The trend of applying the gig economy to the C-Suite (or C-Suite Gigonomics as we like to call it) has never been more important or relevant
The media has been reporting a lot about the gig economy (aka. contingent workforce). This bucket includes those who sell on Etsy to individuals selling their services, ranging from picking up your groceries to designing or developing your new website, on sites such as Task Rabbit and Upwork. What most business leaders are not aware of yet is the rising trend of the gig economy in the C-Suite.
The economics of the C-Suite have never been completely clear to most people. For example, according to PayScale the national average for a CEO’s base pay is $184,000, which does not include bonus, profit sharing, expenses, equipment, benefits; the list goes on.
To shed some light on the situations and economics of applying the gig economy to the C-Suite (a.k.a. “C-Suite Gigonomics”), here are some of the more common situations into which companies bring in an interim/temporary or part-time executive.
C-Suite Gig Situations
“Gig” labor has been used in traditional business models for decades, though most popular for administrative roles. Most business leader are aware of the availability of temporary receptionists, but haven’t given much thought to the availability of temporary executives.
In reality, applying this temporary labor model to the C-Suite makes more sense than almost anywhere else in the company, because:
- Executives are a highly skilled workforce that requires minimal to no training. Conversely, they bring skill and expertise to the company.
- Given the stage of their career, this workforce is more stable financially and can be more flexible in terms of
- High pay levels and the risk associated with bad long-term C-Suite hires makes the economics of C-Suite gig talent even more appealing.
Here are a few examples of how companies can leverage this flexible C-Suite workforce.
- CEO oversees sales but is getting too busy; resulting in stagnating or decreasing sales. Bring in a part-time sales executive for 2-3 days per week for 4-6 months to put the needed sales organization structure into place, then transition to a longer-term Sales Manager or someone internal who has been coached during this time.
- Marketing failing to deliver on the brand or new leads. A part-time marketing executive can bring a new perspective and new ideas to create innovative marketing programs that will increase leads and elevate the brand again, not only in the US, but also in the global marketplace.
- The company’s rapid growth is starting to collapse infrastructure. While the CEO concentrates on continuing growth, bring in an interim President or operations consultant to quickly rebuild processes and organization so that it can withstand the rapid growth it is experiencing.
- The company isn’t running as efficiently as it should and has declining profits. An operations consultant can come in and quickly assess the areas of the company that could run more efficiently. Many times, such a consultant can find low-hanging fruit that brings immediate savings to the bottom line and then will work on the longer-term goals of increasing profits.
- Looking to sell the company or make an acquisition. There’s nobody with better perspective than a contract executive with industry-specific experience buying and selling companies and who has no emotional involvement in the transaction.
C-Suite Gig Economics
Here are a few examples of how the math works when utilizing the gig model in the C-Suite. We have only included a few of the affected numbers from each engagement.
Situation #1: Interim President for a mid-sized manufacturing company.
The company had been losing money and needed some help turning it around. Starting with the engineering unit, the interim President aligned the organizational structure and operations with the company’s strategic goals.
- 2-3 days per week for 6 months
- 1-2 days per month for the next two years
- Total Interim Cost over 2.5 years: $196,100
In the first year, $2,400,000 was added to the company’s EBITDA.
Situation #2: Interim CFO for a mid-sized business services company.
The company was experiencing some cashflow concerns and lack of credibility with the finance and accounting department.
- 5 days per week for 4 months
- Total Interim Cost: $114,800
Within the first 60 days, the interim CFO improved collection procedures, resulting in over $4 million reduction in outstanding accounts receivable.
With improved efficiencies, a position was eliminated, with equivalent cash savings of one-half of what the total interim CFO cost.
Situation #3 – Interim CFO for a small (less than $5million in revenue) services firm.
The company had no budget, minimal reporting, was experiencing declining gross margins, and was just below break-even.
The company had two options:
Option #1 – Full-time CFO with full compensation and benefits around $150k+
Option #2 – Part-time CFO – Ten hours a month for one year
Option #2 cost the company a total of $32,000. A budget was put into place; decision-making–based reporting was created; the CEO had absolute confidence in the financial statements; project costing was established to improve margins; and the company was positive cash flow.
Being able to utilize the best talent for each situation is ideal for any company. C-Suite Gigonomics shows the value an interim or part-time executive can bring. Companies are now in the driver’s seat. The options are just about limitless for building their C-Suite to meet the ever-changing needs of the business.