Fractional leaders can also be utilised to train incoming executives during transitional times, allowing existing executives to get on with the company’s day to day activities. There can be many mutual benefits for both the fractional leader and the company.
Venture capital and private equity companies
Fractional leaders are in high demand as venture-capital firms pour money into early-stage startups. These on-demand leaders fill a particular need at startups after early funding rounds. At the startup stage, companies may not have the need for a full-time CFO, but they will need someone to fill the gap when more complex financial questions arise, especially keeping the all-important investors in startups happy.
Such part-time CFOs help establish processes and make operational decisions, for example how to create financial forecasts or whether to expand to new markets. Deal-making will always fuel the demand for fractional finance services.
Interim Chief Information Officers (CIOs) are in large demand demand in private equity firms to serve a transitional role. This has increased substantially since the pandemic, due to the increased focus on digital technology and the increase in cyber security risks, an issue that Taiwan faces on a daily basis. The fractional CIO plays a critical role in mitigating technology and cyber risks and controlling costs. Many fractional CIOs have expertise in mergers and acquisitions (M&A) and private equity as well, making them extremely valuable.
Third party consultant platforms
The rise in fractional roles has also seen the rise in the number of online service providers which allow those interested in fractional roles to both advertise their need for such services or their availability for such services. There seems to be an entire industry rising up to support fractional employment or engagement. Some of these platforms are extremely professional but there are a couple of issues to watch for when using these platforms.
Firstly, there seems to be an expectation by some companies seeking fractional assistance that they can offer extremely low renumeration for roles which require actual expertise. Perhaps they really do not have the resources to pay market rates, but the offer has to be reasonable, or they will be passed over for a company that is willing to pay.
Secondly, always look for hiring companies that have some “history” on the platform. This is not always possible, but it can give some assurance that the company is valid and has experience in the fractional field. Some platforms even offer verification of payment methods, and this is extremely helpful as opposed to hiring companies which use vague wording concerning renumeration, such as, “we can agree on the fee later”. That fee is highly likely to be low and not worth the time and effort of the discussions concerning the role.
Thirdly, avoid and report any suspicious activity on the platform. Red flags are companies immediately requesting that “next steps” occur outside of the platform or offering renumeration that is vastly overinflated for the expected work or project. Never pay any form of upfront fee to the hiring company prior to being engaged. It is guaranteed to be a scam. That fee, however described, and the scammer will disappear quicker than the non-existent role. These types of scammers and fraudsters are at play in Taiwan already.
Fractional roles and fractional leadership are still evolving but it seems likely that they will be an increasingly active part of peoples’ employment/engagement in the future as people seek to find, when possible, a balance between work and a fulfilling life. There is already a very active group in Asia and interest seems to be increasing at each scheduled group conference call. Face-to-face gatherings are being arranged and there is a very positive momentum for participants to not only look for roles that suit them but to also assist other participants in their pursuit of roles. Word of mouth is a valuable tool in this new fractional world.
Paul Shelton is a consultant with 30 years of experience in the international financial services and related industries with skills in all aspects of legal and financial crime compliance and regulatory relationship advisory and management.