The Rise of Fractional C-Suite Leaders

Mo Fathelbab: Welcome to today's episode of People in Strategy. I'm your host, Mo Fathelbab, President of International Facilitators Organization. People in Strategy is a podcast from the SHRM Executive Network, the premier network of executives in the field of human resources. week we bring you in depth conversations with the country's top HR executives and thought leaders. For today's conversation, 

I'm excited to be joined by Sara Daw, author and entrepreneur. Sara is the co founder and group CEO of the CFO center and the Liberty Group, the global number one provider of part time and fractional C-suite professionals. Welcome, Sara.

Sara Daw: Thanks very much. Great to be here.

Mo Fathelbab: Great to have you with us, Sara. I want to start with your career journey and how you found yourself in this wonderful spot of the fractional CEO or C-suite space.

Sara Daw: Yes. Um, well, it was, it was by necessity actually that I ended up here. Um, so I was a CA and an MBA and the only people that wanted to hire me quite rightly after doing an MBA was the investment banks. I had just got married. I was starting a family and I didn't want to go back into corporate life. I wanted to find a role and a career that would be fulfilling, but also I wanted to be mum at the same time.

So I wanted to have it all, I guess. And this is, you know, 20, 25 years ago now, and I couldn't see my way through that in corporate. So I actually, set myself up as, uh, an independent and what we call back then part time FD. And, and it's now that terminology is now fractional CFO, but it's the same thing because I was a CFO and I thought, do you know what?

There are these SMEs out there, these growing entrepreneurial businesses and large organizations who need us. Um, the skillset of a CFO, but they don't need it full time. They don't want it full time and they can't afford it full time. So I thought I could build a portfolio, work with three or four organizations locally and offer my services, say a day a week for one, two days a month for another, and also at the same time, obviously bring up my family.

So, so yes, that's how it started.

Mo Fathelbab: And so you were the first fractional C-suite person in your business and then you grew from there. Tell us about that journey a little bit.

Sara Daw: Well, actually what happened was, um, so I set myself up and I thought, do you know what? I really want to work with others and I wasn't quite sure how much of a connection I would have with the businesses that I worked with. It, it turned out a deep connection, but I didn't know that at the time. So I thought, who else?

is doing this fractional work and I looked around and I found an individual called Colin Mills who was a fractional CFO busy building his portfolio and he'd set up something called the FD Center a few years earlier. So I met him and joined up. I liked the idea and that's the business that became the CFO center.

Later on, we rebounded from FD to CFO and we built the business from there. Um, both firstly, it was sort of nationally in the UK and then we went on to take it overseas. And now we're in 17 countries globally and we've expanded outside of just fractional CFO into other C-suite disciplines. So people, HR, Uh, marketing sales as well.

Um, and that's, and that's what the business does now. So that that's been the role in the journey.

Mo Fathelbab: Well, that is an incredible journey and an incredible trajectory. Congratulations on your growth.

Sara Daw: Thanks. Yeah, it's definitely been, um, exhilarating and chaotic at times, I would say, but loved every moment.

Mo Fathelbab: it is. As businesses are,

Sara Daw: Yeah.

Mo Fathelbab: So, Sara, why do you think companies are increasingly leaning on fractional C-suite roles?

Sara Daw: Yes. Now this is a, this is a really good question. I mean, so we've got a couple of categories here. You've got the entrepreneurial businesses. So I would say the smaller growing businesses run by an owner founder and those organizations, you know, maybe they're sort of 2 million revenue to a hundred million revenue, something like that.

They are the ones that need these skills to scale. Because, um, they absolutely need these sophisticated strategic skill sets, but they can't afford it full time, they don't want it full time, and, and quite frankly, they don't need it full time. So, they can bring in this fractional approach, and it can help the business owner founder, um, get the right people in the right roles.

