A fractional COO (chief operating officer) is your secret weapon for specialized operational insights, problem-solving, and fresh strategic direction – leveraging experience and decision-making from a seasoned executive.
Find out about the different Fractional Executives you can hire, how they differ from other interim executives, and their costs.
Discover how to hire a Fractional CTO and the benefits of working with these experts.
What Is a Fractional COO?
A fractional chief operating officer is a type of outsourced COO. These part-time executives manage a company's daily administrative and operational activities.
A fractional COO ensures all departments work towards the same goal and usually reports directly to the CEO.
While every company differs, many organizational roles report to the COO, including the “heads of department” or other C-suite executives. While this isn't universally applicable in the case of a fractional chief operating officer, it can still serve as a means to safeguard a CEO's time and provide much-needed guidance and management to the executive team.
While the CEO sets long-term business goals, the fractional COO translates those objectives into actionable tasks and responsibilities.
A fractional COO also holds accountability and provides tactical strategies and advice for turning these high-level objectives into tangible results. They can help bring operational rigor into a company that needs to get organized.
A fractional COO often handles tasks like:
- Executing business strategy
- Supply chain management
- Recruitment and team management
- Financial operations and budgeting
Why do businesses opt for fractional COOs?
The fractional business model provides companies — from small business to larger enterprise companies — with the experience and skills of an experienced operations executive without having to pay a full-time salary, stock options, bonuses, recruiting fees, or other FTE benefits.
In essence, both a traditional COO and a fractional COO will optimize your business operations and strategy, but a fractional COO offers more flexibility and a fresh perspective – ideal for specific challenges or transitional periods. (We’ll get into the details soon.)
Hire the best fractional COO with Go Fractional.
Or, keep reading to learn more about the responsibilities they can take off your plate.
5 Key Responsibilities of a Fractional COO
Fractional COOs can help you streamline daily operations, boost efficiency, and align your entire organization with your vision.
Let’s dive deeper into what they offer and how they can benefit your business.
1. Strategic Planning and Execution
Fractional COOs will collaborate closely with the CEO, project managers, and senior executives to craft strategic growth plans for the company. They leverage what they have seen work well (and not well) to help avoid costly mistakes and bring in valuable insight and operational rigor.
Additionally, they will drive the execution of strategies and ensure business operations align with the overall business goal.
One of the benefits of working with an experienced COO is having the decision-making maturity from working across multiple industries. They can bring wisdom from other companies, sharing what has worked and what has not.
They can be an incredible sounding board to lean on when the executive team needs to make a decision and benefit from asking someone who has done it before.
Here’s an example:
Imagine you’re the founder of a B2B SaaS company, and you want to expand into new markets, diversify your revenue streams, and bring operating efficiency to your teams. Many companies will bring someone into a role that is “punching above their weight” and “figuring things out on the fly” when they could and should be working with someone who has done this before.
When you couple an experienced COO with a VP of operations or a VP of sales, they can bring their prior experience in new market expansion. This synergy becomes especially beneficial if your fractional COO has worked in the same or a similar industry and is familiar with its best practices.
Furthermore, through their experience overseeing larger teams, they can introduce smaller companies to the operational efficiency they witnessed in larger enterprises.
2. Operational Efficiency
Operational inefficiencies can hinder productivity, increase costs, and impede company growth.
But who can a small business owner ask to audit and optimize their current systems?
Fortunately, fractional COOs can work alongside a business owner to spot these inefficiencies. They can recommend new tools or eliminate redundant operational processes – all without being influenced by internal politics or the "way things have always been done."
Some fractional COOs specialize in specific areas such as reviews, compensation adjustments, sales strategy, and compensation. They may also focus on business development expansion, fundraising, financings, venture debt, and overall team and culture building.
As a result, you can hire them to solve your most pressing challenges and achieve operational excellence. They will collaborate with various teams (engineering, product, customer support, etc.) to optimize your operational strategy.
3. Team Management & Development
If you are a CEO, the demands of overseeing your entire company can distract you from working towards your broader organizational goal. Hiring a fractional chief operating officer can take this hassle off your plate, letting you focus on the bigger picture.
A fractional chief operating officer oversees all the departments and the day-to-day operations within your organization. As a result, mid-level managers and other C-level executives often report to the chief operating officer, who then reports back to the CEO. This significantly reduces the time the CEO spends on meetings and business management.
