ROI of a Fractional Integrator
By : GCE Strategic Consulting -
VISIONARY INSIGHTS: How to measure the ROI of a Fractional Integrator / COO
If you are considering hiring a fractional integrator, presumably because you don’t have the budget for a full-time integrator, it makes sense to analyze the investment and make sure you’re getting your money’s worth. How do you measure the return-on-investment (ROI) for a fractional staff member?
Pre-Hire Assessment –
You can start measuring ROI until after hiring the fractional integrator. Finding a fractional integrator with experience working within the confines of The Entrepreneurial Operating System (EOS) is much easier to find than going through the hiring process of bringing on a full-time integrator (Chief Operating Officer) and then training them on EOS methodology.
When you are working with fractional integrators, you should work with your prospective Integrator to evaluate the likely ROI. One way to assess the potential ROI of the prospective integrator is to hire your top candidate for a short-term engagement to assess your business, and to provide a complete assessment and recommended changes that they can help you improve. Whether those changes are operational efficiencies or improvement in your sales and marketing, they should give you an idea of how they can help you improve your business.
You can use this assessment to establish operational priorities and compare the predictions with the cost of hiring the fractional integrators. If the changes they recommend don’t align with the cost of hiring their services, then you want to address those concerns before hiring the fractional integrator.
Setting Clear Goals, Objectives, and Rocks –
When hiring any contractor, whether it’s a SEO contractor or
Fractional Integrator, you need to sit down with them on day one and set clear
goals, objectives, and rocks. Using the
GOST (Goals, Objectives, Strategy,
Tactics), you want to establish what your goals are, implement measurable
objectives and get a picture of what strategies the Integrator will use to
Tracking and Accountability of Work –
Keeping track of the work may seem like an arbitrary and elementary step, but most of the time a contractor is hired, few leaders track the work completed. Having your fractional integrator keep a record isn’t intended to be a micro-managed account of their daily activities, it’s merely so that you can measure the effects of their impact on your business.
In addition to tracking their activities, you need to have them record known or estimated savings from each project they are working on. For example, if they recommend investing in a project management tool or other piece of software, you need to have them estimate the savings in efficiency or reduced cost by implementing the software. Some of the numbers from those projects will be known immediately, while others may take weeks, months or even a quarter to reveal. With your Fractional Integrator, regularly visit your list during same page meetings and update the list. You could also include this in your scorecard and track them during your weekly team meetings.
While you can have the fractional integrator update the list regularly, we recommend reviewing the list together periodically. Most changes in operations, sales, and marketing see gains over time, not day to day or week to week. Constantly checking those numbers will only stifle the change and will take focus off of the big changes that need to be made within your organization.
Metrics to Track –
Every company will require slightly different metrics, but here are the measure categories of improvements that we’ve observed.
· Reducing Cost –
Many small businesses struggle to keep cost under control, which impacts the organizations profit and margins. As your new fractional integrator comes into the business, they should focus on ways to reduce cost across the organization. Possible actions might be finding better pricing for software, materials or negotiating a lower price with vendors. Another area could be to look at ways to make fixed cost variable (Capex to Opex). Your Fractional Integrator should also work with your CFO (Fractional, Agency or FTE) for better tax strategies to save you money. There are plenty of ways to save money within your business, and your fractional integrator should spearhead this activity.
· Increase Revenue –
Your Fractional Integrator may or may not be a strong sales leader or even active in marketing, but they should work closely with your marketing and sales leadership to look for ways to improve revenue. Several areas to focus on include optimizing your pricing structure, discounting programs, opportunities to reengage past customers, improve your margins and drive new sales. Additionally, your fractional integrator should look at metrics to improve marketing efficiency by looking at ways to measure marketing effectiveness and impact on revenue.
· Employee Satisfaction and Retention –
This is an essential metric that every organization should measure month-to-month and your fractional integrator can have an immediate impact. Today your accountability chart may be vague, leaving your team to run blind and rogue. Many organizations our fractional integrators have worked with had little to no organization around their accountabilities and were not using the 5,5,5’s to the organizations benefit. This leads to low employee satisfaction and higher than expected turn-over. Your fractional integrator should immediately evaluate every employee, schedule 1:1 with each team member and implement a way to track employee satisfaction and 1:1 meetings. One tool that is highly effective for one on one meetings to improve employee satisfaction is 15Five. Employee satisfaction scores and retention should be measured regularly and should be used to improve your overall organization, not to penalize employees for providing honest feedback.
· Organizational Check-up –
One EOS specific metric is your quarterly meeting score. In some cases of past GCE clients, they had a low initial organizational check-up and once one of our fractional integrators came in our check-up score improved quarter-over-quarter. This is a metric aligned to EOS and shows how your entire leadership team sees the performance and health of the organization.
· Team Mentoring –
Your fractional integrator is likely to mentor and improve members of your leadership team, and junior staff members. This may be a primary driver for hiring a fractional integrator. Many small organizations struggle to mentor and grow junior leaders. A fractional integrator can help identify mentorship opportunities and people within your organization with the potential of promotion and leadership improvements. How do you measure mentoring? You can look at mentoring from a cost perspective. How much would it cost to send your leaders to leadership training, or the cost of higher education or industry courses? Your fractional integrator may be able to mentor an existing employee to be the future full-time integrator.
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