Fractional Executives and the Recession
What Happens When the Economic Going Gets Tough
“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
Definition of Recession
I really did not want to use the R-word, at least not until it was an official event. So, I will tiptoe around it and review what happens with employment when there is economic uncertainty, as we are experiencing at present:
- Layoffs (Mid-August, Layoffs.fyi Tracker was showing 520 tech startups with 70,671 layoffs. July year-to-date, US-based employers have announced plans to cut 159,021 jobs.)
- Hiring Freezes and/or Slowdowns
When this happens, are companies just cutting fat and using the opportunity to eliminate unwanted and unnecessary staff? And when they freeze hiring, does that affect only the “nice-to-have” positions, or does it apply across the board?
In my experience, any indiscriminate action deprives companies of much-needed talent. Especially when that talent is necessary to:
- Make the product portfolio recession-proof.
- Identify and implement additional channels to market.
- Lead a sales-driven turn-around.
- Enter new markets to spark growth.
- …and so many more steps that help companies navigate the choppy economic waters.
And at the same time, that does not stop companies from taking those steps. But there is an alternative to ‘all or nothing’: Fractional executives bring those much-needed talents at less than the cost of a full-time hire. They are indeed the perfect alternative.
Karis Hustad, in a recent article, took a look back: “ Fractional leadership traces back to the 2008 recession, where layoffs and a weak job market saw seasoned professionals turn to contract or freelance employment. Similarly, the pandemic has resulted in a larger pool of career-change executives ready to join the gig economy. These executives are leaving gaps in their previous organizations, which is also driving demand for leadership in the short term.”
To be clear, fractional executives were around prior to 2008. They did, however, experience broader recognition and a boost in opportunities during the 2008 financial crisis. The pandemic resulted in not only a broader pool but also wider acceptance of remote, part-time work. Last year, when demand was high and the labor market was tight, fractional executives provided an additional talent pool that companies tapped into.
So, what’s next? As we are in uncertain times and companies are responding with layoffs and hiring freezes, fractional executives are again gaining further momentum.
Karis Hustad — The rise of the Gig-CEO
Photo by the author
Originally published at https://www.vendux.org on August 22, 2022.