The Agency's Guide to Fractional Operations: Benefits and Drawbacks
The focus on Operations in the agency world has increased over the last few years, and for good reason. I’ve been happy to see a shift where the industry now understands the impact of having strong operations within their organizations. Not only are they utilizing financial and performance metrics to steer the agency toward its goals, teams are becoming more efficient as well.
It’s no wonder that Promethean’s Digital Services Salary Guide of 2024 found that the salaries for Operations roles have increased by more than 17% since 2023. That’s on top of a reported 35% increase from 2019 to 2022; the largest increases across any of the other roles!
With many agencies facing market challenges and decreased profits recently, it's worth considering how to gain from an experienced Operations role without committing to the full salary (and employee expenses) of a Director of Operations or COO.
Cue the growing popularity of Fractional Operations for agencies. 🙌
But First: Understanding the Basics
Let’s first dive into what Operations focuses on and what it means to be fractional.
The role of Operations in an agency is to understand the CEO's goals and vision, and drive results toward that vision by uniting (and supporting) the various people/roles working in the agency.
In this effort, the main roles I often see carved out for Operations to connect are those involved with business development, client delivery, financials & metrics, and people growth & management. To create a strong and successful organization, all of these aspects of the agency need to work in harmony — a task that can be challenging for a CEO to coordinate alone.
This is where a Fractional Operations resource can help. A "fractional" role refers to a situation where a professional works for a company on a part-time or contract basis, typically in a high-level or specialized role. Instead of being a full-time employee, they dedicate a fraction of their time to the organization.
A Fractional Director of Operations or Fractional COO is someone who is available on a part-time, temporary, or contract basis, and is there to create harmony within the organization. From an agency's perspective, this means getting an available employee a “fraction” of the hours you would normally get from a salaried role.
Pros of Having a Fractional COO
Now that you’ve got an understanding of the main concepts and you’re interested in whether a fractional operations role might work for your agency, let’s dive into the pros and cons of working with an expert.
Pro #1: Cost Savings
One of the biggest benefits of going the fractional route is, of course, going to be the cost savings. Operations role salaries are costly not only due to the salaries themselves but also due the fact that most of these roles are not performing billable work. If they are, the amount is (and should be) extremely limited.
Once you crunch the numbers on the fully-loaded cost of a potential COO salary + benefits + operating costs, you’ll likely find that a fractional role will be a less costly financial investment.
Not only that, but when the heavy lifting is done in terms of initiatives, you have an opportunity to end or reduce the engagement instead of having to continue paying for all the costs associated with a full time employee.
Pro #2: Diverse Expertise and Resources
Fractional operations experts are getting to peek under the hood of many agencies to help diagnose and improve their biggest pain points. With repetition and exposure comes a wealth of knowledge to draw from; that’s not something you can get working in-house at a full-time position.
By working with someone who offers fractional support, not only do you get to utilize their expertise, you also get to tap into their network. Most coaches, consultants, and fractional experts come with many trusted partners to tackle specific issues or areas of the business which can be priceless.
Pro #3: Flexibility and Decreased Liability
One of the bigger challenges Operations roles face is the initial heavy lifting of building an operational infrastructure that can support the business's success in years 1, 2, 3, and beyond. While this is cumbersome initially, eventually, the infrastructure should only require maintenance and optimization, until later when you’re ready for another big push.
This is where fractional operations wins. By leaning on a fractional COO, you can shift to increase or decrease based on your needs during a certain time-frame, providing you with the perfect amount of support.
Cons
Now that we've covered some of the major pros, let's touch on some of the cons.
Con #1: Context Switching
Fractional COOs are likely working with more than one client and running their own businesses. As a result, there’s just no getting around the fact that there will be more context switching, which can mean less focus on your business.
If you’re looking for someone who is only focused on your agency full-time throughout the week, this may not be the best option for you.
If you’re still set on a Fractional COO, ask the person how many clients they normally take on at a time and what their availability will look like to ensure it aligns with your expectations.
Con #2: Limited Availability
Every agency owner knows that running their own shop is never going to be smooth sailing. A potential downside of working with a fractional resource may arise during more intense and turbulent times in your business.
There’s no guarantee that your fractional operations expert will have more capacity to take on any urgent or last-minute issues. It may not be a good fit for your agency if you know you need someone who has more guaranteed availability to handle urgent issues.
Con #3: Team Integration
One of the most important aspects of building a cohesive team within an agency is the ability to connect and bond with each other as fellow human beings. Culturing experiences where everyone feels comfortable to show up each day as themselves can have a huge impact on productivity and relationship-building.
One potential downside of having a fractional COO is they simply may not have enough bandwidth to connect as much with the team and/or may not be treated as a member of the team.
To overcome this potential downside, it’s important for the CEO and leadership to prioritize team integration of the fractional role in addition to the business goals.
Operations As Your Bright Light
There's no one-size-fits-all answer to fractional operations. At the end of the day, only agency owners know their firm's pain-points intimately enough to know if hiring a fractional team member makes the most sense or not.
But, to reference acclaimed business expert and EOS founder Gino Wickman, "Problems are like mushrooms: When it’s dark and rainy, they multiply. Under bright light, they diminish".
If your agency is experiencing some gaps or challenges, that could be your sign to give fractional operations a try. That person can be the bright light that helps solve some of your biggest problems. And fortunately, doing so is a relatively low-risk endeavor that just may have massive payoffs.
