Should your agency sell itself as a fractional CxO to clients?

Agency Leadership Podcast

Chip and Gini discuss the intricacies of fractional leadership roles within clients.

They share their experiences and provide advice on managing relationships, setting clear boundaries, handling administrative tasks, and positioning yourself accurately in these roles.

Key takeaways

• Chip Griffin: “Fractional roles tend to work best when there’s a fractional amount of work to be done.”
• Gini Dietrich: “If there’s more than one decision maker, you have to ensure that all decision makers are on board with whatever you’ve negotiated in your contract.”
• Chip Griffin: “You get some of the best aspects of being an employee without all of the baggage that comes with it.”
• Gini Dietrich: “It’s a weird position to be in, to create a role and mentor and coach and train a team and then interview to find your replacement.”

Related

• When your agency is an extension of the client’s team

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, I think we’re only going to have part of me today. Just a fraction. Oh boy. I guess if you’re, if you’re in listener land and not watching this video, that didn’t, that didn’t, but I, I went partially off camera while still trying to stay in relative proximity to the microphone.

So you could still hear me.

Gini Dietrich: So yeah, and I rolled my eyes, so there you go.

Chip Griffin: But no, I thought that, that there was a good conversation in the Spin Sucks community talking about, going in as a, a fractional leader, within an agent or within a client rather. And so I thought that’s something that would be worthwhile discussing, particularly because it’s something that you’ve done yourself in the not too distant past.

And so can speak to your personal experience on it. And, and I’ve done similar things as well. So, perhaps we can share some unique experiences along those lines.

Gini Dietrich: Yeah. The, the gist of the conversation in the community was, I’ve been working with a company. And I use my team to help support the PR needs.

Now the company is, is thinking about hiring an employee and would like me to direct that employee, based on, or, you know, manage them essentially. and it was, it was an interesting conversation for sure. Also, to your point, I do have that experience where I’ve, in many cases have become either the marketing director or chief marketing officer or chief communications officer for a client and directing their teams You know hiring, firing, all that kind of stuff there are some things to Consider and we again we are not attorneys or accountants. But there are things to consider from that perspective because if you are audited and you have somebody a fractional person you know, leading your team and hiring and firing and making those, those types of decisions.

And that’s what they also do for their own business. There is some, you could get into some trouble from that perspective, but we’ve had really good luck with it. You know, we have right now, we probably have three clients, three of our clients that we serve in that capacity where we’re their marketing department.

They don’t have anybody internally that runs marketing or has any marketing experience. So we do it all for them, you know, and, and depending on, you know, what It’s just like I’m an employee as their marketing. The executive person and then based on what they need and what we agree on the goals, I bring in different team members throughout the year to help get the work done.

that piece is interesting. And then also the piece of this I actually just saw on LinkedIn, somebody said, whoever has decided to rebrand freelancer to fractional marketing director was brilliant. That’s essentially what it is. but you know, they’re Probably two years ago. It’s been almost two years now that I was there.

I was a fractional chief communications officer for a company for several years. And my team didn’t do any of the work. They had a team internally who did the work and I managed and led and did reviews and onboarded and all of those kinds of things. I sat in executive team meetings. I mean, I was essentially a very, very part time employee is how they treated me.

and I had to be paid differently because of that, because of the way that it, it works from an IRS perspective. but it works if you can figure that piece of it out and you’re careful about how it’s structured, it definitely works and it’s, For my, what I was trying to do. And the reason that I did it is because I don’t have any in house experience.

So I wanted to have that experience to be able to round out my resume, but also to understand how people look at the work that we do internally versus having an agency do it so that I could round out that experience from a professional development perspective, too, to be able to coach people to say. If you’re thinking about this, this is how it’s handled with an agency, and this is how it’s handled in house.

Chip Griffin: Yeah, I think there’s, you know, there’s a number of things to look at here. One is sort of the business side of it and how you function that way. And the second is, as you’ve touched on, the administrative side of it, and how you handle some of those things. And so, you know, I guess I’m inclined to focus a little bit on some of the, the, painful, boring administrative stuff first and then, and then, and then talk a little bit more about some of the substance on the administrative side.

