Fractional Hiring Explained: What You Need To Know

Flexible. Hybrid. Remote working. These are terms you’ll now see at the top of most job specs, indicating the rising popularity of fractional contracts. Indeed, conventional office work has become decidedly unconventional.

Fuelled by the restrictions of lockdown, what started as creatively reassessed work arrangements to maintain productivity evolved into normalised ways of working informed by balance, convenience and possibility.

Companies and employees alike are freezing established hiring practices in favour of more flexible, progressive solutions. Fractional hiring is especially prevalent in the marketing industry, considering its multifaceted and ever-changing scope.

Job specs, employer/employee expectations and contractual conditions have rapidly grown to create a new employment landscape where fractional contracts and arrangements make more sense.

Fractional contracts also represent a viable income generation alternative for many people moving between jobs in today’s uncertain economy. So it’s crucial that companies and employees understand their ins and outs, because mutually disadvantageous situations are likely to develop and become employment norms of their own.

What is a fractional contract?

A fractional contract is where an employee or service provider works for a company or client on a part-time or project-by-project basis. Often this can replace traditional full-time, permanent work, but it can also work as an alternative contractual arrangement for payrolled staff.

Fractional contracts can allow people to work for multiple clients simultaneously, providing their services for a specified duration, whether that’s a set of weekly hours or project-dependent.

What is a fractional employee?

Fractional employees are hired by companies for a fraction of their time, and work according to appropriately fractional contracts.

Typically highly skilled professionals offering specialised services to companies and clients - marketing, accounting, consulting - fractional employees offer a flexible, cost-effective option to businesses who need special expertise but can’t afford full-time staff.

The origins of fractional hiring

Fractional hiring came from the academic world - professors would divide their time between university lecturing, researching, media appearances, project consulting and private lecturing. They would have multiple continuous engagements for which they were proportionally remunerated.

In the professional world, this has evolved to the practice of engaging individuals with specific or advanced skills and knowledge. For instance, a startup may fill temporary skill gaps by fractionally employing a specialist - particularly when it comes to specialist areas like finance, pitching and other business-specific skills.

The benefits of fractional hiring

Fractional contracts offer multiple benefits - a ‘have your cake and eat it’ scenario where people enjoy stable, full-time work with the advantage of working where it’s convenient, often in their own time. Many employees, finding they could remain just as productive working remotely, reassessed what they wanted out of life and work.

Fractional roles let people generate income while also refining their skills and progressing their careers: as the labour market and economy become increasingly elastic, people need ways to fill periods between full-time employment. CNBC reported that from August 2021, 37.4% of 3.2 million unemployed US workers had been out of work for at least six months.

Fractional contracts give employers full-time employee productivity without the additional expenses of office space and insurance, and sometimes, benefits and equipment. This can especially help smaller businesses or startups trying to save on administrative and related costs.

There’s potential to access diverse talent that isn’t location-bound. Full-time employees already collaborate with freelance and remote workers - so fractional contracts give businesses a way to leverage specific talent on quarterly, monthly or even weekly bases. Such short-term hiring potential can contribute to lasting company growth.

Part-time job or fractional contract?

Part-time positions often exist to account for gaps in full-time scheduling at a single company. They follow a set schedule and wage, and can offer advancement opportunities.

Essentially similar to freelance or contract workers, fractional employees sell their time and skills to multiple employers. Fractional employees can effectively work full-time hours even if their time is divided between several fixed-term jobs.

For people who want to set their own schedule, enjoy more varied work or focus their skills, fractional employment can be appealing - however, this situation lacks the security of a guaranteed minimum income and work structure of a permanent part-time job.

For part-time employees, losing a job means losing their main income source. Technically, a fractional worker could have other options even if one contract falls away. Additionally, part- and full-time employees could take on fractional contracts to bulk out their income and add to their CV.

Costs and implications of fractional hiring

Fractional hiring almost universally saves businesses money, while bringing in specialist skills that can enhance quality of output.

While fractional employee costs vary with project type and duration, many companies using the fractional approach have reportedly saved between 20 and 40%.

Startups and small businesses might be best having a dedicated workforce for stability and consistency - although that’s not to say investing in different skills to achieve immediate goals can offer long-term benefits.

Larger companies can similarly benefit from hiring specialists on a fractional basis to improve on results per project, while maintaining a healthier bottom line.

Potential pitfalls

As with any developing employment practice, there are pitfalls for employees and employers alike.

Fractional workers may be overall lower-paid than comparable full-time employees, and their contracts are often finite. At some point, fractional workers may desire the security of full-time employment, which can cause issues if this advancement isn’t available to them.

It’s possible that employers won’t offer benefits to fractional employees - in the case of time off (planned or unplanned), this can create scheduling and commitment problems for both parties, impacting talent attraction and retention.

Alongside potential initial training costs, businesses run the risk of instability and inconsistency with fractional hires. Employees could leave abruptly should a better opportunity arise - replacing them at short notice may cause a noticeable shift in results.

Similarly, variable loyalty can create lower engagement and productivity - something that is possibly intrinsic to fractional hiring if factors such as leave or benefits aren’t actively accounted for. High turnover can quickly become disruptive and expensive for employers.

Keeping fractional working healthy

The bottom line is that with fractional hiring, conditions exist for either party to unfairly take advantage of the arrangement. This can cause unhealthy trends that could spread into the wider employment realm - something that is already becoming commonplace.

To address commitment issues, employers can promote a positive, inclusive company culture that values all employees, including fractional workers. Offering selected benefits like health insurance, retirement plans, or paid time off can help attract and retain talent.

Similarly, creating opportunities for advancement can help reduce turnover and maintain consistent output. Focused investment in training to upskill workforces as a whole can also drive productivity - while it’s more expensive to implement for fractional workers, this level of support can really improve loyalty.

Lastly, ask how scheduling and communication are handled in your organisation. If there are availability challenges - even minor ones - it’s important to find reasonable, timely workarounds to support workers with life issues while retaining their skills.

Providing regular feedback, company updates and access to the same information and resources as full-time staff makes all the difference in maintaining a healthy, sustainable fractional hiring scenario.