Fractional, interim or non-executive. Which one do you actually need?
Fractional, interim or non-executive. Which one do you actually need?
The word “fractional” is everywhere now. Owners have used it to me three times in the last few months, and none of them meant quite the same thing by it.
That is not their fault. The word has spread faster than any agreed meaning of it. Three genuinely different jobs, with different levels of involvement, different authority and very different price tags, have ended up wearing one fashionable label. Buy the wrong one and you get an expensive version of something you don’t need.
So here is what each one actually is. And at the end, the view I have formed after forty years of sitting on both sides of the table.
Fractional
A fractional director is a part time executive. “Executive” is the word that matters. They sit on your executive team, they own a function, and they are accountable for delivering it in the same way a full time employee would do. Sales, finance, operations, marketing, whatever the role or gap is.
Usually this is one to three days a week, on a rolling monthly arrangement, running anywhere from six months to two years. They work alongside your leadership team and defer to you or the board for decision making.
The commercial logic is straightforward and it is a good one. You get a high calibre of person that your business could probably not justify full time, at the fraction of the week you actually need them.
You will see monthly fees quoted from around £1,800 at the light end to £6,000 and beyond for two or three days a week.
Interim
An interim is full time and temporary. Six to twelve months, fixed term, and crucially they have independent decision-making authority. They own the function outright rather than collaborating on it.
You bring in an interim when something is broken, or a seat is vacant and you are not yet ready to fill it permanently. The finance director has walked out. The system implementation is failing. You are in a turnaround and somebody has to make unpopular decisions quickly, then leave. An interim is a full pair of hands with the authority to use them.
Day rates commonly run from around £750 to £1,800, depending on the seniority and the size of the mess.
Non-executive
A non-executive director does not run anything. That is the point of them, not a limitation.
They attend your board meetings, typically six to ten times a year, and the job is oversight and challenge. Is the strategy sound? Are the numbers telling the truth? Is the management team, which includes you, being held to account by anybody at all? They bring an outside view and the credibility to use it.
Because independence is the whole value, the conventions around non-executive pay deliberately keep them at arm’s length. In listed companies the Corporate Governance Code steers boards away from performance related pay for non-executives, and the same principle carries down to private companies for exactly the same reason. A non-executive whose pay depends on this year’s result is not independent about this year’s result.
Fees for unlisted businesses commonly sit between £15,000 and £40,000 a year.
Side by side
Fractional. One to three days a week, six to 24 months, on a rolling basis. Runs a function. Defers to you or the board. Bring one in when a function needs building properly. Around £1,800 to £6,000 a month.
Interim. Full time, six to twelve months, fixed term. Runs a function, with full authority. Bring one in when something is broken or a seat is vacant. Around £750 to £1,800 a day.
Non-executive. Six to ten board meetings a year, usually across two to four years. Runs nothing. Oversight only. Bring one in when nobody is challenging the top. Around £15,000 to £40,000 a year.
My view
Most owner-managed businesses I meet reach for fractional when what they actually need is a board.
Here is why that happens. The owner is exhausted. They are in the middle of everything, the days are full, and the obvious reading of that feeling is “I need more capacity”. Fractional is sold straight into that feeling, and it is easy to buy. A day a week, a monthly fee, somebody competent taking a function off your hands.
Sometimes that is exactly right. Often it is not, because capacity was never the problem.
Ask yourself what actually goes wrong in your business. If the honest answer is that things get done slowly or badly because nobody senior enough owns them, then that is a capability gap, fractional is a sensible answer, and you should go and hire it.
But if the honest answer is that decisions get made without real challenge, that the strategy has never been tested by anyone who could afford to disagree with you, that the numbers are only ever examined by the people who produced them, then a fractional director will not fix any of it. You will have added one more capable person reporting to you, inside a business whose problem is that everybody reports to you.
That is not a capacity problem. It is a governance one, and you cannot hire your way out of it by adding hands. It needs somebody whose job is to sit across the table from you rather than alongside you.
The test I use is a blunt one. When did somebody last tell you that you were wrong about something significant, and you changed your mind? If you cannot remember, no amount of fractional resource is going to help.
So which one
Three questions answered honestly.
Is something broken or empty right now, needing full time attention from somebody with the authority to act? That is an interim.
Is there a function that needs building properly, where you know roughly what good looks like and you need somebody senior enough to build it? That is fractional.
Is the business fine on the surface, but nobody is challenging the direction, testing the strategy or holding the top of it to account? That is a non-executive, and quite possibly a chair.
Plenty of businesses need more than one of these, often in that order. But get the diagnosis right first. The three are not interchangeable, and the label on the tin has stopped telling you what’s inside.
If you are not sure which of the three you are looking at, that is a useful conversation in itself. It is often one of the first discussions I have.
Mike Collett