Good Morning, HR

In episode 143, Coffey talks with Neil Katz about how companies utilize fractional leadership.

They discuss the distinction between a consultant and a fractional leader; the two types of fractional leaders and their level of control within a business; the typical profile of a fractional leader; how to assess the need for a fractional leader; the cost analysis of employing permanent staff compared to a fractional leader; and the extent of involvement of a fractional leader with a company.

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If you are an HRCI or SHRM-certified professional, this episode of Good Morning, HR has been pre-approved for half a recertification credit. To obtain the recertification information for this episode, visit https://goodmorninghr.com.

About our Guest:

Neil Katz has over 25 years of unparalleled expertise in leading, advising, and consulting C-Suite executives, deftly navigating the intricate terrain of human capital challenges while seamlessly aligning people and business strategies. With a distinguished career spanning diverse industries including retail, healthcare, manufacturing, telecommunications, and startups, Neil has consistently empowered companies to realize their strategic objectives while optimizing both employee and organizational potential.

Currently, Neil spearheads fractional HR consulting and advisory services catering to small to medium-sized enterprises across the United States. Alongside his seasoned team of 15+ consultants, Neil comprehensively understands the nuanced needs of these enterprises, illuminating the transformative value that strategic Human Resources initiatives can bring to the table, yielding tangible, positive outcomes for both people and businesses alike.

For the past 15 years, Neil has additionally carved a niche as an esteemed executive coach, providing invaluable guidance to CEOs, Board of Directors, and executive professionals. He derives immense fulfillment from collaborating with individuals and groups, propelling them towards the attainment of their business and career aspirations, and fostering ongoing professional growth and development.

Neil's academic credentials include a Bachelor of Arts in Business Administration from Texas Lutheran University and an MBA from Amberton University. He has honed his coaching acumen through the prestigious Executive Coaching program at the University of Texas at Dallas and holds an esteemed SRHM certification. A sought-after thought leader, Neil has graced numerous speaking panels, sharing his insights on pivotal topics such as networking, interview navigation, and employee engagement.

Outside of his professional endeavors, Neil is deeply committed to philanthropy, serving on the Board of Directors for Hope International, an esteemed adoption agency based in Dallas. He has also lent his expertise to organizations such as Gift of Adoption and Halo Senior Care, embodying his ethos of giving back to the community.

Neil Katz can be reached at:
https://exceptionalhrsolutions.com
https://www.linkedin.com/company/exceptional-hr-solutions
https://twitter.com/exceptional_hrs
https://www.facebook.com/exceptionalhrS
https://www.instagram.com/exceptional_hr_solutions_/

About Mike Coffey:

Mike Coffey is an entrepreneur, human resources professional, licensed private investigator, and HR consultant.

In 1999, he founded Imperative, a background investigations firm helping risk-averse companies make well-informed decisions about the people they involve in their business.

Today, Imperative serves hundreds of businesses across the US and, through its PFC Caregiver & Household Screening brand, many more private estates, family offices, and personal service agencies.

Mike has been recognized as an Entrepreneur of Excellence and has twice been named HR Professional of the Year.

Additionally, Imperative has been named the Texas Association of Business’ small business of the year and is accredited by the Professional Background Screening Association.

Mike is a member of the Fort Worth chapter of the Entrepreneurs’ Organization and volunteers with the SHRM Texas State Council.

Mike maintains his certification as a Senior Professional in Human Resources (SPHR) through the HR Certification Institute. He is also a SHRM Senior Certified Professional (SHRM-SCP).

Mike lives in Fort Worth with his very patient wife. He practices yoga and maintains a keto diet, about both of which he will gladly tell you way more than you want to know.

Learning Objectives:

1. Understand the difference between consultants and fractional leaders.

2. Assess the suitability and cost-effectiveness of fractional leadership for business needs.

3. Analyze the benefits and considerations of employing fractional leaders.

What is Good Morning, HR?

HR entrepreneur Mike Coffey, SPHR, SHRM-SCP engages business thought leaders about the strategic, psychological, legal, and practical implications of bringing people together to create value for shareholders, customers, and the community. As an HR consultant, mentor to first-stage businesses through EO’s Accelerator program, and owner of Imperative—Bulletproof Background Screening, Mike is passionate about helping other professionals improve how they recruit, select, and manage their people. Most thirty-minute episodes of Good Morning, HR will be eligible for half a recertification credit for both HRCI and SHRM-certified professionals. Mike is a member of Entrepreneurs Organization (EO) Fort Worth and active with the Texas Association of Business, the Fort Worth Chamber, and Texas SHRM.

