In 2023, it’s not unusual for C-suite-level professionals to offer their management services to organizations on a for-hire, part-time basis. This arrangement is called being a fractional executive.

What does this look like in practice? Why does this benefit a company? What can be learned from this model? Why would a professional want to do it?

To answer these and other questions, Maggie So, principal at Grasshopper Services Inc. and a 2012 MBA-entrepreneurship grad of Cal State Fullerton’s College of Business and Economics, co-authored a paper with Management Professor Atul Teckchandani, “A fraction of an executive: new ways to save and compete.” This paper was published in the Journal of Business Strategy earlier this year.

Maggie So discusses the research and this important trend in the business world:

Explain the concept of a fractional executive. 

To put it simply, it’s hiring executive talent but not in a full-time capacity. This allows small- to medium-sized businesses, which typically have limited budgets, to bring in experienced and specialized help, at a fraction of the cost.

The fractional executive would be “fractioning” out their time, and will typically work with more than one company at a time.

When would a company be in a good position to benefit from a position of this kind? What are the biggest benefits to a company? 

When a company needs strategic level help on finance, HR or marketing, or if there are nagging problems that are being solved through band aid solutions and the current team does not know how to address them strategically, a fractional executive can make a lot of sense.

Essentially when they’ve outgrown the task and executional oriented nature that businesses tend to start out as, and move into a stage where they need to be deliberate on how to leverage their resources to get to the next level. That could look differently for different companies.

The biggest benefits are being able to tap into executive leadership talent and experience, which historically has only been available to large companies who can afford it, but at a fraction of the cost, since the fractional executive will not be a full-time staff. There is also cost savings from the employer expense side, as there usually isn’t a need to pay typical employee expenses such as payroll taxes, benefits and insurance.

Your focus is on CFO and controller positions. Why is this the case? Is it because financial positions require a specialized knowledge base that many small companies overlook?

I focus on these two roles because I believe strategic finance and a well-managed accounting department are areas that the typical founder led companies are weakest at, or there is little desire to dedicate time and energy to due to a number of things, such as not having enough capacity or that it is not their core competency. However, it is one of the most important functions to get right in a company.

At the end of the day, if a company’s financial house is not in order, or its financial health is suffering, it doesn’t matter how great the product or service being sold is because the business won’t be sustainable.

In today’s world, the CFO and many times the controller serve more than just finance and accounting functions. When providing guidance and strategic insight, their work often bleeds into areas such as marketing, human resources, sales, and operations because financial performance is just the numerical representation of the decisions being made in all those other areas. Therefore, the CFO and controller need to understand quite a range of topics compared to other roles.

Why would an executive level person want to work in the fractional model?

The main reasons a fractional model will appeal to executives include wanting to work with a variety of businesses and teams, and wanting to work for themselves.

Fractional executives can also have flexibility over their time, the work they choose to do, and the income they make. It can be extremely rewarding to work with small businesses and help owners and their teams get to the next level.

What can companies learn from this look at fractional executives? 

Companies can learn there are a lot of fractional executives who are easily accessible to them and leadership talent doesn’t necessarily have to be someone on payroll.

If they are running into issues that have outgrown them, or the company needs higher level, strategic help, it’s very easy in today’s environment to get the help they need, and get their business to that next level, whatever that looks like.

About the Researchers

Atul Teckchandani, a professor of management, teaches courses in entrepreneurship, organizational behavior and leadership. He also leads study abroad tours for CSUF management students. The UC Berkeley alumnus has been published in such high-quality journals as Social Science Research, Nonprofit and Voluntary Sector Quarterly, and Management Teaching Review.

Maggie So ’12 is a principal at Glasshopper Services Inc., a Los Angeles-area accounting and back office team outsourced for business of all kinds. She is also a consultant and executive coach. Maggie So is active in her alma mater and collaborates with the college’s faculty for research projects such as on fractional executives.

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