The Rise of Fractional Executives in Direct Selling

Written by Brett Duncan. Brett is a “transitionist” who specializes in helping direct selling companies as they transition into the new era of direct selling. He is co-founder and managing partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps.

The Rise of Fractional Executives in Direct Selling

“Everything rises and falls on leadership.”

John Maxwell wrote these words to begin one of the most important works on the topic of leadership, The 21 Irrefutable Laws of Leadership. It’s a phrase many of us hear often from our field leaders, and it’s one that proves itself over and over again, not just among our salesforce, but at the corporate office, too.

I tend to agree with Maxwell. But if you really dwell on his statement, you begin to feel the weight of it. Is leadership really that important?

Can it really impact everything?

More importantly, what happens when there is a lack of leadership? And not just in cases when someone if filling a leadership position, but simply not fulfilling it, but also when there’s simply no one in the position to begin with?

What is the impact of an absence of leadership for one month? Three?  Six?

And what is the impact of the wrong leader for that amount of time?

If you’ve spent any time working on the corporate side of a direct selling company, you’re likely thinking about two people right now. You’re thinking about the best leader you’ve ever worked with, and the worst. You’re thinking of the times that great leadership became the spark of raising the entire organization. And you’re thinking of the times that the wrong leadership has held the company back.

We talk a lot about leadership in our channel. But do we really respect it? Do we truly believe that everything rises and falls on it? If we did, would we do things differently?

There’s no doubt that the entire business world is and has been facing an ongoing need for transition and transformation, especially over the last five years. This is especially true in direct selling. As the world changes, how we live and operate within it must also change. And a change in how we approach leadership at any given moment must change, as well.

A somewhat new concept that has gained in popularity in the business world over this same timeframe is what is known as the fractional executive. There are many different definitions of a fractional executive, but here is one from ThinkingBigger.com that seems to cover it well:

“Fractional executives are leaders who take up a part-time position in your C-suite of employees such as CIOs, CFOs, COOs, CHROs — the list goes on. When your business hits a certain size, it can be challenging for a founder or CEO to balance all these roles while still running a company. Typically, the workload is more than the CEOs can handle alone, and they become limited to the experience they have on staff and what they can afford. Fractional executives have significant experience with major firms and bring a lot of different skills and expertise to the role.

Most of the time they may only work part-time or in a freelance capacity, but they can have the same kind of impact on your business that many of your full-time staff provide. Not only do they bring their leadership skills to your business, but they may also lend a certain amount of credibility to your business.”

I’ll confess, when I first heard this term “fractional” executive, I was both confused and skeptical. Isn’t this just a fancier name for a “consultant?” In some cases, maybe. But as I’ve learned more and more about fractional services, I’ve learned that there are some important distinctions.

A fractional executive is brought on not just to consult, but to make decisions, and lead a team. On top of that, the whole idea behind the concept is to make a high level of executive experience available to organizations that typically wouldn’t be ready or able to bring those skills in-house on a full-time basis, but where the experience and expertise may be needed the most.

I actually believe that fractional executive leadership isn’t just a trend that is worthy of second look within direct selling. I actually believe direct selling may be able to benefit from it even more than most industries.

As I’ve worked with many direct selling companies over the past several years, one of the things I’ve loved about the work is getting to work with visionary founders who have brought a dream to life, and jumped in and made it happen. But as these companies grow, they eventually and inevitably reach a point where the vision requires more and more operational excellence and know-how, beyond what the founder and the small core team who launched the company are always able to provide. Whether the company is stalling and slipping in sales, or in the midst of hyper-growth, or somewhere in between, the stakes are high, and the opportunities not only abound, but are of an urgent matter.

Many times, a company feels compelled to bring on new full-time executives. And many times, this is definitely the right decision. But in a rush to fill a position, sometimes a company skips over the due diligence and thoughtful considerations of bringing in the right person and settles on simply bringing in a person, only to find out the cultural fit may be off. Or, in other situations, the company is extremely diligent in finding the right person, only to go six months, twelve months or more without having someone in position to help lead the company, and now a window of opportunity has moved on.

The way I see it, fractional executives give direct selling companies an opportunity to add executive leadership quickly without the pressure of making a wrong long-term decision. Here are a few key ways I see fractional executives helping a direct selling company:

In an interim capacity:

Let’s say your CFO just gave notice that she’s moving on to a new opportunity. She’s been overseeing your financial operation now for five years, a true partner. As the owner and CEO, you know that what she does, and all the procedures and approaches that she’s familiar with and leads, is not something anyone can simply step in and hold down, especially yourself.

It’s a need that you need to fill very quickly, but you certainly understand how important it is to find the right person. What if you can’t find them? What if the right person isn’t available right now? What are the consequences of bringing in the wrong person?

This is a great example of where a fractional CFO would be a great solution for you. Allow someone with all the experience of running a financial operation step in and hold down the fort, maybe even streamline it a bit, while you carefully seek out the right long-term fit for your company. The fractional CFO knows this is not a permanent position for him (and likely doesn’t want it to be), and they’re often even willing to help you find and/or qualify a long-term solution to take their place.