Really, um, access the skills, the functional skills that businesses need that an owner founder probably doesn't have or doesn't want to do. Um, and that's how they can grow their organization. So that's, that's sort of one set of, um, businesses. And, and they're really important, by the way, those SMEs, because they're the sort of underpin, if you like, of the global economies around the world.

So hugely important to get those working. And then you've got sort of mid to large corporate, so slightly bigger organizations where they might have a group, um, CMO, CHRO, um, CFO. So they've got the Group C-suite in place, but those individuals are extremely, um, under pressure, if you like, both to complete on everything on their to do list.

and to perform and be top of their game the whole time. And, and they need extra skills wrapped around them for geography gaps, functional gaps, um, time gaps. So they can concentrate on the bits of the role that they absolutely have to do. And they can, um, tap into a sort of dynamic talent pool of fractionals in a team environment and bring in the skill sets on a very flexible basis.

So they don't have to bring in a whole hire or a headcount. They can just tap into, um, these teams of people. And so it works brilliantly for them as well.

Mo Fathelbab: That is brilliant. Indeed. So what are some of the attributes of fractional C-suite roles?

Sara Daw: The roles I would say are, and if you're thinking, if you're an entrepreneur or, or a group C-suite person thinking about, you know, trying this out. What I would suggest is don't necessarily think of it as a job, because that's the sort of old way or the traditional way, if you like. Think of it as the work that you need doing.

So what is it? Is it, is it extra skills? Is it special skills? Is it a project? Is it long term? What are the gaps, if you like, to grow your business or, um, manage your function? And I would define the work, and then I would find the person with the right cultural fit to, um, map to that. In the C-suite space, it is very likely to be strategic.

Um, these are individuals who are used to working in large organizations. They've been there, seen it, and done it in terms of The C-suite function, and they will probably have, um, certain specialisms. So it might be sector, it might be function. And so therefore you can, you know, you can really sort of target the very absolutely specific skills that you need to bring into your organization.

Mo Fathelbab: That sounds like quite a lot of work on your end to make sure you do the right matching and to make sure that it is a good match. Yeah. Yeah.

Sara Daw: like, um, the CFO Center and Liberty Group do. We would. Um, we're a new breed of organization, so, um, I guess there isn't a label you can put on us. We're not recruitment. We're not consulting. We're a totally sort of new organization where we provide a community for the fractional C-suite leaders.

So they've got their Businesses they work with and they will definitely be part of those and part of that team, but in between all of that, and as backup, they are part of an organization like ours where they can have learning and development, community backup support, which means they can always use that as a resource to get the answer for an area they don't know, or a geography that they don't know, and they always feel supported, and they're always learning and growing.

And equally, we can make sure that the individuals involved in this fractional C-suite aren't, um, you know, taking on too much work, that they're getting the right work life balance that They need, um, to help the organizations. So that's the sort of organization that the CFO Center Liberty Group is. And there are others out there, but I think, you know, what's powerful about those is it means that the businesses can tap into the power of many, um, and get access to lots of skills, um, and network and not just one individual.

Mo Fathelbab: So what makes a fractional role gel well with a business? Because what I'm getting very clearly in our conversation is that is very important. It's not just a part time role. It is a partnership of sorts.

Sara Daw: Yeah, you've hit it. You've hit the nail on the head. It is so much a partnership. I can't tell you it's, um, there has to be alignment of values level and purpose level between the business, the business owner and his team or her team and the, uh, fractional C-suite leader, because this is a partnership to get full value.

It's important. It's long term. I mean, of course, these people can come in and do a project. I mean, that's easy. They will be able to do that, but that's where I think if we, if you look at it that way, I think it's a bit short sighted. By fully integrating into the business and being that C-suite leader, just not there all the time, just like any other sort of hybrid worker potentially that an organization has, you know, we're not always present, but we can be always thinking about the organization.

And we can be looking at risk ahead and spotting those things that. probably maybe the organization hasn't seen. And to do that, we have to build a really, really deep relationship. And that's, I think, key. And, and there are, there's something called psychological ownership, which I, um, have uncovered in my research that is essential I think to build a relationship that's value adding both size and long term and trusting, um, in the absence of an employment relationship.

