Fractional is booming, and Canada is late to the party

The fractional market is growing as a solution for small and mid-sized businesses worldwide, with between 25-40% of businesses already using some type of fractional employee and a growth of 340% growth in the UK in the last seven years.

But Canada doesn't seem to have the same adoption... yet.

I remember working for one of the big 5 accounting firms in 2008 and suggesting that businesses would use social media, and wanting to go to school to learn more about it. It was met with skepticism. 6 Months later, I was asked what I could tell them about it.

Fast forward a couple of years, and working with clients, I highlighted how important video was going to be, short form, and on social media. This time, many clients assumed no one would want to see them share a video, let alone that none of them wanted to make a video. It felt too weird, yet in the US it was growing with the emergence of Vine.

Here we are.

How did fractional come about?

I asked AI, and apparently it has roots in the Netherlands, where interim management was formalized as a practice in the mid-1970s. European businesses, particularly in the UK, Germany, and the Netherlands, normalized the idea of engaging senior expertise being engaged for a defined period on a defined mandate ie: without the expectation that it would lead to permanent employment. So this is nothing new, but fairly new to us.

The US adopted this fairly quickly for CFO, which makes sense. For many businesses, it's quite normal to have an on-site bookkeeper or accountant and only bring in a CFO when needed or for regular oversight, aka a fraction of the time.

New Zealand's LinkedIn listings for fractional leaders went from 44 to over 200 in a six-month period. Australia and Singapore are seeing meaningful adoption in the tech and professional services sectors.

Early-stage markets in South Africa, Kenya, and Latin America are starting the same curve.

Yet Canada remains a little behind.

So why is Canada so far behind?

It's a Canadian thing. No really.

First, 'fractional' is not a common term in this context. We understand part-time, and we understand consulting; this blend is somewhat new. A fractional is essentially a part-time leader inside your business, whereas a consultant is project-based and remains at arms length.

Risk aversion is higher in Canadian business culture. This is well-documented, and it cuts both ways. Canadian businesses have historically been more conservative in hiring decisions, particularly at the executive level. We struggle with accepting that a leader is not a full-time hire. (Our status quo bias is high).

There are fewer fractionals in Canada. The US has a significant market of fractionals, and relatively, our numbers don't match up even when we consider the percentage in the market, meaning even if you wanted a fractional, it may be more challenging to find. But that won't last.

Permanent employment is culturally weighted differently. Canadians focus on stable, secure employment, and a fractional just doesn't hold that same stability. It's a little closer to a consultant's stability yet in a fractional position, you are far more committed to the success of the company. I think as Gen X gets older, they will be looking more and more at portfolio-style careers, breaking away from the mindset of their parents of staying in a job until retirement, as this gives them the opportunity to provide their expertise, the challenge of multiple companies, and the freedom that the flexibility provides.

Our start-up ecosystem is smaller and more localized. The Canadian start-up market is concentrated in the major cities: Toronto, Vancouver, Calgary, and Montreal, and outside of those markets, the understanding and demand for fractional is even sparser.

Why Canadians are missing out.

First, if you want more breadth about what a fractional CMO is, this blog covers it in more detail.

For many business owners, the role makes more sense than hiring a full-time CMO to start off with, and gives smaller businesses the expertise they need to scale without the huge hit to their budget.

Consider this: a full-time CMO in Canada typically comes with a compensation package ranging from $150,000 to $220,000, plus benefits, potential equity, and the overhead of a permanent employment relationship. A fractional CMO working 10 to 20 hours per month is a fraction of that cost, with the same caliber of experience and a mandate that's scoped to what you actually need right now.

For many companies, it's the perfect trial run opportunity.

The companies using this model in the US and UK aren't small or unsophisticated. Seventy-two percent of CEOs surveyed plan to increase their use of fractional executives in the next 12 months. Gartner projects that more than 30% of midsize enterprises will have fractional executives on retainer by 2027.

Now is the advantage

Fractional leadership is at an interesting inflection point in Canada. The model is proven, the market opportunity is there, and the results are replicable. But not yet familiar enough to be mainstream.

If you're a Canadian founder or CEO at a growth-stage company and you're still running marketing on whatever bandwidth is left after everything else, the question isn't whether the fractional model makes sense for businesses like yours. The question is whether you'll want to consider it before you burn out, miss out or after your competitors do.

The global numbers already have an answer. Canadian businesses just needs to decide if it's worth adopting.