As, as you note, you do have to be careful. Really the client is the one who has to be careful about how they are setting up your compensation and working with you, because if you, if you walk like an employee and you quack like an employee, you’re probably an employee. And so from their perspective, you know, they may want to protect themselves by paying you.

As an employee or something like that, as opposed to paying you as an agency or freelancer or consultant or whatever. Now that said, I will tell you, it is quite common for that not to happen. I know of any number of cases, including myself in the past, who have done those kinds of engagements where you basically walk and quack like an employee, but you are not.

So. Your mileage may vary. Talk to a lawyer. Talk to an accountant. Encourage your client to do that, to just make sure that you’re classed properly, because again, it is, it is largely on them. If there’s a problem, not on you. That said, the area where I think you need to protect yourself, if you are going into this, and you are not an employee is to make sure that you have clear written authorization for whatever it is that you are doing.

And so some specific examples, In the event that you are signing contracts on behalf of that client, you should have written authority to execute either the specific contract or contracts generally and with specific guidelines because… for two reasons. One is because if you’re not an employee of the company, you probably can’t legally bind them by signing a document.

So if you’re hiring a vendor and you sign it as a consultant, and you don’t have written authority to do it, you know, or clear documented authority, that contract may not hold up, which penalizes the vendor that’s been hired, but it could also be one of those things where if you sign it, you know, they can then – your client, if that relationship were to break down, they could come after you and say, you shouldn’t have signed this.

You owe us the money to, you have to, to satisfy the requirements of this contract. So, so make sure, and, and that’s true on the employee side too. I mean, I think you, as a consultant, you need to be really careful about hiring, particularly firing, you know, but, but employee discipline, any of those kinds of things.

You know, what I generally have done in the last 10 or 15 years, whenever I’ve been in that kind of situation, is not to have on paper authority over any employees, and I would simply be a dotted line, but they would have someone else who is an employee who would be their on paper supervisor, and I would make sure that that individual communicated proper HR stuff to them.

Whether that’s raises, promotions, et cetera, I can certainly be deeply involved in it and they may even defer to my recommendation, but I treat it as a recommendation, frankly, to protect myself and secondarily to protect the client. So be careful about how you’re setting these things up if you are not an employee, because you are functioning differently and you’re potentially opening yourself up to, to problems down the road.

If something goes sideways.

Gini Dietrich: Yeah. And I would also say one of the biggest challenges I had with one particular client is that, the, the president was the one who hired me and he and I worked out all the deal and had the paperwork and everything. And so from my perspective, I was quote unquote reporting to him.

And the CEO had a different perspective on things, but it was never communicated to me. and he expected me to build a team internally, hire, interview, hire, do the whole thing as an employee and make those recommendations up the chain, as an employee. And I wasn’t doing that because A, it had never been communicated to me and B, I wasn’t an employee.

So it came to a pretty big head where he was really angry with me. And I had to say to him, first of all, all you had to do was tell me. And secondly, I can’t really function in that matter because I’m not an employee. I have a business. I have my own team. I have my own, like all of this stuff. So if you’re looking for an employee, I’m not the right fit.

If you’re looking for someone to help you, help you mentor and coach a young team that’s going to grow with your business, then I am the right fit. And he and I, I mean, for several months went head to head on that kind of stuff because he expected me to act like an employee. And I just wasn’t going to do it because I wasn’t an employee. He wanted me to fly to New York for meetings. He wanted me to be at all of their onsite. They had, they went from hybrid to, to fully in person and he wanted me three days a week there. And I was like, I’m not an employee. So it ended up. We ended up finishing the relationship because he and I just couldn’t come to an agreement.

So I would say, I relay that story to help you understand that if there’s more than one decision maker, you have to ensure that all decision makers, all executives that have a hand in making the decision are on board with whatever the contract is, whatever you’ve negotiated.

Chip Griffin: Well, and I think this is, you know, you’ve underscored what is fundamentally one of the problems with being a fractional employee from whatever standpoint that is.

Whether you’re doing it as an agency owner or you’re doing it as a freelancer or that kind of thing. Fractional roles tend to work best when there’s a fractional amount of work to be done. Correct. The problem is that when it comes to marketing communications, there’s really no limit to the amount of things that you could do.

And so it’s not like being a fractional head of HR or IT or something like that, where at some point in all likelihood, there just isn’t any more work to do. Yep. And so you have a natural end of the week. When you’re doing things like marketing and communications, you can always have more ideas and campaigns and initiatives and all that kind of stuff.

