Fractional COO Vs. Consultant: What Your Business Should Choose
November 16, 2022
There are several different reasons that companies may find themselves in the position needing a fractional COO or a consultant. However, these roles are not interchangeable and each serves a unique purpose and function. The past two years have brought unprecedented instability to the doorstep of OEMs and suppliers. Knowing how to address this and what tools to use is crucial to surviving the current manufacturing climate. Fractional COOs and consultants each have their role to play, depending on each company's circumstances. However, one may be more suited to the current environment than the other.
What Does a Fractional COO Do?
A fractional COO’s job is hardly a mystery; fractional COOs do the same thing that regular COOs do, just on a fractional basis. Essentially a COO is tasked with overseeing the day-to-day operations and production of products a supplier or OEM is manufacturing. Additionally, the COO reports to the CEO and is considered second in command. The COO’s job is internally facing and has much less external contact than a CEO's. As the term implies, a fractional COO would perform these traditional duties only on a fractional basis. In general, a fractional COO would work for a company that is not yet large enough to pay a salary of a full-fledged COO or doesn’t need a full-time COO.
Benefits of a Fractional COO
There are several benefits of having a fractional COO. However, most of these benefits translate into saving money. Fractional COOs are usually found at small companies that don’t need a full-time COO or larger companies that are just getting their feet wet with manufacturing operations with feasibility studies. These roles can provide all of the expertise that a full-time COO has, but on a more “as-needed” basis. For fledgling companies and operations, this helps keep costs low and ensures prudent budget allocation while attracting the most talented and qualified leadership.
Drawbacks of a Fractional COO
While companies can save money by spending only a fraction of what they would on a full-time COO, there are also some similar “fractional” drawbacks. A traditional COO can dedicate all their time and resources to one company. On the other hand, a fractional COO gives a fraction of their attention to the company. Any full-time COO works well over 40 hours per week. However, a fractional COO tracks precisely how much time they are spending, so they are not always on call or thinking of solutions to various problems or challenges.
What Do Consultants Do?
Frequently, consultants are ad hoc hires brought on to solve specific problems that companies are experiencing. Specialized consultants have the luxury of being subject matter experts with significant experience and have developed a deep knowledge of the industries they support. As a result, they often become specialists at solving industry-specific problems in creative and unique ways. Because of the recent turbulence caused by COVID responses and supply chain disruptions, many companies are opting to problem-solve with the help of consultants.
Benefits of a Consultant
There are many benefits to hiring a consultant, especially a specialized consultant. First, technical consultants, like Seraph, have deep industry experience and knowledge and often employ former middle and upper managers from OEMs and suppliers. Second, consultants have had the opportunity to work with various companies throughout the supply chain and possess a good understanding of the environment in a given market. Specialized consultants have tried and true knowledge of what works, what does not, and how to implement solutions based on the industry. Finally, consultants can often see different problems in ways the company’s leadership cannot. This deep understanding, combined with a consultant’s expertise creates fertile ground for highly effective solutions.
Drawbacks of a Consultant
Since consultants are usually hired for ad hoc projects, they are limited in their ability to deal with problems outside their scope of work. Unlike COOs, consultants are not managers and usually work with managers to help implement the solutions they provide. On the other hand, specialized consulting firms will step in to fill any management gaps that a company may need for the duration of its contract. The solutions that consultants are hired to provide are typically finite in scope. Once the job is completed, the consultants execute the exit strategy and move on to the next contract, which could still be with the same company, depending on their needs. Finally, consultants do not generally have a stake in the success of the company the way that COOs and other CEOs. Some may argue that they aren’t as strongly incentivized to succeed as COOs (fractional or otherwise). However, reputable consultancies would not risk their reputation by providing poor service, which can be mitigated by hiring respected consultants with a proven track record.
Fractional COO or Consultant for Your Business
The decision to hire a fractional COO or a consultant will depend mainly on the circumstances in which a business finds itself. Some cases require a fractional COO, especially when the company’s primary concern is managing day-to-day operations. However, many companies seek unique and innovative solutions to problems caused by the COVID pandemic and resulting supply chain disruptions. Issues of this nature frequently go beyond one person’s ability to solve them. Therefore, the additive wisdom, experience, and technical knowledge consultants bring to bear on these problems are efficient and profoundly effective. Consultants frequently have their suite of tools that help diagnose the root causes of issues and prescribe the correct solutions. COOs, for all their knowledge, often cannot compete with a business dedicated to solving these kinds of problems. COOs who cannot offer the required depth of attention to address the current issues; fractional COOs can allocate even less attention. On the other hand, a team of consultants may have a similar price tag to that of a COO but could offer a significantly more effective and tailored solution to a company’s problems.
Understandably, many companies have suffered turbulence in the past two years. Supply chains, OEM expectations, supplier efficiencies, and more have all created seemingly insurmountable problems for many manufacturers. Seraph has been able to help both OEMs and suppliers navigate this novel environment to not only help them survive but also position them for accelerated future growth. Our team of former executives has the knowledge, experience, and resources to help manufacturers stay ahead of the curve and successfully adapt to the new business environment. Contact us today to schedule a discovery call, or see our case studies for more information.