Why Embracing Fractional Work Can Change Your Business for the Better

By Dan Martin

One of the most eye-popping stats that has bubbled up over the past few years comes from the McKinsey Global Institute: By 2025, 50% of the workforce in the United States will engage in fractional work in some capacity.

Fractional work is defined as an arrangement in which an individual provides specialized skills or management services to multiple organizations on a part-time or project basis. An alternative form of work gaining some traction is one thing, but the fact that half of Americans are projected to be participating in this kind of work, and that soon? That qualifies as a seismic shift in the relationships between employers and employees.

So how did we get here? Since 2020, workplaces in the U.S. have been in a near-constant state of turmoil. A pandemic forcing workplaces into full-time remote work, widespread leaks of footage showing how disconnected executives are from their teams, The Great Resignation, return-to-office mandates, mass layoffs, lack of backfills for departed employees, economic uncertainty. It’s created what could be termed a perfect storm for hiring and retention across nearly every industry and vertical.

For businesses, tighter budgets, expanding growth targets, a focus on efficiency and high people costs are making fractional resources more and more attractive. For talented workers, stagnating corporate salaries, poor executive leadership and the constant drumbeat of draconian and impersonal layoffs are fueling a move away from full-time employment. As talented employees leave to pursue the freedom of fractional work, organizations that either do not support side hustles for their staff or exhibit the qualities that tend to push employees out are at the highest risk. And when those companies go to rehire, they will have access to fewer and fewer of the very best, as those experts are more likely to be pursuing alternative work options.

Fractional work is only a threat, however, for organizations who fail to embrace it. The organizations who win in this new world will be those who commit to understanding and embracing fractional work right now. Learning how fractional workers can integrate into their business model, learning which projects are best suited for fractional support, learning how to meld fractional resources with full-time staff. Because those companies will already be far ahead when other organizations are still scrambling to shift when they’re forced to change.

These organizations will understand that they need to change how they staff their companies and complete projects in a work world that’s already undergoing a transformation in how people work. Even more importantly, they will know that sticking with the status quo won’t allow them to achieve their most important goals. Organizations embracing fractional work will:

• Save Money: Hiring a fractional worker saves a company an average of 30-40% over a full-time worker due to a variety of factors, including a shorter, time-bound tenure and lack of benefit payments.
• Increase Agility and Speed: Not only can you hire fractional workers far more quickly than full-time employees, most come with reduced training time and expenses given their experience and high level of expertise. 
• Increase Effectiveness: Expert-led, project-based work will result in more projects being completed on time and at a high level of quality, as fractional resources are unlikely to be slowed down by traditional internal company challenges.
• Innovate With Purpose: Innovation is driven by creativity, knowledge, technique and motivation. The outcome-based nature of the engagements, the level of expertise of the individual consultants, and the limited time they have within organizations inherently makes innovation more of an imperative for fractional workers than their full-time counterparts.

There are, of course, cons of hiring fractional experts into your business instead of full-time staff. While fractional experts are cost-effective due to the fact the organizations don’t pay for benefits or other overhead and because their projects are time-bound, they are also paid as experts, and so become less cost-effective the longer they are under contract. There are also leaders who believe that, because fractional workers are hired on a project basis, they may be less committed to the organization they work for than a full-time employee. Finally, because they often exist outside of the traditional interviewing process for full-time hires, it can be more difficult for organizations to vet the experts effectively (without help).

So, while fractional hiring isn’t likely the hypothetical silver bullet to slay all of your organization’s werewolves, it very well may be the right munition for some of them. If you’re ready to learn more about why fractional work could be right for your business and how to find and hire the expert talent you need to move your most important projects forward right now, set a meeting with our team at Canopy Advisory Group.