Getting the best ROI from your next Fractional Hire

Tribe Group

The rising tide of Fractional Leadership is no longer just the latest buzz word. With SME’s making up almost 95% of New Zealand's economy, what does adopting this hiring strategy mean for your organisation and most importantly how can you ensure you are getting the most out of these new executive contractors? 

Unlike traditional full-time executives, fractional executives work with multiple organisations simultaneously, offering a high level of skill and experience without the long-term commitment or cost associated with a full-time hire. An approach that is particularly appealing to small and medium-sized businesses, startups, or companies undergoing significant transitions, who may not require or cannot afford a full-time executive but still need strategic guidance at a high level.  

The Key benefit of a Fractional leader is that they're experts in their field, they offer flexibility and cost effectiveness while bringing an objective and unbiased voice to the table as they are removed from the day to day of the business.  

Measuring Success

While the skill set and functionality of these leaders can be appealing, extensive experience can find quick wins easily and showcase their worth almost immediately, I cannot stress the importance of measuring their success. The purpose of these leaders is to bring unbiased senior experience to your team in a desired timeframe, this recent Forbes article provides great examples of how you can put a dollar figure to the results of your next fractional hire.  

There are two key KPI’s crucial to measuring the success of a fractional hire’s contribution to your business; Revenue Growth rate (RGR) and Return of Investment (ROI). 

  • Identify a starting point

Calculate the average annual growth rate, marketing expenses, and annual marketing expenses as a percentage of revenue over the last three years. Doing so identifies a clear starting point to refer to as your fractional hire progresses. 

  • Measure Performance 

Communicate openly with your fractional hire, ensure milestones and KPIs are continually in place to ensure progression and minimise the chance of critical errors. Implement a system for regular progress tracking and reporting to monitor the fractional hire's performance against the established objectives and metrics. This could involve weekly or monthly check-ins, performance reviews, or status reports to ensure that the hire is on track and delivering the expected results.

  • Analyse 

To accurately calculate the impact your fractional hire has made on your business, it is important to continually measure the ROI over an extended period with 6 months – 1 year being the ideal measurable timeframe. 

The ROI formula for a specified period is: 

((Increase in sales revenue minus increase in marketing expenses)/(increase in marketing expenses)) x 100 = ROI 

While I feel NZ has some way to go to adopting this trend, there is no denying the demand for fractional executives is likely to continue growing globally as businesses increasingly recognise the value of flexible, experienced leadership. 

Cameron King is Head of Sales, Marketing, & Digital at Tribe Recruit. Get in touch with Cam to discuss the everchanging landscape of Sales, Marketing & Digital within Aotearoa, New Zealand.


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