As the fractional executive steps in for three or six months (or more), you can benefit from their leadership without feeling the pressure of finding the perfect fit right away.

In an ongoing part-time capacity:

It seems to me that there’s been an increase in the number of C-level positions at a “typical” company these days. I can remember when the norm was typically no more than a CEO, CFO and COO. Now, there are so many more C-level positions: CMO (marketing), CSO (sales… or science… or strategy ;-)), CCO (commercial), CRO (revenue), CHRO (human resources), CIO (information), CVO (visionary), CTO (technology)… That’s a lot of chiefs!

As more and more companies adopt these broader executive suites, the pressure to add them to your own company accelerates. But here’s the thing: most companies don’t need all of these C-level positions, and you definitely don’t need them all full-time.

As you discover the opportunities for your business and the gaps in leadership to help make it happen, don’t feel like you have to jump from nothing to full-time executive in a single leap. Yes, it is clear that your business needs a CIO to bring your strategic plan to life and to lead the way on some major projects. But you can probably fulfill what you need in two days a week, not five. Yes, your business could get to the next level with a strong strategic marketing plan in place and a leader who knows how to bring it life and lead a time to make it happen. But that doesn’t mean you need a CMO full-time.

Many fractional engagements allow the fractional executive to dedicate a portion of their time (typically 40-60%) to your company, which is typically more than enough to gain the impact you’re looking for. Assume you’re a small but growing direct sales company. You’re in the perfect position to truly leapfrog to not just the next level, but levels beyond, but you know you need the support of people who’ve been there and done it before. Your company’s need requires that of a seasoned, proven executive. However, your company’s budget simply won’t enable you to bring anyone of that pedigree in full-time.

So, what do you do? Sometimes, you promote someone from within, someone with promise and potential, and who has paid their dues. And sometimes, this is a great move. However, many times, it’s a bit premature, and is unfair to both the company and the team member. Your need right now may not be able to withstand the learning curve to push your internal person to the next level. And, your internal person may benefit from another 6-12 months to prepare and learn from someone else. So many times, in this instance, a great team member gets chewed up and spit out by unreasonable expectations and an unfair situation.

In other cases, you may roll the dice and make the investment. It either obliterates your budget, or it requires you to get a loan or infusion of cash somehow. While the entrepreneurial spirit is admirable, what so often happens is that the new executive cannot actually do what they know needs to be done because there’s no budget left over for it. Just think of a Chief Marketing Officer having no budget for advertising and support team options.

In either instance above, there are stories of it working out very well. And for every one of those stories, there are four others of it not working out well. A fractional executive could be the perfect solution. Your company needs a high level of experience. In most cases, two days’ worth of the right experience is worth much more than five days of the wrong experience. And … your company needs to hold on to as much of its cash as possible, while also having enough still in the bank to actually implement what an experienced executive will want to do.

In a project-based capacity:

Another great way to leverage a fractional executive is bring someone in to oversee very important and intricate strategic projects. For example, you’ve decided you need to change your software platform. Sounds easy enough, right? And yet you’ve heard horror story after horror story about how choosing a platform and launching a platform can go wrong, even to the point of bringing a company to its knees.

Your in-house development team is great, as is the rest of your IT team. They know your current system up and down, and they’re always ready to answer the call, no matter what (or when) it may be. But no one has ever done a project like this before.

A fractional CIO or CTO who has gone through software transitions before could step in to not just manage the project, but also manage the entire team through the transition. If this is a crucial strategic project (and it is), then don’t short-change it with a lack of experience. Set the project up to succeed by bringing in someone who knows exactly what success looks like.

An easy option to implement

Several direct selling companies have been implementing a fractional executive approach for years, even though they didn’t know that’s what it was called. I know of one party plan company who has partnered with a fractional CFO for nearly a decade. I’ve personally worked with other companies to oversee strategy and marketing at times.

But I believe it’s a concept that is of utmost importance for direct selling companies right now. We need both agility and excellence. It’s no longer acceptable for one to be sacrificed in pursuit of the other. And, we have a huge number of executives from our industry who, quite frankly, aren’t interested in joining another company full-time, but they do want to do what they do best in the right situation. And if the last couple years have taught us anything, we’ve learned that virtual work and remote engagement is extremely doable, if not even preferred in some cases.

Most importantly, I want to see our growing industry continue to grow. Many are the companies who grow through their first 10 years of business. Sadly, many are the companies who can’t seem to grow past that point. There are many factors that lead to that, but most certainly one is in not bringing in the right experienced leaders in crucial positions to help strengthen the foundation of the company for the future.

So, do you believe that everything rises and falls on leadership? If so, are you tenacious in finding the right leaders for the moment, refusing to sacrifice excellence for agility, and vice versa? I would highly encourage you to consider fractional executive support moving forward, and I’d love to chat with you about it if you’re interested.

SHARE THIS ARTICLE: