The flexible scaling solution
The Definitive Guide to Interim and Fractional Leadership
Table of contents
Table of contents
Everything scaling companies need to know about interim and fractional commercial leadership.
The flexible scaling solution
Scaling is hard. In 2020, only 7% of start-ups made it from Series A-C with 70% of start-ups failing in years two through five. Post Series A, CEO-Founders face a wide range of scaling challenges, such as building a commercial team, establishing repeatable processes and growing the customer base, but these challenges have been amplified in the last few years.
That’s because record levels of investment into tech companies has pushed up growth expectations and increasing competition has raised the price and shortened the supply of senior talent. Meanwhile, market uncertainty in the wake of Covid-19 will likely see investors avoiding riskier assets and focusing on the most impressive companies with the strongest core metrics.
Given the current conditions, you might think 7% seems reasonable, but there is a solution that can turn the odds back in your favour. A solution that helps scaling companies hire talent quickly and flexibly. A solution that helps scaling companies grow faster and more cost-effectively. That solution is interim and fractional leadership.
What is interim and fractional leadership?
Think of it as head-renting instead of head-hunting. Rather than spending time and money trying to hire a full-time senior leader, interim and fractional leadership involves hiring senior leaders on either a short-term or part-time basis usually to carry out a specific purpose.
They are experienced senior-level operators that can be parachuted into your company on short notice to drive high-performance in particular aspects of your business. Unlike a coach or a consultant, interim and fractional leaders are hands-on doers whose remit is to get stuck in and get things done. They sit on the management team as if they’re employed and can operate across technical (e.g. CTO), administrative (e.g. Head of HR) and commercial roles (e.g. CMO).
They are experienced senior-level operators that can be parachuted into your company on short notice to drive high-performance in particular aspects of your business.
How do interim and fractional commercial leaders work?
For this guide, we will focus on the example of interim and fractional commercial leaders, such as Chief Revenue Officers (CROs), Chief Marketing Officers (CMOs), VPs of Sales or Customer Success Leaders. Commercial leaders are responsible for winning new business, increasing retention (i.e. NDR/NRR) and improving operational processes to help the company grow. They are usually hired when a company scales (after a fund raise) and are critical to achieving growth targets.
An interim commercial leader usually works full-time (4-5 days per week) for a set period of time (i.e. 4-6 months). They tend to work exclusively for your company in a hybrid capacity (part in-office, part remotely) and can do all the same things as a full-time commercial leader. As such, they often serve as a replacement for an outgoing commercial leader – steadying the ship until a new permanent solution is found (and often helping find the replacement leader) – or brought in to turnaround a struggling department. Their salaries will be based on their role, region, experience and specialisms, and tend to be paid on a monthly or bi-weekly basis according to an agreed day rate. For example, the average commercial leader placed through Scalewise charges £900-1500 ($1,100-$1,900) per day.
A fractional leader is a part-time role on a rolling basis. Working a fraction of the time (i.e. 1-3 days per week), fractional leaders tend to work in a hybrid capacity for a couple of companies at the same time, tackling a variety of challenges and goals. They will usually work for an agreed day rate (a fraction of the salary) ranging from £800-1700 ($1,000-$2,100) per day depending on the task and specialism. Fractional leaders also tend to have pre-defined goals – such as setting up a sales function, devising a go-to-market strategy, driving consistent pipeline growth or improving customer retention – and focus exclusively on these goals instead of the wider role a full-time equivalent would entail.
What can I expect from an interim or fractional commercial leader?
Each commercial role is unique and it’s important to agree on the parameters before the engagement. In general, though, interim leaders can take on any task a full-time leader would be expected to oversee. For example, imagine your sales figures have fallen for two consecutive quarters and you need an experienced VP of Sales to turn things around. You can’t wait six months to make a full-time hire, so you hire an interim to join the company for an agreed period. The interim sales leader would analyse the problem, devise a strategy and quickly execute on that plan, while also training the in-house sales team and helping to hire their replacement.
On the other hand, a fractional leader can take control of a particular area. Like a surgeon focusing on one part of the body, a fractional leader will deliver pre-agreed tasks and results. For instance, you might not have the money or need for a full-time CMO, but you do need to attract more customers. The fractional CMO might work two days per week, devising and implementing an effective marketing plan that drives lead generation. When the plan is in place, proven to work and passed onto the internal team, the fractional CMO will move on. Imagine it as a pay-as-you-go results-machine as you scale.
Despite the variations, both interim and fractional models enable you to access the same thing: a hands-on, seasoned commercial expert that will create, implement and execute an agreed plan.
Why is interim and fractional leadership increasingly popular?
The International Network of Interim Manager Associations (INIMA) survey found a yearly 11% increase in interim management assignments across Europe in January 2022, with the UK seeing the greatest rise (21%). Meanwhile, an interim manager’s average utilisation (the time when they’re employed in a role) jumped from 33% in 2020 to 63% in 2021.
In addition, Scalewise’s May 2022 survey of senior B2B tech leaders found four in five (79%) companies who had considered hiring an interim or fractional commercial leader did so in the last 12 months.
Interim and fractional roles are clearly growing in popularity – especially in commercial roles – but what is causing this surge?
The pandemic not only accelerated the uptake of remote working, but also made it easier. First, tech companies rose to the challenge by enhancing remote working technology, such as video conferencing and mobile management tools. Second, companies that previously resisted remote working started to appreciate its productivity and financial benefits. Third, more senior commercial leaders took stock of their priorities and considered moving to a freelance, portfolio career. In fact, 93% of our survey respondents said they had started or were considering a portfolio career in the next few years.
Combined with the proliferation of X-as-a-Service models showing companies the benefits of on-demand services over full-time, the pandemic inadvertently created the ideal conditions for interim and fractional (or Scale Expertise-as-a-Service) to flourish.
According to our survey, 83% of senior leaders find it hard or really hard to hire senior commercial roles and almost two-thirds (63%) of senior commercial hires take at least six months. Hiring difficulty has been compounded by rising demand for talent outstripping supply and record investment by VCs pushing up the salary packages needed to attract and retain talent. What’s more, with the tenure of senior leaders falling – for example, the average VP of Sales stays for just 19 months – getting a full-time hire right first time is even more important.
With interim and fractional leadership providing a more cost-effective (pay for what you need), lower risk (no long-term commitment) and more efficient (matched to your needs by commercial experts) alternative, more scaling companies have started to take notice.
According to our survey, 83% of senior leaders find it hard or really hard to hire senior commercial roles and almost two-thirds (63%) of senior commercial hires take at least six months
In the last few years, tech start-ups have benefited from record levels of investment. In 2021, for example, $100 billion of capital was invested in European tech with almost 70 rounds of $100M+ in the UK alone. The greater the investment, the greater the growth expectations and competition. The bar has therefore been permanently raised, despite the market looking increasingly uncertain over the next few years. As VC investment becomes harder to access and scaling companies face down the barrel of a potential downround, the need for a flexible, cost-effective solution is raised even further.
Under increased pressure, CEO-Founders have started to look to interim and fractional to make them more competitive in a faster time frame and for less money. That’s because interim and fractional enables CEO-Founders to not only make their investment money stretch further, but also speeds up growth by leveraging seasoned leaders who will deliver results in a shorter period of time.
What are the benefits of interim and fractional commercial leadership?
All scaling companies want to hire top commercial talent quickly and easily, but the interim and fractional model also has wider advantages.
1. More cost-effective talent
All CEO-Founders want to hire the best commercial talent, but there’s usually a trade-off between quality, affordability and availability. With the interim and fractional model, though, a scaling company can afford talent that would usually be out of reach. Although an interim leader receives a competitive salary, it’s only for a shortened period of time and therefore you don’t have to spend £200,000+ on a CMO’s salary in order to invest in marketing. Instead, you could spend £10,000-20,000 on an interim CMO and still significantly enhance your marketing capabilities.
In addition, with an increasing number of experienced commercial leaders moving to portfolio careers – our survey found 93% have senior leaders pursued or are thinking about pursuing a portfolio career – interim and fractional gives you access to the best talent on the market.
Meanwhile, a fractional solution is especially beneficial to fast-growing SMEs. If you’re a scaling company that can’t afford or doesn’t need a full-time top senior commercial leader, a fractional leader is not just more cost-effective, but will deliver more impact than a junior full-time hire in a fraction of the time.
2. Quicker process
Although no company should rush the scaling process, no CEO-Founder (nor early-stage investor) wants to be left behind. In the life of a fast-growth start-up, a huge amount can change in 6-12 months both internally and externally – i.e. what you need in a leader may evolve or market conditions could change – so lengthy hiring processes can be a major growth-inhibitor. What’s more, with increasing competition for funds, customers and market share, missing a revenue or fundraising target due to hiring delays and losing investor confidence could be terminal.
That’s why a departing commercial leader or a lengthy hiring process is not ideal. Our survey found that 63% of senior leaders believe it takes six months+ to hire a senior commercial leader with no guarantee they’re going to be the right fit.
On the other hand, the average Scalewise interim and fractional placement takes 3-4 weeks. Furthermore, interim and fractional leaders will define clear KPIs to improve upfront and are used to having an impact within a month, so they hit the ground running and get results quicker than a full-time alternative.
3. Less risky
Hiring the wrong commercial leader is one of the most common scaling problems and also one of the most difficult to rectify. As many CEO-Founders are hiring commercial leaders for the first time, they often fall for the ‘grey-hair myth’: hiring a veteran commercial leader who’s ‘been there done that’. Yet, scaling companies need a hands-on doer that will, for example, build them a sales engine from scratch or train up sales reps, not a boardroom overseer with a long-list of industry contacts. After hiring, onboarding, testing and realising your mistake, it can take 12-24 months just to get back to where you started. But that’s just the time. In terms of cost, a bad hire costs between 5 to 27 times the person’s salary when you consider opportunity, disruption and compensation costs.
However, with interim and fractional leadership, you can hire leaders with the exact skill sets and experience that you need at that point in time. Someone who can get up to speed in weeks not months and isn’t tied to a long-term contract or expensive salary if something goes wrong. Someone with the right expertise to navigate you through the next few years of uncertainty.
What’s more, founders can outsource the hiring process to those who know what to look for. The Scalewise approach combines a deep knowledge of commercial leadership roles with rigorous screening to mitigate hiring risks, so instead of rolling the dice on a commercial hire, scale-ups can be sure of getting the right type of commercial leader with the relevant experience.
4. Strategic bridge
Scaling a company is not plain sailing and CEO-Founders can find themselves constantly putting out fires just as others start. Hiring a senior commercial leader is usually a reactive response to one of these fires. For example, sales figures have dropped, your lead generation pool has dried up or your customer churn has become unsustainable.
An interim or fractional leader can not only put out the fire, but also devise a strategy to get you to your next fundraising target. After putting out the immediate fire, they can help with the strategic horizon – be it sustainable sales growth or a predictable and scalable demand generation engine – train the internal team to manage it when they leave, and also help hire their full-time replacement if required.
In addition, an outsider’s perspective removes the chance of burnt-out status-quo thinking. As interim and fractional leaders come in fresh with a licence to shake things up, they can make swift strategic decisions that lead to long-lasting positive change.
5. Less disruptive
Making an expensive full-time hire can disrupt a company’s scaling trajectory in a number of ways. First, the salary cost might mean drawbacks elsewhere and put a strain on your cash runway. Second, the new hire might alter a carefully-honed culture or leadership dynamic. Third, while waiting to make the hire, the CEO-Founder often has to step in and lead commercial functions, which is a drain on their time and increases stress from doing something they’re not experienced in.
With interim and fractional leadership, the cheaper cost doesn’t dislodge wider plans. As they are a short-term hire with no aspirations for higher office, they arrive already on-board with your thinking and focus on set targets not office politics. What’s more, the shorter turnaround time minimises disruption to the current leadership’s daily functions.
Which companies need an interim or fractional commercial leader?
Interim and fractional leadership can benefit bootstrapped start-ups and IPO-chasing behemoths, but the most value arrives as companies scale after a fund raise (Seed to Series C). Despite the wide variety of business models, growth strategies, team skills and leadership profiles as companies scale, there are a few telltale signs that an interim or fractional leader could help your business.
Our survey found that 83% of senior tech leaders think hiring a senior commercial leader is hard or really hard
Are you struggling to hire a senior commercial leader?
Our survey found that 83% of senior tech leaders think hiring a senior commercial leader is hard or really hard. If you don’t know what to look for, your budget is too tight for your perfect hire, your needs keep on changing or the hiring process is simply taking too long, an interim and fractional commercial leader could be the solution.
Are you taking on roles you don’t know?
A common scaling by-product. When founders or senior leaders have to run a department or function they’re not comfortable with, it increases stress and detracts from the strategic plan. Hiring an interim or fractional leader can get you back on track.
Are you feeling the pressure?
Scaling a company is full of pressure, but sometimes it can overboil. When CEO-Founders are facing too much pressure from investors, their team or external sources (i.e. competitors and customers), it can lead to rushed decisions, strategic disagreement and growth roadblocks. Hiring a fully-committed outside specialist on a short-term basis can ease the strain.
Is something going wrong, but you don’t know what?
It’s ok that CEO-Founders don’t know the answer to every problem, but that problem still needs to be resolved. If you need a fast reactive response, then an interim or fractional leader can quickly diagnose, create a plan and execute on that plan.
Are you launching a new product or in a new territory?
Heading into the unknown is much easier with an experienced guide. Be it expanding into the US or selling into enterprise, taking on a seasoned interim or fractional leader is an effective way to canvas ideas and set up for success.
Are you looking to reduce your burn rate?
Extending your cash runway as long as possible helps avoid a downround. With current market uncertainty, interim and fractional is the cost-effective and flexible leadership option that gives you the most bang for your buck and can help cash last longer.
Is a senior leader departing temporarily or permanently?
Talent turnover is high in scaling companies. Whether it’s planned (i.e. maternity/paternity cover) or unexpected (i.e. leader headhunted for another company), a senior commercial departure can leave a gaping hole and cause a drag on other leaders’ time. An interim or fractional leader can serve as a temporary replacement to steady the ship and then set it on course for growth.
Which UK companies currently use an interim or fractional commercial leader?
The interim and fractional scene in the UK might not be as developed as in the US, but a range of forward-thinking tech companies are starting to embrace the possibilities.
“There is a large spectrum of people who could do interim or fractional roles, but only a few that fit in the sweet spot overlap of the three critical areas that I was looking for. Credit to Scalewise for not only having the breadth of sales leaders to choose from, but for working closely with me, having the right processes and asking the right questions to make sure we got the best match possible. To top the experience off, the handover to the new CRO has been well-thought through and structured. I am very happy with the overall results and collaboration.”
Co-founder & CEO – Arctic Shores
Challenge: One of Deloitte’s 50 fastest-growing UK tech companies in 2020, Arctic Shores provides a behaviour-based recruitment assessment to help companies ‘see more in people’. After its sales growth took a hit in the first quarter of 2021, it decided to bring in a seasoned sales leader.
Interim VP of Sales
Solution: Scalewise placed Margo Hayward with Arctic Shores as a sales lead three days per week (over an eventual six months). Margo was tasked with mentoring the sales team and improving sales performance in the time taken to find a suitable CRO.
Results: Margo restored the sales team’s confidence, implemented a sales success routine, created a six month reset plan, channelled the sales team’s focus and reinitiated cross team alignment. By Q3, Margo’s revamped sales team hit their revised targets and increased the run rate by 100% from Q2.
“As a founder, you’re expected to know everything, but you don’t. Having someone with Sophie’s experience as a guide has been brilliant. We get on like a house on fire, but she also challenges me, helping me correct some of my rigid thinking, think through the organisation’s structure and avoid potential pitfalls”.
Founder & CEO – Mosaic Smart Data
Challenge: Mosaic’s AI and machine learning software provides real-time data analytics and forward-looking intelligence that help companies better understand their markets and optimise their activity. Following a $9m Series B, Mosaic made a full-time senior sales hire that didn’t work out.
Solution: Mosaic sought an experienced commercial ‘guide’ that understood their challenges, knew what elements drove success in SaaS and could help build a sales team focused on selling software. Working initially 1.5 days per week (gradually increasing to two days), Sophie Carter was tasked with building the commercial function, defining the sales structure, putting key processes in place and making essential hires.
Results: Sophie helped create a clear commercial strategy with universal buy-in from SDRs up to board level and began implementing the strategic plan. Sophie also defined Mosaic’s ICP (bringing a brand new pipeline of ICP opportunities), restructured the sales pipeline (reducing the sales cycle by 50%) and fully ramped up the sales team (leading to AEs and SDRs consistently exceeding monthly targets).
How to get started with an interim or fractional leader
Think an interim or fractional leader is what your company needs, but unsure how to get started and make a success of it? Follow this three-step guide.
1. Define your need
Whether you know the required solution (i.e. more sales) or require an interim or fractional leader to diagnose your current issue, defining your company’s exact need from the outset is crucial to a successful engagement. If not done already, CEO-Founders should analyse internal data – i.e. on quarterly product sales or recent team performance – to determine the key commercial challenges that the company faces. At Scalewise, we’ll help with the diagnosis process and then work with you to refine this need into achievable targets and a detailed scope.
2. Match with the right leader
It’s not just about finding an interim or fractional commercial leader, but the right one. The one with the desired skillset and experience. The one that suits your working preferences and demands. The one where there’s instant cultural chemistry from the off. At Scalewise, we have a wide network of experienced commercial leaders and will use your detailed scope to devise a shortlist of suitable candidates, organise interviews and match you with the right leader.
3. Agree outcomes
At the start of the engagement, co-create a set of achievable objectives, KPIs, timelines and expectations with your interim or fractional commercial leader as they will know what they can and can’t do in the desired time frame. It’s also important to agree on ways of working and outlining what support the leader needs from you to achieve these goals. Finally, you must be open to making the proposed changes as there’s no point hiring an interim or fractional commercial leader and then either refusing to cooperate or failing to take their advice.
According to our May 2022 survey, 86% of B2B tech companies have tried to hire a senior commercial leader in the last two years, but only 46% have considered hiring an interim or fractional leader for that role. A lack of awareness around interim and fractional possibilities is one of the main reasons (only 50% of survey respondents knew what benefits it could bring their company), but there also remains a perception that full-time hires are more desirable than interim or fractional positions.
In the current climate, interim and fractional positions should be considered plan A, not plan B. Not only do they provide more bang for your buck, but with increasing market uncertainty, interim and fractional leadership provides the risk-free flexibility that scaling companies need with the high impact results that scaling companies seek.
To find out more on how interim or fractional leadership could help your business, access commercial leadership webinars and receive reports on scaling beyond Series A, get in touch with Scalewise.
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