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Growth cheat code: Use fractional hiring to stay on plan when cutting costs

If you want to grow your team while still cutting costs, fractional hiring may be just the solution you’re looking for.

Teja Yenamandra
Teja Yenamandra
· 4 min read
Pie chart consisting of four groups of people making up various pieces of the pie in red, yellow, green, and blue

This piece was originally published to TechCrunch on July 21, 2022.

Venture funds are clear: given the uncertainty of the coming few years as the Fed seeks to unwind its decades-long monetary policy, the mandate given to CEOs is to:

  1. Cut burn
  2. Slow growth
  3. Carefully manage towards profitability 

For leaders and founders who were planning to accelerate growth this year, this is a tough pill to swallow. Open Twitter and you’ll find a cacophony of founders, investors, and advisors doling out advice for what to do next: downsize your product offerings? Freeze all hiring? Consider mass layoffs? 

The fact is, though, you can cut burn and manage toward profitability while still defaulting to growth. In fact, that’s how the winners of this downturn will be determined. 

So what does that look like?

Fractional hiring is a growth cheat code

As a company that’s been operating as a bootstrapped business for close to a decade, we’re familiar with forecasting budgets around very conservative scenarios, and adjusting in 30-day or 90-day windows. This has allowed us to stay not only profitable, but nimble: when faced with mass economic chaos (see: March 2020) we maintained our growth rate by quickly adjusting budgets. 

Instead of pausing hiring and delaying our team’s ability to execute, we’ve chosen a fractional model. As we’ve scaled headcount over the years, we’ve always looked to bring on key people first as (typically, part-time) contractors, and then convert to full-time hires. This strategy allowed us to ramp our team to serve a network of 50,000 developers while remaining profitable almost every month since inception. 

How small companies can win

Given the current level of overall economic uncertainty, we believe a contractor-first strategy will become even more prevalent in the coming years. And, contrary to the gloom and doom surrounding current economic dynamics, we think it presents  an opportunity for small companies to employ this strategy effectively.

Large companies—to manage their huge levels of risk—must adopt hiring freezes. As capital markets implode, it’s only rational that these companies are going to slow down hiring. If you’re an entrepreneur, this is good news for you. There is now way less competition for the talent you’re hiring. You may be able to lock-in talent that was previously unaffordable just a few short months ago. 

Not only do we think hiring contractors is a strong strategy for small companies looking to stay nimble during the coming years, it’s clear that it’s increasingly what professionals want in terms of working arrangement. That means higher-impact professionals are more apt to take on contract work rather than full-time salaried roles.

How to assemble a fractional team you can trust

As founders and leaders, we’re often led to believe that the only way to get the maximum value out of our team is to be sure we “own” all of their working hours. In reality, fractional employees bring an incredible amount of value. Context-switching allows them to see the challenges of our businesses with fresh eyes each day. 

Ten years in, this is our magic formula for identifying, prioritizing, and hiring key fractional roles: 

  1. Decide what outcomes you need most—then figure out who can drive them. 

Before you hire, get to bedrock on what your business needs. Is it cheaper leads? A product that converts? Higher retention? Then, determine what kind of person you need to drive this metric. If you could summon them out of thin air, what would they be able to do, and how would they do it? 

Spending careful time on this will not only write your job description for you, it’s  also insurance against making a mishire. 

  1. Share success metrics up front.

Fractional employees should know from the jump what they need to achieve (and by when) in order to continue the engagement. This key metric should write itself if you do #1 well, and should drive a bottom-line result that has outsized ROI. Having a shared understanding of what success looks like is absolutely critical for fractional teams, especially when resources are tight. 

  1. Work with experts to find experts. 

If you aren’t a world-class marketer, you probably can’t identify one. The same goes for any key role: CTO, Head of Product, VP of Finance, and so on. If we don’t have the expertise required to hire well in-house, we work with external partners who do. Of course, we have a leg up when it comes to vetting software engineers; but for marketers, for example, we work with an agency that specializes in high-impact marketers. 

This is especially important for fractional hires: unlike typical ramp for salaried employees, key fractional employees should be able to deliver almost immediate value. Spending resources to ensure this will pay off in spades. 

Keep calm and hire on

As a growing start-up, prudence makes sense: it extends our runways and allows us to adjust to market conditions. But, we believe it should be balanced with the right level of aggression. While others are wary of hiring during economic uncertainty, it does not make sense to stop innovating and building. We believe working with fractional talent is the best way to do that, while mitigating risk. 

In uncertain times like these, I like to remember the old Buffetism: “Be fearful when others are greedy, and be greedy when others are fearful.”

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