Hiring fractional executives has emerged as a growing strategy among tech startups looking to combat market challenges to scalability while maintaining a flexible budget. These contracted professionals deliver valuable team and project leadership skills while working on a short-term basis.
Taking insights from our Betts Executive Compensation Guide and additional research, his blog will dive into why many technology companies are recruiting fractional leadership, and when is the best time to hire a contract executive for your firm:
What is a Fractional Executive?
A fractional executive is a highly experienced leader who works on a part-time or contract basis, sometimes for multiple organizations simultaneously. They deliver Expertise as a Service (EaaS) as well as critically-needed strategic guidance without the commitment of a full-time salary, making recruiting fractional leadership an attractive option for startup companies looking to scale for growth in the short-term while remaining budget-conscious. This is also an effective stopgap measure for industries where the required experience comes with a compensation premium, especially at the exec level.
Fractional Work vs. Consulting
An important distinction to be cognizant of when hiring fractional workers is how they differ from outside consultants. While both may work part-time, a fractional executive will be directly leading their projects instead of having a layer of separation from the teams involved. A consultant may contribute the same level of expertise, but in their case their EaaS is focused on filling a need that requires guidance while the fractional hire is brought in specifically to be a leader.
The Rise in Fractional Leadership Hiring for Tech
The tech sector has gone through a great many changes that specifically made any organization that is not a venture capital-funded AI startup very budget-wary. As companies balance these economic uncertainties versus their growing need for specialized skills sets, hiring fractional executives provides a flexible in-between for leadership title recruitment that still allows access to expert talent without the overhead of a full-time, C-suite or Director-level salary. We have seen this trend picking up from 2023 onwards and it will likely persist in the technology industry for the immediate future as companies continue to prioritize flexibility in the current economy.
The Flexibility of Fractional Contracts
One of the key benefits of hiring fractional executives is the level of flexibility it allows for a startup that requires specific leadership and skill sets. You can adjust the scope and duration of the engagement based on what you need in the interim. This inherent scalability allows you to bring in a valuable expert to lead your go-to-market (GTM) teams on a temporary basis without the long-term commitments of a full-time hire.
Top Roles for Fractional Executives in Technology
The most common fractional executive roles we have seen in the tech industry include key C-suite or Director-level positions, such as:
- Fractional CEO
- Fractional COO
- Fractional CFO
- Fractional Head/Director of Marketing
- Fractional Head/Director of Sales
- Fractional Head of People
Each of these titles each oversees an important operational channel in a growing tech startup, but these also bring scalability challenges in a short-term period. For example, a firm where the founder comes from a technical background and will be acting as the CTO (Chief Technology Officer) to drive product development, bringing in a fractional Chief Executive Officer will add valuable top-level leadership to the company without forcing the founder to divide their time between both needs. This also applies to roles such as Chief Operating Officer or Chief Financial Officer, both jobs that require specific skills and knowledge.
Compensation Trends for Fractional Executives
Fractional executives in tech command significant hourly rates, which can end up being potentially more expensive than a full-time hire; however, many startups may opt to keep a fractional leadership hire on a retainer of around 3-months. Here is a snapshot of the average rates we found for different C-level and Director-level fractional roles:
| Title | Hourly Rate | Retainer (3-month) |
| Fractional CEO | $250 – $500/hr | $20,000 – $50,000 |
| Fractional CFO | $250 – $400/hr | $15,000 – $30,000 |
| Fractional COO | $250 – $400/hr | $15,000 – $30,000 |
| Fractional Director of Marketing | $200 – $400/hr | $10,000 – $20,000 |
| Fractional Director of Sales | $200 – $400/hr | $10,000 – $20,000 |
| Fractional Head of People | $200 – $400/hr | $6,500 – $20,000 |
When to Consider Hiring a Fractional Executive
There are several scenarios where hiring a fractional executive might be the best course of action:
1. During Rapid Growth Phases
Startups experiencing rapid growth can benefit from fractional executives who bring extensive experience in navigating expansion challenges without the long-term commitment of a full-time hire
2. For Specific Project Leadership
When a company needs expert guidance for a particular initiative or project, a fractional executive can provide focused leadership without the need to create a permanent position
3. To Fill Temporary Leadership Gaps
During transitions between full-time executives or when unexpected departures occur, fractional leaders can step in to maintain continuity and strategic direction
4. For Expertise in Emerging Technologies
As new technologies emerge, companies may need specialized leadership to guide implementation and strategy, and fractional executives may bring cutting-edge expertise in these tools that can be leveraged on-demand
5. To Optimize Costs While Scaling
Fractional executives allow companies to access C-level expertise at a fraction of the cost of a full-time executive, making it an attractive option for budget-conscious organizations
Key Traits to Look for When Hiring Fractional Executives
The success of hiring a fractional executive hinges on finding the right fit for your team. When sourcing a candidate, look for these essential qualities:
- Relevant Experience – Look for candidates with experience that far exceeds what you could afford in a full-time hire, particularly in solving challenges similar to those your company faces
- Strategic Approach – Effective fractional leaders should have a clear strategy for managing their part-time presence while ensuring continuity and progress
- Adaptability -The ability to flex their time commitment and adapt to changing organizational needs is crucial for successful fractional executive engagements
Industry Experience vs. Technical Expertise
When hiring a fractional leader for your technology company, it is important to be clear what your goals for an executive hire are right now and what skills are absolute requirements for your teams to have. Your GTM strategy may need to be refined for your particular industry market or for a more technically-savvy audience that wants to hear immediate solution value before they even talk about buying. You will have to balance priorities in many cases, and trying to find the perfect fit candidate may take longer to source, raise expected compensation beyond what you planned, or be hard to validate without knowing exactly who and what you are looking for (unless you have a partner that can help).
Challenges of Hiring Fractional Executives
While there are many benefits to hiring fractional executives, there are also potential challenges that can arise during their shorter term. These include:
- Limited Availability: Fractional executives may be working with multiple organizations simultaneously, which can limit their availability
- Integration Issues: Integrating a part-time leader into a full-time team can be challenging, especially if the executive is not physically present
- Consistency: Maintaining continuity and consistency can be difficult when an executive is only present part-time
Overcoming Challenges with Fractional Leadership
To maximize the benefits of fractional executives, you should:
- Clearly define roles and expectations
- Establish effective communication channels
- Integrate fractional leaders into the existing team structure
- Set measurable goals and KPIs
Hire Your Next Fractional Executive for Tech with Betts
Hiring a fractional executive can be a game-changing decision for tech startups seeking to leverage top-tier leadership talent while maintaining flexibility and managing budget. Working with Betts Recruiting will give you access to a network of thousands of qualified candidates, pre-vetted by our team and with experience in different areas of the technology industry.
Contact Betts here to get started on your search for your unicorn executive and propel your GTM strategy forward.