Neil Katz:

I think the key is somebody that's done fractional before. Not just that they've been a see this or see that, but have they done fractional? It's different to be a fractional leader than a full time leader. So the key is have they had that experience before? What was the outcome and impact of that organization, and what did that organization tell you?

Mike Coffey:

Good morning, HR. I'm Mike Coffey, president of Imperative. Bulletproof background checks with fast and friendly service. And this is the podcast where I talk to business leaders about bringing people together to create value for shareholders, customers, and the community. Please follow rate and review Good Morning HR wherever you get your podcast.

Mike Coffey:

You can also find us on Facebook, Instagram, YouTube, or at goodmorninghr.com. Sometimes a business's need for leadership in a certain domain outpaces their ability to recruit and hire or maybe just pay for that leadership. Enter the fractional executive. Whether it is part time or full time, short term or long term, many companies are turning to fractional executives to lend them the leadership and experience they need. And joining me today to discuss how businesses use fractional executives and how best to evaluate when to use a fractional executive is Neil Katz.

Mike Coffey:

Neil is the CEO and founder of Exceptional HR Solutions, an advising, consulting, and executive coaching company supporting leaders and companies in solving their people needs. Neil has over 25 years of expertise in the c suite and coaching and guiding c suite leaders as they navigate business and people strategy. His diverse experience includes retail, health care, manufacturing, telecom, and startups. Welcome to Good Morning HR, Neil.

Neil Katz:

Mike, thanks so much for having me. Super excited about being here. Been wanting to be on your podcast for a while now.

Mike Coffey:

Well, I'm glad you're you finally made it. So let's talk about fractional, leaders. I first found out first time I heard that that term was probably 15 years ago, and it was a marketing company, and they they did fractional chief marketing officers, CMOs, and, as I dug deeper into it, they weren't really act acting as an executive level position. It was just more of a is this another brand for a consultant? So when you're talking what's the difference between just a regular consultant that you might hire to help you on a project and a fractional leader?

Neil Katz:

Mike, great question, and we get this question all the time is, what's the difference between the 2? To me and what I characterize it as fractionals, truly somebody fractional, part time. Somebody that can work anywhere from 5 hours a week to 25 hours a week to 5 hours a month. It's truly, quote, unquote, part time fractional. That just small amount of need to fill an opportunity, a project initiative, a program, help scale something out.

Neil Katz:

But the great advantage is you're getting 10, 15, 20, 30 years of experience on a fractional basis and a fractional cost.

Mike Coffey:

So what is a fractional leader's typical scope of control? Am I bringing somebody in and putting them in charge of a piece of my business or, you know, are they just advising? How does that typically work?

Neil Katz:

Well, Mike, there's great variations here when it comes to fractional. There's generally what we're seeing is 2 groups of fractionals. The group 1, which is the ones that will come in and run your business or run a segment of or section of your business on a fractional basis, marketing, finance, accounting, HR, legal. Those are the fractional groups that we're seeing pretty common in the marketplace today where they come in and will run that section of your business. Additionally, we'll also see it sometimes where they'll come in and work on a specific project or a program, a merger and acquisition, a system integration, something of that nature.

Neil Katz:

And they will come in and support that project or initiative, but they're not necessarily going to be running the organizational structure for one of those disciplines such as HR, legal, compliance, marketing, sales, something of that nature.

Mike Coffey:

And we use a firm as our fractional CFO, basically. And they know my business at a really deep level relevant relative to even my own accountants. I mean, because because they they sit in. We have a monthly meeting with them and my senior team, and they ask the hard questions that I often don't want to answer or, you know you know, I've I've avoided answering for the past month. And they understand the business where I know if I perhaps I could get my account up to that speed, but I don't know that my account necessarily has the experience and and, you know, companies our size, crossing the the horizons that we're crossing and all of that.

Mike Coffey:

They, you know, they can do the blocking tackling of our taxes and that kind of stuff. But so they're kind of a balance between knowing our company and kind of knowing the personalities and understanding some of that and also giving us really practical experience. So is that typical or most are most do most of these, you know, after they've been around a while, if they stick around, you know, if it's a longer engagement, do they really become part of that senior team often?

