A chief operating officer is an impactful role that touches every aspect of a business. Often, an effective COO can make the difference between a business achieving its full potential and sputtering out.
However, the salary requirements of an experienced COO can make it cost-prohibitive for many small businesses and growing organizations at the moment when they are most in need of senior operational leadership. According to Glassdoor, the average salary for a COO is $265,000.
Organizations who can’t afford an experienced COO sometimes elevate a promising junior candidate into the role with a below average salary reflecting their lack of experience. While this person might have the aptitude for the role, there’s an opportunity cost that is often unaccounted for when you go this route. Their lack of high-level operations experience means their journey will be filled with trial-and-error.
Fortunately, there’s a growing supply of experienced COOs who are looking to offer their services on a part-time basis. A fractional or part-time COO is an experienced operations leader, often with decades of wisdom, who has led multiple organizations through critical growth transitions. As a fractional team member, they work with organizations on an hourly basis, offering their services for as few as 20 hours a month, enabling growing businesses to benefit from a COO’s guidance at a fraction of the cost of a full-time C-Suite hire.
In this article, we’ll lay out everything you need to know about the fractional COO role so you can evaluate whether it might be a good solution for you.
Here’s what we’ll cover:
- The responsibilities of a COO
- The skills and knowledge a qualified COO brings to your organization
- The average cost of a fractional COO
- How to make the most of a fractional COO engagement
- How to get a fractional COO on your team in less than 3 weeks
The Responsibilities of a Fractional Chief Operating Officer
The COO is traditionally perceived as the CEO’s right hand, turning the CEO’s long-term vision into an actionable plan and overseeing the daily business operations of the company. A full-time COO typically works closely with department heads and supervisors to support the day-to-day activity of employees.
While a fractional COO is capable of filling the role as it is traditionally defined, we tend to see fractional COOs take a more transformative role, focusing on major projects designed to exponentially increase the organization’s capacity.
With that in mind, here are five key responsibilities of a fractional COO:
- Operationalize the CEO’s Strategic Vision: The fractional COO translates the goals of the board or the CEO into actionable plans and thinks through how any changes or pivots will impact every aspect of the organization’s operations.
- Streamline Processes: A fractional COO will spend time getting to know how things are currently done, identifying inefficiencies and redundancies that hamper the organization’s ability to serve its customers. Then they’ll take these insights and work closely with the senior management team to create, implement, and roll out plans for changes to operational processes, internal infrastructures, reporting systems and company policies to foster growth, improve profitability, and maximize efficiencies throughout the company.
- Establish and Report on KPIs: A fractional COO will often be the first one to introduce formal measurement tools to gauge process efficiencies, taking care to measure true indicators of growth and not just vanity metrics. They’ll establish a regular cadence for reporting on these KPIs back to the CEO to offer accurate, timely insights into the company’s operational health.
- Drive Growth: A fractional COO will take the lead on new growth strategies and strategic initiatives designed to improve the bottom line. They’ll oversee projects from soup to nuts, communicating progress to all internal stakeholders and iterating based on early results.
- Liaise with Direct Reports: To allow the CEO to remain focused on the big picture, the fractional COO often works closely with other senior leaders, providing mentorship, coaching, and strategy alignment in line with the CEO’s objectives.
Here are some examples of the transformative projects a fractional COO might spearhead, demonstrating the breadth and versatility of the role:
- Overhauling a startup’s pricing structure
- Migrating to a new ERP
- Setting up sales and marketing automation tools
- Setting up an HR function and developing leave policies, performance standards, and disciplinary procedures
- Launching a new product or service
Some companies find it helpful to work with both a fractional COO and a fractional chief of staff. vChief Founder Maddy Niebauer outlines the differences between these two roles in this video:
The Skills and Knowledge a Fractional COO Brings to Your Organization
A fractional COO is a seasoned operations leader whose depth of knowledge and first-hand experience with business strategy, process improvement, project management, and team development can have a transformative effect on your organization. The fresh perspective they bring helps them identify inefficiencies and gaps in your current processes and ask questions your current team wouldn’t think to ask. They can introduce new systems for organization, identify automation opportunities, and drive collaboration between siloed departments.
Typically, they come with a rich work history that includes several C-suite roles in multiple organizations. Many have been business owners themselves at one point. Through these experiences, they have developed in-depth knowledge of a wide variety of business functions, including HR, finance, fundraising, marketing, IT/business automation, and business development.
In our talent pool, we require fractional COO candidates to have at least 12 years of experience and to hold at least a bachelor’s degree (MBA preferred). Many candidates also have professional certifications such as Six Sigma or PMP.
