The gig economy is reaching the boardroom

This article was written by Rik Winkel for fd.nl in May 2023. This version has been translated into English and adjusted, for the original version, please visit this link. It started with meal deliverers, taxi drivers and catering staff. But now that judges and governments finally seem to be putting limits on these gigs at the bottom of the labor market, the gig economy is emerging at the top of the career ladder. The ‘fractional CFO’ makes its debut.

A fractional director or professional usually works as a self-employed person part-time, sometimes for six or seven companies at the same time. These often concern start-up companies that cannot afford a full-time CFO.

In brief

• Dividing work into tasks is not limited to platforms for simple self-employed jobs.
• Due to the enormous scarcity of suitable personnel, this also happens with top positions.
• The supply of ‘fractional’ work is now spreading from the US to Europe.

Tech companies have difficulty finding talent, or are faced with the high costs of full-time employment in the early stages. Many (former) entrepreneurs and experienced specialists long for more freedom, flexibility and variety. Supply and demand come together in fractional work. A fractional director or professional usually works as a self-employed person part-time, sometimes for six or seven companies at the same time.

For Carla Martinez it is a godsend. ‘I have worked as a branding and marketing specialist for various companies in a nine-to-five job. When you have an appointment with the doctor, the manager starts to look suspicious. That is also fatal for your creativity. Now I work fractionally, for four clients on different continents. No more than four days a week, and that earns me enough. Because you focus entirely on the result, you can also commit 150% mentally.’

The LinkedIn profile of Claire Tange, former CFO of charging station company Fastned and founder of Joanna Invests, which invests in female entrepreneurs, also states that she works as a fractional CFO.

‘What I most enjoy doing is helping entrepreneurs get started. In the early stages, a company does not need a full-time financial director at all. Then I can focus for two days on things that I can do well and find interesting, and the rest of the time someone with less experience can do the other things. This way I spend my time more efficiently and it is much more interesting for the company from a cost perspective.’

Tange has been active since 2018 as a part-time advisor to Solho, an Italian maker of solar heating systems for greenhouses. According to her, this shows that fractional directors are very loyal. ‘That’s the difference with an interim manager. At a certain stage, start-ups and scale-ups can make use of someone who has already experienced everything. They can rely on that.’

According to Angelique Schouten, former director of the fintech firm Ohpen, there is a fierce battle for talent. Directors struggle with this. Schouten is the founder of 10x, an HR platform for fractional work that has so far operated in stealth mode . ‘Most companies in the start-up and scale-up phase cannot afford a full-time CFO. They spend €50,000 to €100,000 on a headhunter and then a few thousand euros in salary. A fractional CFO will cost you between $2,500 and $15,000 per month, and you can turn the subscription on and off.”

‘In the US there is more awareness that you need to have the right people in the right place on time’

Angelique Schouten from 10x, HR platform for fractional work

Piet Hein de Sonnaville, partner at interim and executive search agency Schaekel & Partners, sees the phenomenon in scale-ups, but even more often in SME and SME+ organizations. ‘Achterliggende gedachte: te klein voor het tafellaken en te groot voor het servet. Je wil toch dat zaken goed en professioneel geregeld worden, maar mist de omvang voor een fulltime invulling.’

Corona

In the United States, this form of job placement mainly emerged after corona. That’s no coincidence. Martinez also exchanged her permanent job three years ago for assignments that she chooses herself because they interest her. ‘A new way of working has emerged. Companies are no longer in charge and talent has more room to negotiate. In the past, an HR department would receive thirty to forty applicants for an advertisement. After Covid, they will be lucky if there are ten of them. And when candidates hear that they can’t work remotely, they pass on the job,” Martinez said.

The Great Resignation has been less widespread in Europe, but Schouten believes that the European market is also ripe for fractional work. She says she is the first with a membership platform. Through a monthly subscription, it provides clients with access to approximately fifty top managers and professionals, who may or may not be affiliated with 10x on an exclusive basis. Participating companies and candidates are screened both personally and via artificial intelligence. The platform handles contracts and operational matters.

‘Dutch start-ups fail much more often in the initial phase than in the US. This is not only due to a lack of funding. There is enough money. But they usually think in a small and Calvinistic way that they have the knowledge and skills to grow. In the US there is more awareness that you need to have the right people in the right place on time,” says Schouten, who is also a board member of Holland Fintech.

‘I can organize my time as I want and don’t have to sit in the same meeting every Monday. Sometimes you also want to do something to make the world a better place.

Wim Hekstra (former Aegon board member) divides his attention over five companies

She sees a change. ‘I already have more assignments than people. Companies are increasingly focusing on skills. That has to be the case, because there are not enough people for all the vacancies.’ She points to a report by HR consultant Korn Ferry, which predicts that companies will not be able to fill 85 million jobs worldwide by 2030. They can overcome this by separating tasks and skills from functions and jobs. Large multinationals are already busy doing this, Deloitte reported last year. Six in ten directors see this as the best way to better organize their company.

Autonomy

For the fractional executive, autonomy and the opportunity to focus on things he or she is good at beckons. ‘When I was CEO of Clevr, I thought 30% of the work was great fun, 40% was part of it and 30% was not fun and not my strength, such as the operational hassle and the legal aspects of consultation with the Works Council.’

This way of working is not really age-related, although some experience is required, according to Martinez (39). “I think it’s difficult when you’ve just left school,” confirms Tange, who is just forty himself. She does not see any conflicts of interest because you are close to the action at multiple companies. ‘If you don’t behave with integrity, it’s once and never again.’

Wim Hekstra, a member of the board of Aegon until mid-2021 last year, also currently divides his forces among five companies in five different industries. ‘This is not for everyone, but after thirty years in permanent employment I really enjoy the variety. As long as it’s on my terms. I can organize my time as I want and don’t have to sit in the same meeting every Monday. Sometimes you also want to do something to make the world a better place.’

He says he earns a good living this way and still has time to travel, cycle and play golf. ‘Management at Aegon is more than a full-time role. I don’t even work those hours now.’

Hekstra also sees the need to use your experience in a different type of environment among other people in their fifties, although the trend naturally started among young digital nomads. ‘You can now also see in 10x how this spills over into a corporate environment. When people are scarce, you have to use their skills where they are needed.’ He has no concrete agreements yet, but is on the platform. ‘The model appeals to me. It is commonplace in the US, but the demand for senior executives is also enormous in Europe.’