Neil Katz:

Mike, they really do, and a great fraction leader is gonna come in and truly be part of your team. The difference is they're not gonna be there 40 hours a week. They're not gonna be there Monday through Friday to 5 or 8 to 9 or whatever time it is. But a great fractional leader will come in and do exactly pitch a perfect what you just described. Ask you hard hitting questions, learn your business, understand what you do, understand the team, the players.

Neil Katz:

All of those components, they're gonna a good fractional executive will do that. And again, the advantage is, they could do it at less time because they do have the depth of experience, the practice of doing this. They've worked in multiple companies across multiple industries. They're 10ured at this. This is what they know.

Neil Katz:

I always say I can walk into a company and whether I'm there an hour or 40 hours, as long as I'm doing a good job with you, I can understand your business and help you. And that's the advantage to the fractional workplace today is you don't need to have somebody 40 hours a week, especially in certain size organizations.

Mike Coffey:

You know, in HR and probably marketing are the 2 biggest areas where as soon as someone gets laid off, they become a consultant. Their LinkedIn is automatically updated and until they get their next gig, they're gonna be a consultant. And there's nothing wrong with it, and I know a lot of really competent HR people who've brought value to our clients in those interim periods, but that's you know, they're not really acting in that case as if you know, they're they're doing, you know, short term task work usually, you know, and we need our handbook updated or, you know, we look at our policies and help us freshen freshen those. What kind of person, I mean what is there a personality type or something unique that tends to attract fractional work that that fractional leadership role?

Neil Katz:

So I think 2 things, Mike. First thing I would say is, generally, it's the years of experience. So you are right. When somebody is in transition or they need a break or something's happened in their life, they'll go into consulting. And there's they're great consultants.

Neil Katz:

They're skilled. They're competent. They add value and impact to the organization. To me, a fractional executive is that person that really has spent probably, I'd say, 10 plus, if not 15 plus years of experience in the market and truly understands executive is they've hit a point in their career that they wanna take all of that experience and add it into companies that are looking to scale and grow those departments or functions. Generally, what we're seeing in fractional is people that have been in corporate America for 15 plus years, and they're looking for their next opportunity to make an impact.

Neil Katz:

When you're with an organization for 5, 6, 7, 10, 15 years, your impact seems to go down to some degree just because the organization is not transitioning and evolving at at such the pace it was early on. So a lot of these folks will go into fractional because you get to go into an organization like yours and others that is looking for rapid change, impact, and evolution of what they are. And a lot of these fractional executives, including myself, and the main reason I went into fractional was to join companies and make a difference in their HR function. I could do that with a company for 5 to 10 years, but after that period of time, you're not making the same level of impact. Today, I can go in an organization and completely overhaul and build out and build up an HR department in 6 months to a year.

Neil Katz:

You can't do that in generally a functioning organization today.

Mike Coffey:

And so typically, these these folks who are fractional leaders have already been in in a leadership role, at a at a higher level in a in another organization. And so they're just and I and I totally get what you said about wanting to make it quick. The only way if, you know, if heaven forbid, you know, they made what we do and all the things I do illegal tomorrow and I had to go get a real job, I would have a really hard time. The only I think the only environment I would be ever probably really be happy in is if it was a startup, and I got to do the startup HR piece, the people piece from scratch, with the the with the support of, you know, good admins who could actually write the employee handbook because I don't have that I don't have that patience left in me. But that's the only environment.

Mike Coffey:

So I can see that somebody with a lot of experience wouldn't want to get necessarily back, you know, or may not want to get back in the day to day whether it's accounting, marketing that, you know, HR, whatever, the daily grind of HR, but could would like to come in, light a fire under under some folks, give some creative insight into how to run the organization, and then, you know, set them up for success, help them get the right people in place, and then move on.

Neil Katz:

That's that's exactly it. It's the ability to make that impact. And, generally, you can go in, like I said, within the first 3, 6, 12 months and have a very profound impact. And what's really great is depends on the relationships you build with these organizations. Some of them are long term where you'll stay on 15 hours a week, 5 hours a month, whatever the criteria or the need of that business is.

Neil Katz:

You could stand as long as they need you to. But what's great is you can build a team that operates the daily business then, and you stay in a fractional capacity, more of a strategic level. So what I always say is I come in for 6 months to a year, year, maybe 2. Build out the foundation, build out the functions, processes, and systems. Bring in a HR individual to run the daily operations, then I'll move into a strategic level and really help that organization drive the people strategy for the next 3 to 5 years.