Mo Fathelbab: All right. So let's talk about this psychological ownership. First, please define it for us. And then after that, I want to talk about how you make it happen. 

Sara Daw: So defining it, it's, I mean, it's an academic concept, it's well researched. So I, you know, I didn't come up with this on a wet Wednesday afternoon. It was something that I, um, I realized it was, you know, in place in other access economy models. So if I just take a little step back, I uncovered it because I was looking at the, our business model and researching it and realizing that, you know, the businesses are accessing our services, but not owning or employing, if you like, these people.

So what other access economy models are out there? Um, You know, the audience today will be very familiar with these. They are the likes .Of Uber, um, Airbnb, Spotify, Netflix, Zipcar. So this is where we access services, um, instead of owning them. Yet it feels like they belong to us. And that's the concept of psychological ownership.

That feeling that it's ours, even though legally it isn't. And that's what I wanted to delve into in my research, Cheers. Does this exist? Is this what holds these relationships together in the fractional C-suite? And, you know, I certainly found evidence that in, in certain relationships where there were certain ingredients, psychological ownership, that feeling that something belongs to us, it's mine, it's ours, was in play.

Um, and so then I started looking at the, um, components of psychological ownership to see if I could see them in these relationships. So there's, there's something called roots, uh, as in like tree roots that are the foundation. So it's a nice way to think of it.

Tree roots, they hold the tree up. These are the foundations of psychological ownership and these are the reasons why it exists. And there are three of them. And the first one is efficacy. Now, you know what I mean by that is that the business model, the case for the relationship works in commercial terms, in cultural terms, there's value both sides.

So, you know, this fractional leader has to deliver value for the business, the business has to, um, be a fulfilling place for this individual to work. And so there's a value exchange. That's the first thing. And, you know, you can work together to form desired goals, um, shared outcomes, that sort of thing.

Then secondly, there's something called self identity. So the relationship between the two parties has to add to each other's identity. So an example would be,  I'm a fractional C-suite leader, and I'm say a fractional CFO. The business owner would say, you know, I've got a CFO and they'd say that to their investors, their bank, their clients, and it makes them feel credible, investable, serious, sort of bigger than they are perhaps.

And, that adds to their identity. And equally, you know, the, C-suite leader. By working, perhaps say it's a tech business, they develop more of a specialism in tech, which adds to their identity. So that's the, it has to work both ways, but that has to be in place. And then the third thing is that, um, we need to have a sense of belonging.

You know, we are social animals as humans. We want to be part of something. So the C-suite leader needs to feel as if they belong to the organization. The business owner needs to call them my C-suite leader, my CMO, not, not someone outside their organization. And, and the C-suite leader themselves has to talk about the businesses, my business, you know, where I work and as if it's part of them.

So it's that belonging piece. Um, and if you can have those in place, then that, then you can go on to develop some routes, which are how you build psychological ownership.

Mo Fathelbab: It seems to me each one of those attributes is also important, important for a full time employee. Um,

Sara Daw: totally.

Mo Fathelbab: right.

Sara Daw: rocket science there. So this is not something that only works in access. It should be in all the productive relationships. I mean, I'm afraid to say it probably isn't, um, in all relationships. And, and the only thing I would say is sometimes I've noticed that by You know, when we've got an employment contract, we tend to use that as a bit of a crutch sometimes to think that we've got the relationship because we've got that, that signed contract, when in fact the hearts and minds aren't in the relationship at all, and we haven't built those roots.

So, you know, this is a learning across all relationships that we need to put the effort in here.

Mo Fathelbab: Yeah. And what are the typical number of hours that the fractional C-suite role spend with each client?

Sara Daw: Gosh, that varies. That really does. I mean, I would say, you know, from my knowledge and in our organization, you know, a typical C-suite role for an entrepreneurial business would be around about a day a week. So, you know, maybe that's a sort of 10 million, 15 million revenue business. Um, that may be a day a week.

