A woman with short white hair and glasses stands and lectures in front of a whiteboard covered with equations written in marker. Out of focus in the foreground are several young people sitting in chairs around a table. In the background are wooden shelves of folders and books.
Fractional hiring originated in the academic world to allow educators to pursue multiple opportunities in their field. Recently, the practice has spread to other industries. — Getty Images/Ridofranz

In recent years, the traditional office has become decidedly less traditional. Full-time workers frequently collaborate with freelance contractors and remote workers. Ad hoc talent is available to work with small businesses on a quarterly, monthly and even weekly basis, allowing merchants to make short-term hiring decisions that contribute to long-term growth.

Fractional hiring is an important — if underutilized — hiring strategy in this competitive job market. This practice can help small businesses tap into a valuable talent niche and benefit from skills and expertise without paying the same costs as hiring a full-time employee.

What is fractional hiring?

Fractional hiring refers to the practice of hiring an employee for a “fraction” of the time a normal employee would work. An employee could be hired to work for multiple organizations throughout the week.

Fractional hiring is similar to hiring a freelancer or contractor. The key difference is that fractional hiring is not project-based and the time for which a person is contracted is more than a typical part-time work contract.

[Read more: The Difference Between Contract, Part-Time and Full-Time Workers]

Perhaps the easiest way to understand fractional hiring is through its origins. Fractional hiring started in the academic world, where professors would often divide their time between teaching students, performing research, making media appearances, consulting on special projects and lecturing in the private sector. These projects were not based on project completion; rather, professors would have multiple ongoing engagements and be retained based on their expertise on a specific subject matter.

Fractional hiring has expanded outside of the academic world to include professionals with niche, advanced or technical knowledge. Today, startups often use fractional hiring to fill skill gaps. Many startup founders are engineers or developers and lack the business skills to pitch to venture capitalists or manage finances. They may use fractional hiring to bring on a CFO to help the startup grow successfully.

Fractional hiring provides a way for small businesses to tap into advanced expertise at a lower cost.

How is fractional hiring different from freelancing?

There is a fair amount of overlap between freelancing and fractional employment. Fractional workers will legally be classified as contractors for the purposes of payroll and taxes. Fractional workers, therefore, won’t have typical benefits, such as health insurance or 401k contributions, but they will have flexible work hours.

However, because fractional hiring is not project-based, these experts build o​​ngoing relationships with their employers. They typically work more hours than a freelancer, spending two days a week with one company, two days a week at another, etc. Where part-time workers may complete the same task each shift, such as stocking shelves, fractional work is typically more specialized.

Fractional hiring is a great strategy for executive roles. The CFO is one of the most common types of positions for which fractional hiring works well. Some companies also hire for positions like chief operations officer or chief marketing officer, rather than outsourcing to a third party or trying to race to fill a full-time position under pressure.

Benefits of fractional hiring

Fractional hiring provides a way for small businesses to tap into advanced expertise at a lower cost. Fractional workers offer extensive expertise without the hiring costs of bringing on a full-time worker, which can add up quickly. And the retainer-style nature of fractional hiring allows the expert to become more familiar with your organization over time, investing more time and attention to your business than a freelancer who would only care about completing the scope of work.

Fractional workers benefit from flexibility and the power to design their own schedules. “Fractional hires aren’t likely to have long-term ambitions at your company, which means there’s little room for politics or posturing when it comes to getting their work done,” wrote one expert.

Likewise, fractional hires bring industry knowledge that can be invaluable when growing a business. Fractional hires benefit from working at different companies and gaining experience while on the job, meaning they usually have insider knowledge of industry trends. Your company can gain a competitive advantage from working with experts while saving on recruiting and hiring costs.

[Read more: What to Know Before Hiring Gig Workers]

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CO— is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce.

Published October 18, 2021