Smart Solution for Cost-Effective leadership
Flexible and Efficient: Fractional Leadership Solution
When organizations face an urgent need for senior leadership, the instinctive response is often to hire a full-time executive. This decision is frequently made in haste, driven by concerns over declining performance and customer satisfaction. Alternatively, companies delay filling these roles, meticulously evaluating costs until the situation becomes critical. By then, performance may have already deteriorated, and customer trust may be eroding.
But what if there is a better way?
A fractional leader provides senior-level expertise on a parttime basis, addressing immediate leadership needs without the long-term financial burden of a fulltime salary. In many cases, companies can save an estimated 23-25%, or roughly $61,000 to $65,000 annually, as illustrated below.
This approach allows businesses to bring in top-tier leadership, assess their long-term needs, and avoid the premature commitment of a full-time hire for a role that might only require 20 hours a week
✓ Quick to hire
✓ Quicker to contribute
✓ easier to release
Comparing Costs: W-2 Executive vs. Fractional Executive Leader
Let’s look at the numbers, where a skilled senior leader is needed to alleviate the current leadership of the responsibility for a segment of the business, where the known time investment is 20 hours per week. Sound familiar?
A traditional full-time executive comes with significant expenses beyond their base salary. For an executive, operating in a business-friendly state, with an annual base salary of $200,000, a 15% bonus potential, medical, dental, and vision benefits, plus a cell phone allowance, the total annual cost to the employer would look like this:
W-2 EXECUTIVE
Total Cost
Estimated Cost to the Employer
$230,000 (Direct Compensation) + $13,099.40 (Payroll Taxes) + $2,300 (Workers’ Compensation) +
$18,000 (Healthcare & Benefits) =
$263,399.40 annually.
01
Base Salary and Bonus
Base Salary: $200,000
Bonus (15%): $30,000
Total Direct Compensation: $230,000
02
Healthcare and Benefits
Medical Insurance: $15,000
Dental Insurance: $1,200
Vision Insurance: $600
Cell Phone Allowance: $1,200
Total Benefits Cost: $18,000
03
Workers’ Compensation
1% of total compensation: $2,300
04
Employer Payroll Taxes
Social Security (6.2% on $160,200): $9,932.40
Medicare (1.45% on all wages): $2,900
FUTA (0.6% on first $7,000): $42
SUTA (1.5% on first $15,000): $225
Total Employer Payroll Taxes: $13,099.40
In comparison, hiring a fractional executive under a 1099 contract at an annual cost of $198,500, a comparable “base”, is far more cost-effective.
FRACTIONAL EXECUTIVE
Total Cost
Estimated Cost to the Employer
$198,500 (Direct Contractor Payment) + minimal administrative costs =
$198,600 – 202,600 annually.
23-25% or $61,000-$65,000 SAVINGS
01
Direct Contractor Payment
$198,500
02
Contract Preparation (one time)
$0 – $1,000
03
1099 Processing, Training, Onboarding
$0 – $1,100
04
Accounting, Bookkeeping
$100 – $2,000
Leading Business Executive experience
Why settle for outdated leadership models when flexibility and financial efficiency are within reach?
Our expert team helps you streamline your leadership needs.