It may increase at times of intensity, but the beauty of the model is you can dial it up and dial it back. And if you're working with a firm, um, of fractional business, uh, fractional leaders rather than an independent. What you can do is then bring in other team members to fill capacity gaps or skill gaps.

So you might have a lead fractional C-suite individual whose primary relationship is with that business, but if they feel there's someone better to do a specific task or role, then they can bring them in for that specific piece and then they can go away again. So it can expand and contract really nicely.

Um, but you can have anything from, you know, a day, a day, a month, um, all the way up to, you know, three or four days a week for really heavy pieces of work that might subside over time, but is a, is a temporary, um, a temporary piece of workload.

Mo Fathelbab: So one of the things we talk about at SHRM a lot is the concept of belonging. How do you ensure that when you place this person that they do feel A sense of belonging and what are you doing with the client, uh, to ensure that they also do their part

Sara Daw: Yeah. I mean, 

Mo Fathelbab: feel a sense of belonging.

Sara Daw: Yeah, that's such a great question. So I think it's really important in setting the, setting the relationship up well from the start. So many businesses haven't worked with a fractional leader before. So it's all new territory, if you like. And there's lots of questions around, oh, how does it work?

And, and will they be at my board meetings? And, and how often will I speak to them, et cetera. And I think it's really important for the fractional leader to guide the business owner through this. And, um, talk about, you know, how they're going to communicate, how they're going to introduce each other internally and externally.

Um, get rules of engagement around how they're going to, how often they're going to speak, what mode of communication, um. Are they going to be part of the senior leadership team? And I would definitely advocate that. So welcoming the fractional leader into the senior leadership meetings. And I would encourage the fractional leader to literally camp out as much as possible at the organization.

Like, You know, basically adapt their culture. So be on the inside, be an insider, and the more the fractional leader can act like an employee and be an insider, the more that sense of belonging will just naturally happen. Actually fractional leaders, I think have to be quite chameleon like and adapt to their surroundings.

Um, and make sure that they're. Um, so for an example, an example for me, when I first started with one of my very, very first clients, this is a long time ago now, but they moved offices and the, everyone went to the new offices on a weekend to paint them. And I showed up and did my share and painted those offices along with everyone else.

I just, I'm part of this team, makes a difference to me, I'm doing it. And, and sort of from that moment on, I was, I was, I had my sense of belonging. I was there.

Mo Fathelbab: That's beautiful. I love that. Uh, so when you place someone, uh, in these roles, how early on in the relationship do you know if it's working and if it's not working and what do you do if it isn't working?

Sara Daw: Well, it's, you know, that's really interesting too, because what I found through my research was actually that you could develop psychological ownership really quite quickly. So it, it. Function, you know, time is one of the functions, but actually, because psychological ownership can be developed across, um, many routes, um, and many routes actually, which are the way to develop it.

So if I just talk about the routes moment, it will, it will give us a guide to this question. So the routes are how you develop it and you develop it by making yourself accessible, available, and approachable for each other, a little bit, what I talked about just now, to having intimate relationships.

building psychological safety and doing things together. And you don't need all of that, you know, that you don't have to have every component, but you have to sort of have enough to get over a threshold. So enough of some of it, if you like, to make the psychological ownership fit. So actually, you can have a very short space of time where you're working incredibly closely together, and it can be highly intense, and you can actually build it really, really quickly.

Alternatively, it might be more drawn out and spread out because the interaction is less. So, um, and, and actually I also found because I studied this during COVID that it can all be done remotely as well, um, which was really fascinating. It doesn't, you don't actually physically have to be together. It's about putting the components together and putting Building the routes, but you don't actually have to physically be together to do that.

Mo Fathelbab: Yeah, that is that is just wonderful. And when you place these wonderful people in the C-suite fractional rules, are they trained in any way on building intimacy? Is that something that you focus on so that you're more likely to have that intimacy when they are placed?

