Fractional leadership on the uptick, report reveals

In the past six months in New Zealand, there’s been a four-fold increase in the number of individuals publicly operating with the ‘fractional’ title, a new report by the Fractional Directory finds. 

The fractional model is characterised by experienced leaders or executives operationally integrating into a company but contributing a fraction of their full-time capacity.

It differs from traditional third-party engagement models, such as consulting or advisory, as fractional leaders are titled and positioned exactly as a full-time leader would be, responsible for strategic outcomes and often entire teams or lines of business. 

The report, titled 'Fractional Leadership in 2024: New Zealand Market Report', details demographic trends and pay data from 138 fractional leaders, showing how New Zealand executives compete against the global market. 

On average, it finds New Zealand's fractional leaders are positioned with day rates 30 percent or more under-market compared with the same roles in North America and Europe – making them highly attractive for overseas companies to leverage as remote workers. 

This finding underscores both a challenge and an opportunity for this talent to be leveraged by New Zealand companies to help bring top domain expertise back into Kiwi businesses without top talent being tempted to work offshore, it says.

The report also found that, demographically, there is stronger gender balance and representation across the board for female executives operating in fractional executive roles than traditional leadership roles, which shows an opportunity for the fractional leadership model to positively impact diversity hiring initiatives. 

Fractional working, especially in the startup world, is huge in the US, says Fractional Directory co-founder Michelle Allbon, who expected the concept would take longer to catch on here. 

An American herself, Allbon and her co-founders, Julia Bowen and Petra Axelsson, set up the Fractional Directory as a project to map out everyone in New Zealand operating as fractional leaders and executives.

Fractional working is not completely new to New Zealand, with companies like Proxi having offered fractional CMOs for years, but it is nascent. 

What began as an ‘awareness raising experiment’ quickly evolved into much more, says Allbon. 

“We made it easy for people to make a profile but expected that it wouldn’t uptick. Then, 120 people added themselves within three months,” she says. 

What stood out to Allbon was that “at least half the people” who added themselves to the directory are currently in full-time roles, but are ready to switch to fractional work. 

“It’s been a lot more provocative than we expected,” she says. 

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How does this benefit startups?

Allbon says this more agile model allows startup founders and CEOs at all stages to engage experienced leadership resources for a lower total cost and far less risk than through traditional hiring.

It also offers a different dynamic to the traditional advisory role as, rather than having the expert sitting in the background, they’re in the leadership team, which means “their face can go in the pitch deck”. 

She says the autonomy offered through the fractional model benefits founders, as finding people with a background specific to a startup’s needs is often challenging. 

Having been involved with the fractional model herself, she advises those considering the fractional route to take the time to look at what skills are missing within the founder team. From there, it will become clear what skills and experience a fractional leader might need to balance the team and take a proactive business approach.

However, fractional leadership is not for everyone.

“The reality is it is a very challenging way of working if you haven’t already been an executive or leader because you only get the skill set by having done the job before,” she says.

If a founder is interested in bringing a fractional leader on board, it is their responsibility to vet those people against their credentials and backgrounds, she says. 

“We’re trying to bring it out of the dark,” she says, but people will need to prove its effectiveness for themselves.

“The trend is that if people, especially startups, find that they can operate fractionally in one area of business, they often transition to having a large portion of their executive team in a fractional model.”