Fractional work is on the rise, but why?

If you’ve signed into LinkedIn recently there’s a high likelihood you’ve seen at least one person update their title to include the term “fractional”. Fractional recruiting teams, engineering teams, CHROs, CROs and leaders are becoming more visible. But why is this happening and what does it all mean? Read on to hear one fractional leader’s perspective as to what dynamics are leading to this workstyle rising in popularity.

A working relationship that doesn’t always work

With economic conditions shifting rapidly and often there’s more pressure for organizations to adapt to and evolve with those changing conditions. Managing risk while still working towards growth and business expansion is an ever-present tradeoff—with outcomes favoring employers over employees when push comes to shove. Fractional work represents the natural response to that tension offering an upside for both workers and organizations.

When evaluating the conventional, full-time employment relationship (often referred to as ‘W2 employment’ in the U.S.) the assumption of risk has historically been carried primarily by the employee. When times are tough economically the individual’s survival is based heavily on their employment with an organization—any threat to that relationship creates an existential crisis for the employee and their ability to provide for themselves and their families.

Companies also experience threats—when economic conditions change, when competitors emerge, when big bets don’t pay off. Unlike individual employes, organizations typically have more optionality to ensure their long-term survival. Unfortunately, these options usually include big downside for individual employees such as layoffs, reductions in force (RIF) or role eliminations. This means that when times get tough the needs of the employee and the employer become mutually exclusive—the best course for one is the worst course for the other. And at the end of the day the employer holds the final decision to keep or terminate the employment relationship. Even if an employee goes to another organization these relationship dynamics go with them.

When times are good, we pay little attention to this fundamental power imbalance. It’s so core to the way we work in the U.S. when the tables turned it created a media storm in the summer of 2022 and during the ‘Great Resignation’. But, with volatile macroeconomic conditions and businesses experiencing never-before-seen tailwinds, the traditional employment relationship and the inherent power imbalance is returning to the forefront. Hence there is an increase in demand for performance management systems and, more recently, AI tools to augment individual output. Employers are trying to extract every last ounce of talent out of their investments—not out of malice, but because they have to. There is no longer margin for error in hiring or in performance.

Enter fractional work

Fractional work is a lot of things, but, at its core, it’s a way for employers and employees to find a comfortable middle ground in which to operate with a little bit of breathing room. One of the few win/win scenarios out there! Fractional work is a form of “Expertise-as-a-Service” in which employers pay for part of an employee's time, but gain access to all of their skills and knowledge. In the case of fractional leaders, they are hired to focus on solving specific business problems or running a particular business unit. The intent is that they go where they’re needed most and operate in a more hands-on manor than advisors, while still driving impact in specified areas.

The result is that employers get the most impactful work they need done without having to make a long-term investment in talent. As an example, the commonly accepted multiplier for total cost to hire an employee is 2.2 x ANNUAL SALARY. In the case of the fractional HR leader that is about $200,000 in the top geo markets (SF, LA, NY, etc.). Even with the hourly markups most consultants charge, this usually results in a sizeable savings for employers who still have work that needs doing, but can’t afford the cost (or risk) to bring on a full time leader.

Fractional leaders get a diversified workload that isn’t beholdened to one single employer or industry. This means that they can go where there needed most completing high-impact work, helping teams through phases of growth or transition without concern for total job and income security the moment the winds change. And, for many fractional leaders, this workstyle allows for more flexibility to follow personal passions, travel and be active within their communities and families, avoiding the dreaded burnout.

Fractional work is not a net new concept, but is a new application of contracting or part-time work. Which appears to be a good fit with the current economic conditions. It sets up both organizations and employees for a productive and flexible working relationship—which is novel and definitely worth the exploration and growth in popularity.

Interested in learning more about if fractional HR leadership is the right fit for your business? Check out the services offered or let’s find some time to chat.