In most small to medium-sized businesses, the CFO manages all non-operations departments such as Finance, HR, IT, and Marketing. As the company grows, its leadership team grows to include more specialized executives including the CIO (Chief Information Officer), CMO (Chief Marketing Officer), and potentially the CPO (Chief People Officer) or CHRO (Chief Human Resources Officer). Until then, many companies outsource these roles or rely on consultants. Since 2020, we’ve seen a rise of fractional executives in Construction, including the CFO role.
9 Reasons Why CFOs Like Fractional Executives
- Subject Matter Expertise – a fractional executive is an expert in their field and has an expertise that the CFO often isn’t knowledgeable in such as marketing. This allows an industry expert to make recommendations and decisions based on their experience and knowledge.
- Industry Knowledge – many fractional executives specialize in a specific industry like how AltCMO focuses on the Construction industry.
- Continued Education – good fractional executives continues to learn and hone his/her craft. They read industry articles, attend conferences, watch webinars, and talk with their peers about challenges, trends, and innovations in their expertise that a CFO couldn’t keep up with and probably doesn’t have access to.
- Value – because a fractional executive is a fraction of their salary, often 15-25% of their salary and burden, companies get an extreme amount of value by pairing the expertise of a fractional executive with an entry-level employee such as a marketing coordinator, which costs less than a marketing director.
- Predictable Monthly Expense – fractional executives have a set monthly rate so CFOs can easily budget their expenses instead of worrying about huge fluctuations with outsourced companies or consultants that charge per project.
- Hire Better Talent – since the CFO may not have the knowledge or resources to distinguish the difference between candidates, they tend to overpay for lesser-skilled team members or underpay valuable employees who leave quickly. A fractional executive can see who “gets it” and find those diamonds in the rough that they can mentor and grow to be valuable assets to the company.
- Consistency Through Turnover – turnover happens with every company, but it can be detrimental for smaller companies with one-person departments like HR, IT, and Marketing. A fractional executive can cover for that person’s absence, utilize their network for a temporary solution, and hire a replacement faster to minimize the impact of the disruption.
- Vetted Network – a fractional executive can tap their network to bring in additional experts and vendors that they trust, which saves the CFO time and frustration.
- Scalable – fractional executives can scale their offering as the company grows and recommend when and what to hire in their respective departments.
A fractional executive can make a significant impact on a company and generally make the CFO’s job a lot easier. Additionally, fractional executives can provide CEOs and CFOs with insights they see from their other clients. If the fractional executive focuses on a specific industry, they’ll also see trends happening in real-time instead of having to wait 1-2 years for those trends to be reported in industry publications.