Full-time knowledge workers are harder than ever to find.
As remote work expands, values change, and new strategies emerge. More than half of companies globally are experiencing a talent shortage. All companies feel the effects of the shortage, which Korn Ferry estimates will reach more than 85 million people by 2030.
And early-stage companies feel it most.
Every growing business has a local knowledge maximum, meaning their teams regularly encounter issues which they know little to nothing about. When this happens, they have two options: Hire a full-time employee, or engage someone fractional (a contractor).
In DoorDash’s early days, we were vehemently against HQ contractors. Our feeling was, “You’re either with us, or you’re not.” That’s changing. Fractional work, particularly at the C-Level and with niche skill sets, has become increasingly common. It’s a new dynamic, but new by necessity: When executed properly, fractional arrangements bridge talent gaps for companies and enable flexible, lucrative work for executives.
In this article, I’ll explain how that works. Let’s start with the demand: companies.
Early-stage companies need help, but they can’t hire experienced full-time execs.
For early-stage companies, full-time executives are extremely hard to hire. Exec searches take six to nine months to complete — an eternity in startup years. Engaging a top-tier search firm costs between $100K and $150K. And as DoorDash CEO Tony Xu once said…
“The Michael Jordan of executive recruiting gets it right two out of three times.”
So, most startups rely on their investor network for help. Again, this runs into a local knowledge maximum problem. Investors only know so many people. They’re biased toward those already in their networks. And they usually provide a few names, but they can’t provide a global overview of available talent.
Particularly for startups, full-time exec hiring is too slow, too expensive, too limited.
On the other hand, fractional hiring is faster, less costly, and more flexible. Fractional arrangements allow companies to engage experts at less than their full market rate for well-defined purposes.
At my company, Continuum, we see teams leverage fractional hires in three main ways:
- Full-time fractional. This is for companies with major gaps today. Either they can’t hire fast enough or they had to fire someone — in any case, everyone is reporting to the CEO or there is a skill gap that’s hurting the company, which is a nightmare for all involved. Full-time fractional execs help them stabilize the situation and bridge knowledge gaps.
- Project-based. This is for companies with defined needs like performance management, compensation, or leveling, and who don’t have that expertise in-house.
- Coaching and advising. For a few hours a month, an experienced executive will answer a broad range of questions. It’s insanely high leverage for young companies who want to grow their current staff and avoid mistakes.
Fractional arrangements reduce cost and time-to-hire, and help companies solve problems today.
Which brings us to the supply side: the executives.
Fractional work lets executives work more flexibly and earn more.
DoorDash was founded in 2013. The fact that we were so opposed to contractors in the beginning speaks to what inhibits many executives from considering fractional work: The fractional paradigm is still “unconventional.”
Because it’s unconventional, many executives either don’t know it exists or don’t know how it can work for them.
I can speak to this personally. For 10 years, I had my head down, working 60-70 hours a week, building, building, building. It wasn’t until a conversation with someone brand new at the company that I understood how valuable my background was.
Senior employees have a unique and valuable set of skills. Rather than working 60 hours per week for one company, fractional work allows these people to work 15 hours a week for two or three companies, charging each one less than their full rate, but netting more money than a single company could pay them.
In the past, it was black and white: You work full-time, or you’re retired. Fractional work offers a third way, a middle path, where executives can work as much as they want, earn a healthy income, and design their version of work-life harmony. In my view, the recent shift to fractional work is the first step in a move away from monogamous employer-to-employee relationships.
The future workforce will be a network of interconnected nodes —contributors — making contributions to multiple companies simultaneously.
And until then, employees and employers both stand to benefit from fractional arrangements.