The Average Cost of a Fractional COO
The standard rate for fractional COO services is between $200 and $250 an hour. At vChief, our rates start at $3,900 per month for 20 hours a month.
If you were to hire a full-time COO, you would expect to provide a salary ranging between $199K and $371K per year, according to Glassdoor. That doesn’t include the cost of benefits or other perks that an executive-level hire will expect.
If you’re wondering how effective a COO can be when they’re only providing 5 or 10 hours of support each week, consider this. Rarely do you actually need a full-time COO as your first COO. While the decision-making about which processes to automate takes COO-level insight and experience to get right, the implementation of those decisions can often be done by a much more junior-level full-time employee, such as an operations manager. The salary range for an operations manager is between $58K and $94K per year — a much more manageable sum for growing companies. If you engaged a vChief fractional COO for 40 hours a month, you’d spend just under $95K annually. Pair them with an operations manager, and you’d still keep your costs well under the average COO salary.
Fractional COOs often work themselves out of a job. Working just a few hours a month, they can build the systems that will rapidly accelerate your revenue, taking you to the point where you both need and can afford a full-time COO.
How to Make the Most of a Fractional COO Engagement
A common concern when hiring any executive leadership position is how long it will take to find the right person and how long it will take for them to get up to speed. However, that’s where the fractional executive model shines. A fractional executive is skilled at taking initiative to figure out how to make an impact with minimal hand holding or onboarding.
However, there are a few best practices that will help to set your new fractional team member up for success.
- Provide plenty of facetime in the first two weeks.
The first two weeks of a fractional engagement are crucial. That’s when a fractional COO will get to know the lay of the land, observe how things are being done, and start identifying the most urgent problems. While fractional executives are autonomous, strategic doers whom you can trust to run the daily operations of your business with minimal input, they’ll be the most successful if they have plenty of access to the CEO during the first two weeks of their engagement.
- Treat them like a team-member, not a consultant
Even though a fractional COO only works part-time in your organization, it’s important for them to be fully embedded within your company, and that includes being treated like a full team member when it comes to team building activities, access to your databases and software systems, and internal communication systems. Provide a warm introduction to all the team members they’ll interface with and be transparent about the scope of their role and who will work directly with them. Handoff relationships with vendors and clients to the COO so that you can disentangle yourself from routine communications.
- Support them with junior-level team members to execute strategies.
As we mentioned before, the implementation of a COO’s strategic plans can often be accomplished by someone with only a few years of operations experience. Make sure you have someone in this role with the capacity to be the doer on the ground carrying out the directions of the fractional COO. Without this person, you’ll end up using up the fractional COO’s hours on work that could be completed by someone with less experience who costs less.
- Practice letting go!
The most important thing a small business owner can do to empower a fractional COO is to get out of their way and trust them to handle the day-to-day operations of the business. With a capable fractional COO at your side, you can direct your attention to the duties that only you can handle, whether that’s fundraising, coalition-building, market-making, or anything else that can never be delegated.
How to Get a Fractional COO on Your Team in Less Than 3 Weeks
A fractional COO can expand the capacity of your leadership team with a thought partner whose skills and experience fill your organization’s gaps.
At vChief, our outsourced COO services let you offload strategic business initiatives and large scale projects onto a capable leader. Here’s an overview of our process, from the first inquiry to your first day with your next fractional team member.
Custom Talent Matching
You don’t need to write a job description to get strategic support tailored to your business needs. Our placement process begins with a comprehensive needs assessment to understand the best way our talent can support you and your organization.
Step 1: Free consultation
Our talented team is skilled at reading between the lines and asking targeted questions to identify the skills gaps, inefficiencies, and bottlenecks that are most impacting your effectiveness.
Step 2: Review 2-5 hand-picked candidates
Our team will provide resumes for a minimum of two and up to five candidates from our thoroughly vetted talent pool within one week of your consultation.
Step 3: Interview top candidates
We created a guide to interviewing for fractional positions to help you identify the best person for your team.
Step 4: Select candidate
After interviewing, extend an offer to your top choice candidate.
Step 5: Candidate starts
If the candidate accepts your offer, they’ll begin working with you immediately. It’s extremely rare for a candidate to decline an offer.
All of our fractional executives work on flexible month-to-month retainer contracts. You can cancel anytime with only 30 days notice. As your needs change from month to month, you can flex your hours up or down freely.
The average time from your first consultation to your fractional executive’s first day on your team is just two weeks. From day one, your fractional COO will be looking for ways to make themselves indispensable.
See why 88% of clients recommend our services. Schedule your free consultation today.