Regarding team development, fractional COOs can introduce proven training programs or employee development initiatives that have been effective in other companies.
Due to their limited engagement, they might prioritize initiatives that give you quicker results – for example, short-term training programs, immediate team restructuring, or quick conflict resolution.
But that’s not all.
Fractional COOs can also work closely with your team members to identify areas of improvement and skill gaps. They can mentor junior executives, boost productivity, improve team dynamics, and mold the next generation of company leadership. This commitment to fostering a culture of growth and mentorship creates a more positive and progressive work environment for operational excellence.
4. Financial Management
Need help making strategic decisions about spending and investments?
Or want to ensure your company’s finances meet your financial goals?
Fractional COOs can manage your company’s budgeting and financial planning. They can optimize your expenses and cash flow and position your organization for sustainable growth.
Plus, putting in place better financial models can be helpful for fundraising.
For example, for a small business in the tech industry, a fractional COO can collaborate with the finance team to optimize operational expenses, such as cloud infrastructure costs, software licenses, and vendor contracts.
5. Risk Management
It can be challenging to strike a balance between strategic focus and predicting operational disruptions and reputation risks.
But that’s where a fractional COO steps in.
These executives can ensure your growing business is prepared for eventualities, helping you safeguard your company’s employees, assets, bottom line, and reputation.
How? Fractional COOs have worked with diverse companies. So, they’re well-versed in recognizing and managing financial, operational, or reputational risks across industries and business model types. As a result, they can help you develop contingency plans and establish operational processes to mitigate risks.
Let's now delve into the compelling benefits of hiring one for your growing business.
3 Notable Advantages of Hiring a Fractional COO
Leveraging a fractional COO service is beneficial in many ways:
1. Cost-Effective Operational Leadership
Fractional COOs are a cost-effective alternative to full-time executives, as they work on a fractional basis and receive compensation at a fraction of the typical cost.
For example, the annual salary for a COO in the US typically falls between $370k and upward of $620k (with the top 10% being even higher).
By contrast, fractional COO rates typically range between $10,000–$20,000 per month — the upper end of which would cost you $240,000 annually.
Furthermore, opting for a fractional COO arrangement also shields you from the considerable recruitment expenses of bringing on a full-time or traditional COO and the commitment to providing benefits and bonuses.
This gives businesses, especially early-stage ones, extra cash to invest in other important areas like marketing strategy and product development.
Between the time it takes to hire someone full-time and the associated costs, such as paying a recruiter 20%-30% of a salary and providing stock options, you invest a significant amount of time and energy into the search.
Hiring a fractional COO allows for a quicker start, cost savings (especially for companies aiming to reduce burn), and helps you avoid potential issues if things don't work out.
People often forget about the costs that come up when someone leaves a company, and these can end up being quite hefty, including severance and other departure-related expenses.
2. Expertise and a Fresh Perspective
Fractional COOs often have a broad range of experience across industries and business sizes, bringing a wealth of knowledge, valuable insight, and best practices to your growing company.
This diverse experience brings a broader, fresh, and unbiased perspective during the strategic planning and execution stages.
Being external to the company, a fractional COO can hit the ground running and spot inefficiencies in your operational strategy from the get-go. They are more used to starting with a new company and won’t take long to understand and adapt to your requirements, providing immediate value.
3. Flexible Engagement
Fractional COOs offer the unique advantage of being on-demand executives, available on a project or fractional basis.
How can you benefit from this?
This flexibility gives businesses, especially small ones, access to the expertise of a great fractional COO whenever needed.
For example, you can contract a fractional COO for several hours a week to complete a short-term project or hire them on an ongoing basis.
Plus, a fractional COO can increase their involvement with your company during rapid expansion and scale it back as the growth stabilizes.
It’s clear that fractional COO services can offer businesses valuable benefits.
But at what price?
We’ll find out next.
How Much Does a Fractional COO Cost?
The cost of a great fractional COO varies based on factors such as the individual's experience, expertise, and business needs. Plus, considerations like the number of required hours, project complexity, and engagement duration can also play a role in determining the overall cost.
Here are some of the different pricing models when leveraging a fractional COO service:
- Hourly Fee: With the hourly fee model, you are charged for the total number of hours the fractional COO dedicates to your business during a specified period. This model is ideal for projects or tasks with varying time requirements.
- Project Fee: The project fee involves a predetermined amount agreed upon to deliver a specific and defined outcome. This pricing approach suits well-defined projects with clear objectives and milestones.
