What is Fractional Recruiting

Why employ the Fractional Recruiting model for your business?

Finding an executive or hiring someone to search an executive has become too costly. Especially when unemployment has been in a downward trend since the financial crisis, finding a full time equivalent for an executive position has been very difficult.

Firms have tried to adjust by giving more duties to existing leadership, but this has a tendency to lead to overburdening existing executives. Again, it’s a job seeker’s market out there. So an overextended executive will eventually lead to an unhappy executive, who will likely jump to greener pastures and better pay.

So what should firms do?

At Vested, we have become pioneers at finding executive level talent at a reasonable cost. We do this with our $999/monthly subscription service. We also do this by recruiting fractional executives for firms who need executive talent but have a limited budget.

It’s great for the following reasons:

 

What is a Fractional Employee?

This term originated in universities and colleges, where professors and university level employees divided their time. Professors often have many interests. They are sometimes needed in government to work on special projects, like consulting on the construction of a Mars Rover.

Or perhaps it’s a professor who excels in Finance thought leadership so he or she is hired by Wall Street to teach at their employee training sessions. Because of their demand, professors work in academia as well as in government or private businesses.

They may lecture a couple of days in university and spend Fridays in Wall Street, teaching CPE courses at an investment bank.

Fractional employees are not freelancers so their job is not based on project completion. They can be retained on an ongoing relationship, so he or she can be an adjunct professor at a local college and provide consulting services to a Wall Street firm on the side. Institutions prefer to retain them on an ongoing basis because of their expertise about a particular subject.

Fractional employees generally forego benefits like 401K or health and dental, but they receive greater flexibility in hours and commitment. Many workers prefer this relationship because of greater flexibility over work/life balance.

Why use a Fractional Employee for Business?

I’ve already discussed how some Wall Street firms often use fractional employees to teach their training courses. Every summer a Wall Street firm welcomes their new associates and entry level analysts into their ranks.

Most often, especially the entry level analysts, have little to no exposure to accounting rules or finance theory. Moreover, working in the financial services industry means passing certain tests to achieve certifications.

Many Wall Street firms hire accounting and finance professors at top local universities. They are already skilled in handling a classroom.

Plus, they are considered the best in their profession. Who better to teach the new leaders of Wall Street?

For the professors, they get paid a lot of money during the summer (when universities are closed) and it becomes an easy routine for them. This relationship works for both sides:

  • Professors get an on-going work without sacrificing their normal duties at a university
  • Wall Street firms don’t have to pay benefits to get top level educators to teach their employees

It’s much more cost effective for Wall Street firms to have this relationship as they don’t have to pay the benefits.

Fractional Recruiting is Excellent for Startups

This employee-employer relationship works very well for startups. For fast growing startups, there’s always a need for experienced C-Level executives.

Often, startup founders are led by engineers or very technical people, or they are led by newly minted MBAs.

For the founders with an engineering background, they have excellent coding skills and product development but lack the financial savvy to attract venture capital.

For the MBAs, they have the financial savvy, but have very little coding and product development skills.

Often, C-Level executives are needed to fill the gap or need within the organization. The technical founder needs a CFO or a Controller to handle the finances and to pitch to venture capitalists.

The MBA founder needs a CIO or Product guy or gal to develop the actual product to sell.

Unlike large established firms, startups do not have an unlimited budget. They often have to make sacrifices. More often, limited capital is used to build the technology and improve the product, leaving very little for recruiting and retention of C-Level executives.

This is where fractional recruiting is a game changer for startups.

By employing a fractional recruiting relationship, a startup can fill the talent gaps within their organization without sacrificing a long term commitment to a particular person. It can be try out for both sides.

The startup can use a fractional relationship to assess if a particular person is the right candidate long term. Conversely, the fractional employee can test to see if there is a potential future with the startup. Since there is no long-term commitment, any side can walk away from the relationship.

Both sides of the table benefit from a fractional relationship

The startup can fill the talent gap in the organization by having an experienced C-Level executive on the team.

Whether it’s a CIO to help build the technology or a CFO to manage the finances, the startup can employ a highly skilled individual to help push the startup to the next round of funding.

If all works out, the fractional employee can be extended a full time offer to fill the job once capital is more abundant.

The employee benefits by building institutional knowledge of the startup. He or she may not have the benefits of a full time employee, but the fractional employee will have a better work/life balance.

Moreover, he or she can walk away at any time if the role is not right. When capital is no longer an issue, the fractional employee will most certainly be at the top of the short list for the C-Level position.

Why Vested is the best resource for Fractional Recruiting?

At Vested, we have a strong history working with startups like care/of, Trustwave, Peloton and Convoy. Their stories and testimonials can be found here.

Moreover, as an early stage startup, Vested also knows the dilemma firms find themselves in when they have to choose between product, technology or hiring talent.

With agency recruiters, they can charge as much as 45 percent of first year salary to find an executive.

This is a non-starter for almost any startup. At Vested, we have a pool of candidates willing to work on a fractional basis.

We provide the recruiting service at an affordable cost, and provide a dedicated member of our support and recruiting team to help with the ongoing relationship.

We understand startups go through various stages of radical growth. We too have experienced the famous “hockey stick” effect of startups so it’s necessary to find the appropriate working relationship with a fractional employee.

The working relationship can be a 60, 90 or 120 day plan, but if you don’t plan properly, the departure of this fractional employee could leave a gaping hole in the growth of your startup.

There’s also the matter of compensation. We can work with you to discuss how best to structure the compensation.

It can be balance of salary, equity or work/life balance. Every individual is different and every company is different. We will work with your company to structure the best fractional employee relationship that makes sense for both sides.

To better understand if fractional recruiting makes sense for your business, contact us for a complementary consultation of your HR needs.

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