Sara Daw: That's such a great question. Um, we really look for individuals who are self aware. Um, so we believe that those individuals who have emotional intelligence, have self awareness, good at active listening, um, good at the, good at the soft skills. And we all know they're the hard, hard skills really. Um, we look for those individuals.

And we also. work with our people to help them master those skills and, and keep them, you know, fresh as well because it's, you know, those are the skills actually that make the difference in these relationships because you wouldn't be in this game if you didn't have the technical skills. They're all, they're a given if you like the hygiene factors and it's the ability to hold multiple relationships.

remotely at times and be, and fit into all those different environments that I talked about. And you can't do that, I don't think, without, um, looking at ourselves and building those, um, softer skill sets, influence, persuasion, and basically the human interaction skills, communication skills. So yes, we do, um, prioritize those in our organization to help the C-suite leaders develop them further. 

Mo Fathelbab: I love that. So, uh, Sara, there's, there's a pressure to keep up with the rapid pace of the workplace. How do you handle this in your role?

Sara Daw: In my role particularly, gosh, um, I feel that I spend as much time as I can talking to our people because they're the individuals that are out there, you know, every day seeing new developments. So that's both internally, our C-suite leaders, and also to the businesses that we work with. So I try and spend as much time as possible hearing, And, you know, understanding their issues, because, you know, if we don't understand them, we can't help them.

So, and then, then, by that, if I'm really listening to both our people and our, and the businesses we work with, then we can develop internally, um, we can develop our programs to support both those sets of people.

Mo Fathelbab: Um, so looking ahead at the future of work, what do you think is next and how do you see, uh, the workforce continuing to change?

Sara Daw: Yeah, this is a great question. I mean, I believe that roles are unbundling. We're seeing it now, but I don't think we've really seen the full impact of it. So roles are unbundling. They're not sort of tied up in a nice sort of bow now. We are unbundling them. They're becoming, you know, tasks and pieces of work, and they're going to be done by humans and machines going forward.

So I think that's the future of work, and we really need to, you know, it's on us really, all of us, to try and understand how we need to support our people to work in that environment, to work with the the machine element, the automation element, and to really bring the human element the roles need.

Um, and I think fractional is a big part of that. It meets it head on because it enables organizations to to work more flexibly and, and get work done in the, in the bite sized chunks it is, rather than just thinking that I've got to hire traditionally in the, in the employment model.

Mo Fathelbab: And again, in, in your role, what would you like to see more of and what would you like to see less of?

Sara Daw: I think, you know, I think for me. I would like to see more focus on the relationships and the human element. you know, I do still feel that we get caught up in the sort of harder, aspects of roles, you know, the goals, the, achievement element of it, the short-termism of, you know, producing results.

And I think You know, for me, the more we can focus on the people and the relationships and what's making them tick, I think we'll have a smoother pathway to creating long term success and get through the short term. you know, I guess notion that we're, a lot of people are obsessed with, and build more authentic long term relationships that add value to people's lives.

And I think that's a bit, that might sound a bit idealistic, but yeah, I guess that's where I am.

Mo Fathelbab: I agree with you a hundred percent relationships versus transactions.

Sara Daw: Yeah, yeah, totally. Absolutely.

Mo Fathelbab: I love that. I love that. Thank you. So our closing question, Sara, what is one piece of advice that has shaped your work or personal life?

Sara Daw: I would say that advice is know yourself. Um, because then I think, then I think when I learned that and, and it, and it's a forever work in progress, I have to say. So there's no finished article here. Um, but know yourself and know myself, and know what supports me so that I can show up better for others.

Mo Fathelbab: Sara, thank you so much. And that's where we'll end it for this episode of people and strategy. A huge thanks to you, Sara Daw, co founder and group CEO of the CFO Center and the Liberty Group. You can follow the people in Strategy Podcast wherever you get your podcasts. Also, podcast reviews have a real impact on a podcast visibility.

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