Fractional Leadership: the Answer to Hiring in an Unstable Economy?
With the back-and-forth, and subsequent uncertainty regarding Donald Trump’s tariffs, many companies have no choice but to pause what they’re doing and wait to see if (and when) there’s a path forward.
I call this state “purgatory,” and right now I have so much empathy for businesses that are being directly impacted by the daily whims of this administration. Just this morning, one of my clients–a large, nearly 20-year-old retailer–called me on the verge of tears regarding shipments that are already in containers and on their way to the US. For them, new tariffs mean that they are already losing money before the goods hit our port of entry.
As we border on a potential recession, I’ve had a number of founders and VC’s reach out about my practice as a Fractional People Operations Leader. When the world is in flux and stability is not guaranteed, solutions that provide flexibility are a godsend.
So why does fractional work make sense at a time like this?
Agility: Bring in experienced leadership as needed, no long-term commitment required
Preserving runway: Avoid steep upfront costs like search fees, signing bonuses, benefits, perks, hardware, employee referral fees, new hire technology/tooling, 401K contributions, professional development stipends and team offsites (See below for more detailed info on spend)
Preserving equity: When cash is king, you’ll be expected to pay for services and not with shares—save your equity for critical hires and refresh grants
You have full license to be REACTIVE: I know, I know, “reactive” is usually a dirty word in startups. However, in this case you can pull experts in on a whim with little-to-no planning. Fractional talent can address issues like RIFs, culture challenges, or performance reviews fast
Try before you buy: I can’t speak for anyone else, but I never say never, even when it comes to full time roles. Fractional work offers a rare glimpse into a leader’s actual output before committing to a full-time hire
While price is always a factor in startups, in the context of economic uncertainty, startups need leaders who can scale up or down with market conditions—making fractional support especially appealing to founders and VCs.
Also—it's tax day. And if you're in NY (especially NYC), I feel your pain.
The U.S. Bureau of Labor Statistics (BLS) reports that 40–80% of gross revenue goes toward employee compensation, which includes salary, benefits, and training and development expenses. Sounds pretty cut and dry, right?! Unfortunately, the BLS left out some crucial elements that could push this number up to 90%. These include:
Incentive and bonus compensation: This includes any extra pay awarded based on performance, such as bonuses, commissions, incentives
Workspace and office essentials: Unless an employee is fully remote, companies usually incur expenses to provide a physical work environment. This can involve rent, utilities, desks, chairs, and general office supplies.
General overhead costs: business travel, utility bills, expenses for IT and telecom equipment, mobile devices, subscriptions, and data services
Employment-related taxes: Employers are typically responsible for covering payroll taxes, such as Social Security contributions, unemployment insurance, and workers’ compensation premiums.
Software applications: Mid-sized companies may rely on more than 130 cloud-based software tools, with some tech-focused organizations spending over $8,000 per employee each year.
To wrap this up, Fractional leadership is having a moment. Perhaps more than it did when the trauma of covid pushed tons of burnt-out leaders to leave the workforce and start their own businesses. For all of the reasons I listed above, I’m excited to see Fractional work is gaining traction as a cogent business strategy more than a “nice to have.”