Mike Coffey:

And so your are fractional leaders generally engaged in more than one client at any given time, so they may yeah. Because if we're only talking a handful of hours a week, I don't think they're all playing golf every every every Tuesday through Friday. But

Neil Katz:

no. Generally speaking, what I'm seeing in general is anywhere from 1 to 3 clients at a time based on the client workload. Anything more than 3 clients is just a lot. And I say that even if the clients are 5 to 10 hours, it's just the work you have to invest, the time, the energy, the knowledge you have to gain from those industries and those organizations. Most fractionals will go up to 3.

Neil Katz:

Anything more just gets to be a bit of a drain, and it's it's a lot of work.

Mike Coffey:

Do most of most of the time these fractional leaders, are they are they are they working for, you know, for lack of a better term, a staffing kind of firm or of that, you know, places fractional folks and being paid through them, or are they being paid directly either as a, you know, as a you know, from by the employer, I guess, either as a w two or 1099, or how does that work?

Neil Katz:

Sure. Generally, what we're seeing initially, we've seen a lot of independent fractionals, which is it's a 1099 working 1 on 1 with an organization. Generally, they're not w twos. They're usually 1099s on pretty standard practice. So we're seeing that to be the common.

Neil Katz:

Now what we're starting to see is some growth in not staffing firms, but consulting firms like mine.

Mike Coffey:

Mhmm.

Neil Katz:

I have 15 consultants that work with with me today. And the reality, what we've learned is great consultants, great fractionals, candidly are really good at what they do. The one thing they don't like is business development.

Mike Coffey:

Running their yeah. Going in and doing the sales piece. Yeah.

Neil Katz:

And and running the business as you said too. The 2 things that no one likes to do is run the operational components and business development. So what we're starting to see is an elevation in the number of firms that provide clients to these folks. We provide the infrastructure, the client base, everything they need so that they can really just focus on the client and not have to worry about the rest of it.

Mike Coffey:

And given the the DOL's latest and probably most clarifying interpretation of the 10 1099 independent contractor role. I would be hesitant today as a as an employer to hire very long term for much more than just any short term project. A professional who was gonna provide services that were integral to my business including accounting or HR as a 10.99 employee. Because that's all great, you know, and everybody's while everybody's happy. But assuming somebody's not happy, suddenly you you may end up with, you know, with with some taxes due.

Neil Katz:

And that's the that's the reason you wanna stay away from that. If you're gonna be long term engagements with a 10.99 on a fractional basis, I'd probably do it through a firm, like mine because the reality is we have the luxury and the ability to kinda segregate those components. The fractional consultant comes in with their own equipment. They have their own flexibility in scheduling. Many of the criteria the DOLs put in place, we've protected against, and we'll continue to work to evolve that as the interpretations in the court cases kinda bring some clarity to that message.

Neil Katz:

As we know, the message is not as crystal clear as we'd like it yet, but give it some time. It'll get there.

Mike Coffey:

Yeah. And so people are using companies are using these fractional leaders for short term projects and then like you said longer ones, but also for mentorship or coaching for executives, you know, just to bring in maybe an outside perspective. So you've got that's what we find so valuable with, you know, both with my my financial guys, but also with, my we're on the entrepreneurial operating system, EOS. And using that I've got a fractional integrator who comes in facilitates our our quarterly planning. There's a resource for me throughout the quarter for anything that come up or my team, and and just gives us that outside perspective.

Mike Coffey:

She's she's got amazing deep, experience in a lot of different industries and, is my go to for anytime somebody asks me, you know, I wanna implement an EOS who I talk to, and I'll always send them to Linda. But, so I you know that outside perspective is really valuable. But if I'm a company and I'm thinking about, okay, I need help in marketing or I need help in wherever in the organization. Where how do I assess whether what I need is, you know, just to hire a consulting firm and just give them this project and have them run with it versus really bringing in a fractional leader?

Neil Katz:

So, Mike, great question. And what it comes down to is this, is actually I would bring them in for the project at first. Let them show you their outcomes, their impact, their experiences, letting them learn the organization. And based on their skills, performance results, that's when you can say, wow. Mike's done a great job in marketing.