- Monthly Retainer: Under the monthly retainer model, a fixed fee is agreed upon and paid in advance monthly for ongoing fractional COO services and support. This arrangement is often used for long-term partnerships.
Now, you may be wondering:
When’s the right time for your business to invest in fractional leadership?
What’s the Right Time to Hire a Fractional COO?
You should consider hiring a fractional executive to handle operations if:
- You are bogged down by daily operations and need help to focus on the bigger picture. Here, a fractional COO can help streamline operations, allowing you to dedicate your energy to strategic initiatives and overall growth.
- You need someone to fulfill the duties of a full-time COO but are facing budget constraints.
- You plan to hire a full-time COO within the next 6-12 months, and you need someone to handle the responsibilities and assist in defining the job specifications for the full-time role.
- You need to work on evident operational inefficiencies and roadblocks. An experienced fractional COO can be instrumental in streamlining any process and resolving bottlenecks.
- There’s a strategic misalignment between the company's goal and execution. A Fractional COO can step in to ensure operational activities align with the overall business goals.
- Your company requires someone to oversee the executive leaders. A fractional COO can level up the C-suite by offering coaching and guidance.
- Your company is ready to scale but lacks the necessary business process to adapt to sustainable growth. A fractional COO can help optimize any process and set the stage for expansion.
- Your business is growing but lacks the human resources and skill sets to support it. An experienced fractional COO can provide targeted operational leadership.
Think your business needs a fractional COO but aren’t sure how to go about it?
Discover the best way to hire fractional leadership next.
Hire an Experienced Fractional COO with Go Fractional
Go Fractional offers a network of highly experienced fractional COOs passionate about driving business growth. Whether you’re a small business owner, a startup founder, or an enterprise CEO, we understand your company’s unique requirements and provide tailored and vetted executive level leadership recommendations.
Our operational leaders possess extensive expertise and excel in establishing and efficiently implementing best practices at scale.
Why Go Fractional?
At Go Fractional, we pride ourselves on having a vibrant community of carefully selected fractional COOs. Many of our candidates are working part-time, have exited companies, or are looking for the right opportunity in the right market or sector.
We handle all the sales and administrative burdens for you and our fractional COOs. This way, they can fully devote their expertise to your projects.
You benefit from reduced overhead costs, and our fractional COOs are paid what they’re worth!
How Go Fractional Works
Go Fractional is 100% free to meet candidates and has no cost to the client. It's a great way to scope your project, meet great consultants, and get them started on your challenge immediately.
Here’s how we’ll help you find the best fractional executive for your specific needs:
- Connect: We offer a wide selection of executive level leadership member profiles for you to explore.
- Meet: Meet our members to discuss crucial details such as deliverables, timelines, and pricing. Next, you can introduce the Go Fractional member to your leadership team to ensure they fit well. If everything checks out, we’ll draft a proposal outlining the engagement for you and your stakeholders to review.
- Begin: Once you’ve reviewed and approved the proposal and selected a start date, we’ll send contracts based on it.
How We Source Our Fractional Talent
- Applications: We exclusively consider applicants presently holding leadership positions and founders of successful companies.
- Interviews: We’ll then conduct thorough interviews with all candidates to assess their compatibility with our community and clients.
- Profiles: Candidates must draft a comprehensive profile showcasing their prior experience, projects, and accomplishments, which they'll submit for approval.
So, if you want to work with someone who can see around corners, avoid mistakes, and level up your leadership team, you should work with us.
Most of our talent will never have a full-time employment role again, allowing them to work across multiple projects and clients — giving you the perspective and experience required to grow.
What about invoicing?
We keep things simple with a monthly invoicing system, and you'll get one invoice, no matter how many fractional executives you team up with.
And don't worry, we'll stay in touch regularly to ensure everything goes smoothly!
Fractional COOs: Unleashing Organizational Efficiency and Innovation
Fractional COOs are the dynamic solution for business owners seeking top-tier operational expertise without the full-time commitment.
But as you know, smooth operations are the backbone of success for every business, and you need the best fractional COO to make it happen.
Fortunately, at Go Fractional, we take no shortcuts — our fractional COOs have proven track records in scaling organizations, navigating dynamic situations, and driving growth.
So why settle for anything less? Join forces with Go Fractional and let the best fractional COOs take your business to new heights!