Success Matters

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Measuring Success and ROI in Fractional Leadership

In today's fast-paced business environment, fractional leadership has emerged as a strategic approach for organizations seeking specialized expertise without the commitment of full-time executive roles. But how can businesses measure the success and return on investment (ROI) of these engagements?

We are going to take a look at how to ensure that a fractional engagement is successful or not. However, as all of the blogs in this series this is not just for the fractional executive but for all executives. We must be accountable to progress and continued improvement or else we are not doing our jobs.

Before you Get Started

If you are new to this blog series then I encourage you to start at the beginning for greater context. 

Part 1: The Strategic Power of Fractional Leadership

Part 2: Less is More

Part 3: This is Not For Every Business

Part 4: Are You Ready?

Part 5: Plan for Success

Part 6: Communication and Transparency

Part 7: Navigating Challenges and Conflict Resolution

As always, no matter what order you read these blogs I hope it will help you re-think all your leadership approaches to help your business grow more effectively without risking valuable resources so that you can keep your profits as high as possible. 

So, let’s dive in!

Establish the Wins

The success of fractional leadership matters not only for the immediate needs it addresses but also for the long-term growth and stability it can bring to an organization. Fractional leaders provide valuable insights, drive strategic initiatives, and fill crucial gaps in leadership.

However, to truly benefit from their contributions, businesses must establish clear metrics to evaluate their performance. In other words, you have to establish what you want to accomplish and what the wins look like. If you don’t articulate this well then you could find yourself very frustrated as well as frustrating your executive leader. 

Establishing Key Performance Indicators (KPIs) 

Once you get on the same page with your executive leaders about what the wins look like then it’s time for them to take over. They will want to ensure that the wins happen so they know that the key performance indicators (KPIs) are essential to show progress along the way. In other words, they should essentially predict the future of the established goals. Not simply by hoping and wishing but knowing if they will happen because of the daily and weekly activities that are being measured.  

KPIs are also called lead measures. Lead measures simply mean that they are leading the way for the wins that you and your leader have already established. They become your company’s scoreboard to see how everything is going during the game. 

For example, here are some lead measure (KPIs) to consider:

1. Weekly or Monthly Net Revenue. 
2. Sales Close Rate. 
3. Average Customer Wait Time.
4. Average Service Time. 
5. Sales Pipeline Strength.

If strong lead measure KPIs are not put in place then there is no way to determine if the established goals will be met or not. It would be like driving to a location that you’ve never been to without a map. No matter how good you feel about getting there you will not get there. Let alone be able to predict when you will get there. 

So, don’t wait on the final numbers to come in before you decide what you need to do to  make an adjustment. The end of the month, quarter or year will be too late. This is where an executive leader has to make tough decisions and challenge the status quo if the daily and weekly scoreboard does not show progress that will reach the goals. So, let’s talk about how this looks in a fractional contract engagement.  

Tracking and Evaluating the Success of Fractional Leadership Engagements

To track and evaluate the success of fractional leadership engagements, there needs to be a structured approach to be able to know what success looks like. In addition, the process should be brought to you by the leader, fractional or full-time.

For example, here is my 90-day integration plan for my clients:  

1. Month 1: Review & Assess: The first 30 days is critical to really understand the current state of the organization. I will have weekly meetings with the business owner and my direct reports. These meetings will be for relationship building and my organizational learning. I will also learn by securing access to the current organizational chart, strategic plan, latest financial metrics, employee survey data, and current standard operating procedures. In month one I will also start my formal 12-week business operations foundation training to ensure the management team is maximized and empowered by the end of the first 90 days. 
2. Month 2: Meeting & Training: In the second 30 days I will begin the management team's weekly standing meetings that allow us to review the current process in detail and adjust strategies as needed. Also, address immediate issues and challenges. 
3. Month 3: Reveal New Strategic & Operations Plan: This is a dynamic plan that we, as a team will work on to deliver company wide. It will include a revised mission and vision statement, current issues list, prioritized list to resolve the issues, short term / long term / quarterly goals, updated KPIs dashboard, meeting review expectations, and a working standard operating procedures (SOP) document. In addition, I will start quarterly 1:1 meetings with each direct report to exchange feedback and set personal goals/commitments for the next 90-days. 

Every leader is going to have a different version of this plan, especially if they are not an operations executive. However the three main components should be completed by every leader in the first 90 days, in some way, to set up the organization for continual assessment and improvement. 

First, assess the current plans, daily operations and culture of the company or the division the leader is charged to oversee. Second, work with the team to revise the plans as needed. Third, empower the teams to implement the plan with excellence. If a leader does not have this overall framework or no framework at all then you need to ensure they have a plan but definitely do not hire them until there is a plan clearly presented. 

Tracking Success 

Demonstrating the ROI of executive leadership is crucial for justifying the investment and ensuring continued support from any and all stakeholders. So, if an executive leader of any kind is not willing to benchmark activities and results then that’s a bad sign. They need to be able to care about the organization’s short term and long term results in order to build trust and lasting results for your company with your team and customers.

Here are some examples that you can expect from your executive leader to determine if the engagement is a success or just a paycheck opportunity: 

1. Strategic Wins: Monthly, quarterly and annual reports that show the strategic milestones achieved, such as successful product launches, market expansions, or operational improvements. These accomplishments demonstrate the leader’s value in driving the company’s long-term growth.
2. Share Employee and Customer Feedback: Feedback from employees and customers to illustrate the positive impact on organizational culture and customer satisfaction. Testimonials and case studies can be powerful tools in demonstrating success on a monthly basis.
3. Compare Against Baselines: The baseline assessment conducted before the fractional leader’s engagement should be used to highlight the improvements made. This comparison provides a clear picture of the progress made and the areas where the leader has added value.

Remember This

When hiring a fractional for full-time leader be sure they have a plan and they can clearly articulate the plan. This will keep the guesswork out of the engagement so that you’ll know within the first 90-days if it will be worth keeping or not. 

Also, measuring success does matter in business so that you can keep carrying out your company’s mission. So, you should not expect anything less from the executive leaders that you hire whether they are fractional or full-time. 

Your company's future is at stake so don’t take that for granted and blindly pass off your company to someone without a plan whether they have a lot of specific experience or not. 

Now, go use this information to find a great fit executive leader to help you scale your company to the next level. 

Enjoy the Process!

Grow More. Risk Less.

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