Neil Katz:

You know what? Hey, Mike. We'd like to keep you on in a fractional basis to help us because you've had some really great impact with our marketing team, and we'd like you to stay in a marketing manager, marketing director, CMO role, whatever the background aligns to, and let them come in. I always say a project's a great place to start and then let them come in on a fractional basis. And what you talked about a minute ago, which is spot on, which is the ability to bring in a fractional executive to coach and mentor and guide the team on a fractional basis.

Neil Katz:

We have 3 clients today that we're doing this with where we support their current team in house with their growth and development journey because we've seen it. We've done it. 25 years of the same industry, not much is gonna surprise you every once in a while, but generally speaking, it's not gonna surprise us anymore. And because of that, that's an advantage to that fractional is the ability to support and guide. And then if the organization is looking to continue to grow and scale and they need somebody that's done multiple m and a's and things of that nature, you get all of that experience on the fractional basis.

Mike Coffey:

So take them for a test drive and see how that works and, you know, are they competent, but also do they get our culture? Do they work well with our team? And and what drag do they bring, you know, or lift? And so Exactly. And then once you get them in there but okay.

Mike Coffey:

So if we need them know we've you know we've made that realization and we're willing to is I'm assuming and I know from my experience I certainly pay a premium if I look at it on an hourly basis for what I would probably pay for somebody, on a permanent long term basis, you know, you know, for annual salary versus what I pay for the handful of hours. Oh, you know, because I'm buying you know, there's just an efficiency there that's lost. Is is there a standard that you would expect a markup for you know, when I'm comparing the the market wages for a rollover, but I'm talking about bringing them in as a fractional?

Neil Katz:

So here's the thing. The old fashioned average still holds true. You get what you pay for. So, yes, there's gonna be a markup. Yes.

Neil Katz:

You're gonna pay more for these folks than you would probably think if you took their hourly rate and multiply it. Remember, you're paying for the fractional. If you're going through an a group like mine, there's a markup on that to offset my operating expenses, things of that nature. So it does cost more. Absolutely.

Neil Katz:

But as the old fashioned analyst goes, you do get what you pay for. And you look and say, what can they deliver in an hour and what can that other person deliver in 5 hours? Generally speaking, if you get the right fractional, they can deliver most of anything pretty pretty efficiently and quickly. They've done this before. It's not their first time.

Mike Coffey:

And let's take a quick break. Good morning. HR is brought to you by Imperative, bulletproof background checks with fast and friendly service. For 25 years, Imperative has helped risk averse clients make well informed decisions about the people they involve in their business. Whether that means very thorough pre employment background checks, due diligence for family offices or private equity firms, or any other kind of business transaction, if there are people involved, there's risk involved.

Mike Coffey:

We help businesses mitigate that risk. You can learn more at imperativeinfo.com. If you're an HRCI or SHRM certified professional, this episode of Good Morning HR has been preapproved for 1 half hour of recertification credit. To obtain the recertification information, visit good morning hr.com and click on research credits, then select episode 143 and enter the keyword cats. That's k a t z.

Mike Coffey:

And if you're looking for even more recertification credit, check out the webinars page atimperativeinfo.com. Now back to my conversation with Neil Katz. So how do I find somebody? Let's say I'm looking for a a chief marketing officer on a fractional basis. I just need to get my my marketing is kind of a mess and we're going in different directions, we're really not targeted in on our ideal customer.

Mike Coffey:

How do I go find that person? How do you where does that come from?

Neil Katz:

2 places. 1, LinkedIn, as we all know, is a great resource. There's plenty of great fractional chief marketing officers. What we're starting to see in the second part really is the teams that offer the service. So they've vetted them.

Neil Katz:

They've ensured they have the competency, the skills, the background. They've done all the work. It's, hey, Neil. Do you have a CMO you can get me? Sure.

Neil Katz:

Let me get you 2 or 3 people. Give me a couple days. I'll I'm ready to go. Most other fractionals will have a network of people. For myself, I use the best example.

Neil Katz:

Name an industry that you're looking for a fractional. I probably saw somebody in my book to help and support because the reality is this, we know companies at this point in time are really capitalizing on the fractional roles. So we're built our networks, chief legal officer, chief revenue officer, chief sales officer, chief marketing, put a c with it. There's a fractional to it. And what we're finding what we're starting to see early in the evolution of fractional is we're starting to see segments of fractionals within the fractionals.

Neil Katz:

So an example is chief marketing officers that specialize in

Mike Coffey:

digital. Okay.