So it is much harder to draw the line. And as much as you may put things in the scope of work to fence it off, either your expectations or the client’s expectations may be for more to be done. One of the challenges I’ve had in these kinds of roles is sitting there and saying, I know I’ve promised only a day a week or whatever it is, but you know, I, can I just leave them hanging?

Like, I mean, if I’ve spent my eight hours for that week, but then there’s an important meeting coming up and I want to make sure that the perspective of the marketing team is being represented there. Yeah, I mean, sure, I can say I’m not going to go to that, but I’m sort of cutting off my nose to spite my face.

And so if I want it to continue to be successful, I kind of need to do some of those things. And so trying to figure out how to manage that is much harder than it seems going in. And most agency owners, are really ambitious people who want to do a good job. And so drawing those lines becomes incredibly difficult.

So I always counsel if I’ve got a client who’s looking at this kind of relationship, assume it is going to take way more time than you think. So if you think it’s going to take a day a week, charge them for two days a week, because it’s probably going to be closer to that by the time all is said and done.

Gini Dietrich: Yeah, that’s a really good point. I think there’s so much unknown too, because this isn’t a, If a professionally formulated position, it’s fairly new, you know, there’s a, there’s chief marketing, fractional chief marketing officers to your point, there’s fractional HR administrators, fractional IT, there are people that will come in with expertise that the business either can’t afford for full time or only needs them for a certain amount of time.

So you have all these roles that, you know, it’s, it’s fairly new. And so there isn’t sort of that structure around what it looks like. And you do have to think about, okay, yeah, if you, if you’re a fractional one day a week, help freelance or whatever you want to call it, solopreneur, employee, whatever you want to call it.

and there’s an important meeting on Wednesday or there’s an important offsite meeting or that’s going to last a week or, you know, whatever happens to be. And you’re only, you can’t really be like, well, I’m only being paid for one day. So there are lots of things to think about. And some of it comes with experience.

Some of it comes with listening to people like us who have been through it. Some of it comes from asking questions in communities and forums, but, I will say though, that it is highly. Like I enjoy doing that. I enjoy having access to different types of people. In this case, I’m around my peers, so I’m around other people who are high level.

It’s not just me as the agency owner running my business with my employees, but I’m around other, you know, senior level executives in a business. So I have access to the CFO and I have access to other business leaders. And I have access to a chief marketing officer as a peer, and that’s a different relationship.

So for me, it was, it’s, I enjoy it. I enjoy it. It’s highly satisfactory. I learn a lot, you know, in the one client that we worked with for several years that we ended the relationship with, they had a chief marketing officer who’s probably the smartest person I’ve ever worked with ever hands down. And I learned so much from him just being there day to day, but I was definitely not one day a week.

It was like 30 hours a week easily. So you, you, you have to really think through that and also be strong enough to say, You know what? We thought this was going to be one day a week, but it’s ended up being three or four. Yeah. How can we renegotiate this contract?

Chip Griffin: I I’m just, I’m still just reeling from not being the smartest person you know, I, I just, I, I …

Gini Dietrich: Chief marketing officer. I said chief marketing officer. All right.

Chip Griffin: Okay. All right. Whew. Well, I feel, I feel better there. I mean, that was, that was, that was a close call then. I mean, I, I really enjoy those kinds of engagements, you know, whether it’s for a, you know, a traditional business or an agency or those kinds of things, I mean, to me, it’s incredibly enriching, it’s a learning experience.

As you’ve pointed out, you, you get a different perspective on things. You know, for me, it’s in part, it’s like, you know, you get some of the best aspects of being an employee without all of the baggage that comes with it. Along with being a full time employee for any organization. And so, so I think there’s a lot of reasons why this can be appealing, you know, as long as you can figure out how to fence it appropriately so that you’re able to produce results that you’re happy with and the client is happy with.

And it doesn’t damage the rest of your business. I think one of the ways to do that is to focus on doing these kinds of things on more of an interim basis, as opposed to completely open ended. It doesn’t mean that you have to have a date certain that it ends, but it should be for a transitional period.

