Strategic, cost-effective guidance: Understanding the fractional workforce

Strategic, cost-effective guidance: Understanding the fractional workforce

Thirty years ago, a company’s executive leadership team looked very different. More likely than not the team was made up of full-time, experienced professionals who worked in the office.

Thinking back, you’d probably picture a boardroom filled with people in sharp suits pointing at a powerpoint presentation.

As the gig economy continues to revolutionize the modern workforce, companies have begun to embrace a new form of contingent worker — fractional workforce talent.

This model of employment has had a profound effect on a variety of industries, particularly in the C-suite. Not only has remote work been popularized, but many companies are opting to hire top leaders on a contract basis to provide advice, manage teams for specific, short-term projects, and achieve strategic goals at a lower cost.

We look at how fractional workers fit into the gig economy and why companies should invest in this model.

What is a fractional worker?

While many treat the terms “contingent” and “fractional” like synonyms, they’re not interchangeable.

Contingent workers are characterized by talent employed on a contract or non-permanent basis. This includes freelancers, temporary employees, and part-time workers, and encompasses a wide range of skills, roles, and industries. Many are hired to fill skill gaps, handle peak workloads, or provide cost-efficient labor.

Fractional employees are a type of contingent worker hired on a part-time or per-project basis. Typically, they’ll have multiple clients and are very specialized in their field.

While a software developer may be seen as a contingent worker, a C-suite consultant would be in the fractional category. For example, many companies look to fractional workers for cost-effective leadership advice, leading to a rise in fractional CMOs, CFOs, and COOs.

Looking at the demographics

Born between 1981 and 2000, millennials will make up a significant 75% of the traditional workforce by 2025, and around 40% of the gig economy in Canada. Still the Gen X and Boomer generations, born between 1965-1980 and 1946-1964, are also particularly valuable in the contingent workforce, especially in leadership roles. They are often hired for fractional roles.

Many in the Gen X community are approaching retirement age and see the gig economy as a way to maintain a healthy personal-professional balance while bringing in more money.

According to a Statista survey, 46% of baby boomers work freelance or contract positions as a way to supplement their income.

Both these generations have deep experience and knowledge in their industries, and often take up fractional leadership positions to provide strategic expertise, drive critical projects, and mentor younger professionals while maintaining a flexible work-life balance.

Why companies need a fractional workforce

Fractional employees are an asset to a wide array of companies, from smaller businesses in the growth stage to larger, enterprise companies trying to manage their budgets.

While fractional employment looks different for every position, a newer startup could hire a fractional Chief Financial Officer (CFO) to provide growth strategies, oversee financial planning, and manage long-term risk.

An enterprise software firm, on the other hand, could hire a fractional Chief Technology Officer (CTO) to help with the product development process, which would be less costly than hiring a full-time, salaried employee.

Benefits of opting for fractional employees include:

Flexibility. Fractional workers are an asset for companies who need to be agile, as it allows them to pivot based on the evolving market and changing customer expectations. If a company needs to scale to stay competitive, they can hire a fractional leader to guide key projects based on a specific goal without paying for a full-time, salaried employee.
Cost-effectiveness. Fractional workers are usually paid through monthly retainers or at an hourly rate, which is more cost efficient than opting for a salaried employee, which would mean paying for benefits, payroll tax, and paid vacation.
Valuable knowledge. Fractional workers are unique in the contingent workforce. They have specialized skills in often niche markets, and are an asset to organizations suffering from a global skills shortage. They’re also usually highly experienced in their field, bringing a wealth of expertise and strategic insights that can drive significant value.

Optimizing your workforce

As companies struggle to fill niche skill gaps and optimize their operations, many are turning to fractional leadership to provide cost-effective guidance while navigating complex industry challenges.

TalentNet’s intuitive talent acquisition platform allows companies to add fractional workers to their Direct Sourcing initiatives. Our solution enables Curators to easily build Talent Pools filled with pre-vetted candidates in a variety of fields. To learn more, book a demo here.