Neil Katz:

Okay. Chief legal officers that specialize in being chief legal officers for in house. Then you have the legal side, where they do contracts. So you're starting to see segmented functions within the fractional realm themselves based on the organizational needs.

Mike Coffey:

Are there associations out there just for fractional executives, or are they just pretty much sticking in the SHRM or whatever the marketing association is or those kind of groups?

Neil Katz:

They're starting to there's 2 or 3 fractional groups that are starting to build themselves out. Not strong yet, but they have years to go. If you look at Sherm, they'll take years to catch up to Sherm and some of these other groups that they're in. But, yes, we're starting to see some groups coming together and trying to partner the teams together so that it's more of a society you can go to and go, here's a database or a directory of all the CMOs. Not not yet, and I think we have quite a few years ahead of us to pull all that together.

Mike Coffey:

So if I've I've got it let's say I've got 3 or 4 candidates, and I'm trying to evaluate them. Anything unique other than just what I would look for if I were hiring an executive in general? Anything unique I should be looking for in, when I'm talking to our fractional leader?

Neil Katz:

I think the key is somebody that's done fractional before. Not just that they've been a see this or see that, but have they done fractional? It's different to be a fractional leader than a full time leader. So the key is have they had that experience before? What was the outcome and impact of that organization?

Neil Katz:

And what did that organization tell you? Because I've seen a lot of great executives will come out and say, I wanna be fractional, but they've never done it. And to become a fractional leader, it takes time. You have to understand the client's needs and you serve clients differently as a fractional leader than you would as a full time leader.

Mike Coffey:

And tell me if I'm wrong, but my guess would be that that leader who's got extreme attention to detail almost to the point of maybe micromanaging or really wants to touch all of the carrots in the basket, may not be ideal for a fractional row because of just the the shorter time period that they're they're committing to the organization.

Neil Katz:

Exactly spot on. And I think that's that's what I was referring to somewhat earlier was saying you need to have fractional leaders that when you're interviewing that have done this before. Because it's a different need. You you're not there 20. You're not there 40 hours a week.

Neil Katz:

You're maybe 20, maybe 10, maybe 5. So how do you make a positive lasting impact? Quickly learn an organization, assess and evaluate people, and move the needle and get results. Those are all some key criteria and sounds simple, but it's very different than what you're used to doing. And I always say, I've seen executives transition from being an executive to a fractional leader.

Neil Katz:

It just takes time. So just know that the longer they've been doing it, the more value, the more efficiency, the better influence and impact they have on those organizations.

Mike Coffey:

If they're going to be, you know, we know this is gonna be a, you know, we're planning this out for a 6 month relationship or even maybe a 12 month relationship with, you know, a handful of hours each week or something. How important is culture fit? Is this an area where I can rely more heavily on competencies? And because I'm really just trying to extract that expertise, or is culture fit still a pretty important, element in in finding the right person?

Neil Katz:

I think culture, if it's always gonna be important, but I don't think it's as important if it's a defined project. And the reason I say that is defined projects at 6 months, we need to do from a to b, and we'll be done and that's it. And maybe it'll go on for an extra 30 days. Okay. Culture fit becomes probably a little less.

Neil Katz:

The challenge we see is, like, for my group and my teams, we generally will go in and we don't have an end date. So when you don't have a defined end date, I think culture is gonna be critically important because you are an extension of that organization. Part time, fractional, you're representing the organization when you are there, when you're communicating with them after and before. So because of that culture fit, I think, is on the non defined periods of time of contracts. Culture fits can be very important, because just with anything, you want to bring in somebody that represents you in the culture.

Neil Katz:

Also, it's also an opportunity to change and evolve the culture and teams. So if you're looking, you've lost a leader, and we see this a lot where organizations will bring us in when a leader has left. They're hiring. They want more time to hire. As we all know, hiring is not easy.

Neil Katz:

So, look, if you wanna add 3, 4, 5 months to your hiring timeline so you can really vet out the right candidates, Bring in a fractional for a 3 to 6 month contract. But if you wanna evolve some things in that period of time, bring in that person that aligns with the evolution of what you're trying to achieve. Because this is a great opportunity to make some pretty short quick changes before that next leader comes in.

