The cost of hiring a proven C-level executive inside any company can go up to millions every year. When you combine the entire panel of C-suite, it is multiplied manifold. Most companies, especially start-ups and firms aiming to be technology-forward may not be able to afford this. At least until they have raised a substantial round of funding or are driving revenues with strength. Instead they opt out of filling the roles, merge multiple roles into one body or hire consultants on roll. 

I have seen many companies work with part-time executives (CTOs, CFOs, CMOs, etc.). The founders of some of the biggest tech companies in the world have moved around a lot. C-suite executives have LinkedIn profiles that reveal a similar trend. In the era of serial entrepreneurs and gig economy, the traditional model of leadership hiring is undergoing significant disruption. 

Today leadership executives are wearing multiple hats serving different roles across companies as consultants and board advisors. What are the pros and cons? Let’s find out.

The case for fractional executives

Prima facie, it’s difficult to calculate the benefits of getting an experienced brain at a significantly lower cost. These executives work for the company two to three days a week, come with substantial salary cost cut and tax benefits - practically an employee minus the perks. Organisations in infancy can specially benefit from this model as they can get high-level firepower talent to help them out with their business until they can afford a full-time leader. We have seen several instances of such matchmaking of brands and executives / mentors from service providers, accelerators and co-working companies with high start-up traffic.  ‘Fractional CTOs’ for instance, are now commonplace. People invested in this model have realized that strategic work takes only a fraction of their time and feel that most companies don’t even need a full-time CTO on-site to handle strategy. 

While fractional executives are typically associated with start-ups, recent thinking and progressive trends have mulled deeply about the value a part-time executive adds. While it’s great to have outside-in perspectives to figure out the decisive course of action, can we expect them to be fully invested? Shouldn’t the full-time core team be the face of the driving strategy and growth of the company?

The case against multiple hats

Let’s take a step back. Imagine you are a mid-level operations manager in the company, and only get to connect with the CTO once a week. The problems are solved once he/she is on-site. Once he/she leaves, your team struggles to utilize the same strategy to optimize growth or even duplicate it for future initiatives. Lack of sustainable leadership translates to culture-fit problems. The process of transition, getting acquainted with the team and operations is a time-consuming process too. Often, organisations may face ethical conflicts and incur IP losses if the consulting leader is involved with competing brands.

While experts agree that companies may utilise the expertise of part-time executive leaders for process complexities and short-term highly technical project /problem-solving, the long-term sustainability of this model is still in question.

The advantages of the ‘rent-a-CXO’ model is only effective for a limited time. The whole nature of a senior executive is long-term vision. Without fully aligning with the company or understanding the myriad of nuances within it, the business would end up facing and / or causing more complications than intended. Add to that the cost of transitioning to new leadership - and they are high. When top executives change, both the successors and their companies suffer. In fact, a failed succession can slash revenues by as much as 3% for a standard USD 1 billion company, bleeding the market cap in billions.

The balancing act

In the lexicon of management, the epitome of leadership is the C-suite. Depending on where and how a leader is positioned determines what gets done – a company-wide signalling of priorities. It’s a leader’s job to champion the organisation’s culture and constantly look for ways to strengthen it.

Its therefore best to supplement skills or guidance from part-time executives, while the primary business is helmed by the core team. The goal of any core member is to go beyond their functions and influence a broader discussion - instead of serving a myopic siloed role in the company’s growth.