Firms cut senior hiring costs with fractional executives

Companies report 50% to 70% lower costs than full-time senior hires.

Singapore’s human resource (HR) teams risk falling behind companies already using short-term senior executives to fill leadership roles, according to talent advisory executives.

“If HR people are not doing enough, they will be dinosaurs and they will be left behind,” Karunesh Prasad, founder and CEO at Bridge Et Al Pte. Ltd., told Singapore Business Review. ”They need to consciously work towards making fractional executives part of their talent agenda.”

Priya Rao, chief operating officer at Bridge Et Al, said many companies want to modernise hiring but lack systems that can support fractional executives—fixed-term, outcome-based senior leaders.

“A lot of companies want to be future-oriented, but their internal system controls may not support that,” she said in the same Zoom call with Prasad.

Maestro in a survey of 117 fractional leaders across the Asia-Pacific region found that Singapore is still an early-stage market. About 59% of respondents have worked in fractional roles for less than two years, it said in a February report.

Engagements are usually short, often lasting one to three months.

Bill Padfield, founder and CEO at Salamander Advisory Services, said companies are using fractional executives as they deal with uncertain business conditions.

“So many companies are uncertain about the future,” he said in a separate Zoom interview. “They say: ‘Let’s just bring in somebody with experience who can hit the ground running,”

He said these executives are also used in digital transformation and restructuring work.

Demand is strongest for chief financial officers and chief operating officers, especially in technology firms.

Unlike freelancers, fractional executives are hired to deliver business outcomes, Prasad said.

“There is a component of ownership and accountability,” he said. “The fractional executive can… make sure implementation happens.”

Padfield said hiring fractional leaders could cut costs by 50% to 70% compared with full-time senior hires, mainly by avoiding salary, benefits, recruitment costs, and failed-hire risk.

Rao said startups are key users because they seek senior experience without long-term hiring commitments. She added that about one in five fractional executives are later hired full time by client companies.

Padfield said demand is likely to grow as firms become more cautious about permanent hiring. “The more concerned people become over hiring permanent staff, the more fractional hiring is going to thrive,” he added.