Mike Coffey:

Yeah. And I can totally see if if I'm the leader of the organization, CEO, founder, I'm probably a generalist in a lot of areas, but I may not have the expertise to really know if I'm hiring a CFO what to ask. And so if I've got a fractional who's worked alongside, understands the company, has got the the, you know, the skins on the wall, the credit behind them to, you know, demonstrate that they really know it. I feel a lot more comfortable if they're in those interviews with in in helping me select that permanent placement.

Neil Katz:

Exactly. And so the great thing with a fractional on that realm is you have a CFO that's a fractional CFO. They should be able to do the 1st or second or maybe the 3rd interview for you. And really at the end of it, the CEO and founder truly would be the culture fit assessment. You don't have to worry about the competency as much.

Neil Katz:

Your recruiter will do the 1st round. CFO will your fractional CFO does the second. And then you do the 3rd as the founder CEO. And guess what? What's great about that is you're looking for culture.

Neil Katz:

Everybody else has done all the other testing. Yeah. You might ask a few questions, but it's a really nice skill to have that level of expertise. And I'll tell you, it gives organizations less pressure. Let's be real.

Neil Katz:

No organization wants an open seat at a c level or an executive level, but a great substitute kind of interim is put the interim in place, put that fractional in place so that you have some time. You have somebody managing the ship for you. You're not gonna go off course. And you know what? They can take care of it until you have that opportunity to find just the right candidate to fit the role.

Mike Coffey:

So I I would guess that it varies from organization to organization. But how often are these fractional executives actually, you know leading, managing, and holding accountable actual employees of the company. You know if you know if Joe didn't meet his expectations this month or he's late to work or he's not he's just not performing, Who's typically handling those performance management issues for that person who ostensibly is, you know, working under that that fractional executive?

Neil Katz:

Generally, if it's done right, it's the fractional executive. I mean, they are still a representative of the company. They're pay being paid on behalf of the company. There's no reason they can't manage the performance. Yes.

Neil Katz:

Would if a termination came down to it, yes, I'd have the HR team or a employee of the organization do that. But besides that, it's no different. Leadership is still leadership and how you structure it and how you hold them accountable. And again, great opportunity if you have an underperformer or somebody that needs some really focused growth and development to allow that fractional to let them grow and develop them in that journey before the next leader comes in.

Mike Coffey:

So we're running up on time, but one last question, and I've seen this, mostly with long term consultants. There comes a time where the company is ready to move on, either hire somebody full time or we found our our fill, and we've got to separate this relationship. And I think it, you know, especially when it's somebody you really like working with, but it's just, you know, I've got to make the investment now in a full time equivalent versus the consulting. Any advice for making those breakups, easier, on on on everybody involved?

Neil Katz:

Yeah. I think the greatest way to do that is start laying the foundation early. Start letting that fractional know, look. You know what? We're looking at q3 to probably bring in some, that next person to fill fill this role, we wanna let you know and just start laying that foundation and start moving some things to other people.

Neil Katz:

Things of that nature really kinda help soften the blow. The other thing is that if they've done and I would assume they've done a good job for you, have a celebratory party. Celebrate their success and impact with the organization. Send them in a good way. And there's a fair number of organizations actually will take that fractional person.

Neil Katz:

Maybe they were working 15, 20 hours a week. And what they'll do is they'll convert them to 5 hours a month and truly become a strategist to support that new leader coming in, ensuring that new leaders onboarding has been effective, giving that new leader a little bit more time to actually onboard well, and then just support them in the longer term initiatives rather than fully exiting them. So that's another option to consider too is just decrease the amount of hours and scope over time. So it just it's kind of a gradual decrease rather than a very harsh closeout.

Mike Coffey:

Speaking of closeout, that's all the time we have. Thanks for joining me, Neil.

Neil Katz:

Mike, thank you. It's been so much fun. Great opportunity to chat with you, and I'm glad I finally made it to your podcast.

Mike Coffey:

Well, thanks for being here, and thank you for listening. You can comment on this episode or search our previous episodes at goodmorninghr.com or on Facebook, Instagram, or YouTube. And don't forget to follow us wherever you get your podcast. Rob Upchurch is our technical producer, and you can reach him at robmakespods.com. And thank you to Imperative's marketing coordinator, Mary Anne Hernandez, who keeps the trains running on time.

Mike Coffey:

And I'm Mike Coffey. As always, don't hesitate to reach out if I can be of service to you personally or professionally. I'll see you next week and until then, be well, do good, and keep your chin up.