Understanding that at some point they’re probably going to need someone full time. And setting that expectation, both for yourself and for the client from the beginning, so that you’re taking it in that direction. And so that way you’re giving yourself an easier off ramp when it starts to feel more like being an actual employee and all of the baggage that comes with that.

Gini Dietrich: I will say that, you know, we, To your point earlier about marketing and communications being a more open ended the way I’ve always done structured it is like for a certain amount of time based on the need to transition or to hire. Sometimes it’s for a quarter, sometimes it’s for six months, sometimes a little bit longer. But what I have found is that, that, that timeline always gets pushed out further and further and further.

And I’ve also found that when you’re interviewing people for your role. They, they get a little skittish in the interview. They’re like, well, wait a second. Why are you leaving? And what, and, and you explain that you’re not an employee, you know, all the things, and they still get really skittish. They’re, they’re trying to understand, is there an ulterior motive here?

Is there something going on that, that I’m, they’re not telling me about, are they not being honest? So there’s that piece of it, even though you’re very open and you’re being honest and you know, it really is I have my own business, but they, there’s, there’s, there’s still that like, But why? And I think part of it is because this is such a new way to approach working with, with organizations that not everybody’s accustomed to it.

So there’s that piece of it too, you know, when you’re, and it’s, it’s a weird position to be in to, you know, create a role and mentor and coach and train a team and then interview to find your replacement. It’s a strange position to be in, but if you do it correctly you will be in that strange position.

Chip Griffin: Yeah. And I think, I mean, if you handle it well with people you’re interviewing, good candidates appreciate the fact that they will have someone who can help them with the transition. And so, so I’ve often seen that outcome, you know, where the, the prospective hires actually come to the point where they’re like, but now you’ll still be sticking around for a bit afterwards to help, you know, make this successful.

Right? And, and so that’s something that you, Before you go hire your quote unquote replacement, you should be working out with your client to make sure that A, that is part of the roadmap, but I would encourage for it to be part of the roadmap because it can make a big difference versus most of the time when you’re hiring someone senior, who’s being just dropped in because whoever it was left to go somewhere else and there is no over. And so, so you now have an opportunity and frankly, you may be able to maintain some sort of consulting relationship that may still be beneficial for you and your agency going forward. So there’s a lot of reasons why you might want it to work out that way. The last thing that I would say on this fractional idea is make sure if you are positioning it as fractional, a fractional role, that that’s really what it is. Because what I see a lot of now is

marketing agencies in particular saying, we’ll be your fractional CMO. And they don’t really mean it. They, they, they’re looking at it as a traditional agency relationship, where we do very, very specific things. If you are positioning yourself as a fractional senior leader within that organization, A, they are expecting you, they are not expecting your team.

So this is different. We always tell you clients don’t care who. Here they do. Because you are positioning yourself that way. And secondly, if you’re positioning yourself that way, you really are at that point, simply selling your time. And I know that you, you don’t feel like that’s what you, but, but as an employee, you’re not, your scope of work really has to be more in times context, as opposed to based off of I’ll do three press releases and I’ll manage Google ads and that kind of, because ultimately, if they’re viewing you as a fractional employee, they want you to employee like things, which means it’s going to change from week to week. And so you need to be prepared for that. If that’s how you’re going to position it. If that’s not what you want to do, then sell regular agency services.

Don’t call yourself a fractional CMO because you think it’ll make it easier to sell.

Gini Dietrich: Yeah. Yeah. I mean, I think there are pros and cons to it, just like anything else. And you know, there, there are lots of lessons to learn for sure, but I think we can both say that it’s been For both of us, it’s been, you know, really beneficial.

I’ve learned a ton more than I would have just staying on my own.

Chip Griffin: Absolutely. And for me, particularly, you know, because I’ve generally run small businesses of no more than, you know, 15, 20 people, it’s nice to be able to be part of a larger organization. And as you’ve mentioned, all that comes along with that – proper CFOs and HR teams and all of these kinds of things that you know, they’re, they’re, they’re fun to have as part of your week. I don’t necessarily enjoy them. Something I have to deal with every day. And my apologies to all of my HR and CFO friends out there. Cause I have a lot of you. In any case. All right. Well, I think that, you know, we, we gave a full measure of advice on being a fraction.

At least that’s how I view it. So with that, that will draw to a conclusion this episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.