3 Reasons to Decentralize Your Leadership Team

Joseph Frost an Entrepreneurs’ Organization (EO) member in Nebraska, is a decentralized entrepreneur, university professor of entrepreneurship, and a three-time founder. He is the founder of yorCMO, the first decentralized leadership franchise business, and heads the Fractional Professionals Association, the first and only community for decentralized, fractional executives and leaders. We asked Joe to explain the benefits of decentralized leadership. Here’s what he shared:

The world is changing at a faster-than-ever pace. Out of those changes emerges a new model for leadership and hiring: fractional.

Fractional hiring implies that an executive leader joins an organization on a flexible, part-time basis, spending a fraction of the time of a full-time leader–at a fraction of the cost.

After speaking on the subject at EO’s annual One Canada Conference called “The Great Rethink,” it struck me just how fascinated entrepreneurs are with new hiring models. Not only do new hiring models profitably impact a business, but so many entrepreneurs (more than I realized) feel the “pain points” of the hiring-onboarding-offboarding cycle that repeats ad nauseum with full-time, permanent employees.

Entrepreneurs want alternatives, and the timing is ripe because the market has officially changed.

The fractional leadership model became more of a viable reality after the pandemic. Thrust into the future of work, we are permanently altering the ways we run companies and the types of companies we run.

Research confirms it: Over the next 5 years, 52 percent of the US adult workforce will either be working or will have worked as an independent contributor. And, 63 percent of executives say they would become independent contractors, given the opportunity. The independent economy is one of the fastest-growing phenomena in the country.

Then, the “Great Resignation” occurred. So many entrepreneurs I knew panicked: Retention, hiring, ROI on labor, the ability to raise capital–everything was up in the air without the right people in place.

I realized that the “Great Resignation” would become our greatest opportunity.

The “fractional” model implies smallness, fragmentation, and incompleteness. However, leaders joining an organization in a fractional capacity are anything but small or fragmented–and neither is the impact they bring to a company.

The new hiring model isn’t fractional–it is decentralized.

If decentralization reminds you of the governing philosophy behind Blockchain, you’re right. You remember Blockchain: a few years back, every entrepreneur was talking about it and wondering how to integrate Blockchain into their business.

Blockchain popularized it, but “decentralization” is emerging as the reigning philosophy for the future of work.

A decentralized hiring model flattens hierarchies and creates a deeper sense of interdependence, rather than authority, between leaders and teams. Decentralized leadership comes with flexibility, relinquishes control, and brings creative ideation–and is future-of-work ready.

Here are three primary benefits decentralized companies experience:

1. Diversity of Thought

Decentralized hiring, the strategic implementation of fractional and part-time leaders within the C-suite, is non-geo-centric. In a remote-first world of work, organizations have access to a broader, more diverse talent pool.

With traditional geographic boundaries eliminated, companies have more options to bring niche expertise from across their industry or outside of their industry. Expertise within the organization can reach new heights and diversity increases–both in terms of cultural background and of thought. Hidden biases stemming from an entirely local talent pool, like conformity bias (AKA groupthink), get eradicated.

2. A Culture of Decision-Making

Decentralized leaders are often only physically (or virtually) present for a fraction of the work week. As a result, decentralization begets a culture of decision-making: mid-level teams become empowered to own their decision-making without turning to an ever-present leader for continuous approvals. It’s been said that “meaning is the new money.” If nine out of ten people are willing to earn less money to do more meaningful work, the companies of tomorrow should incentivize meaningful work, autonomous decision-making, and satisfaction at the core of operational culture.

As a result of a shift in decision-making hierarchies, the C-suite becomes liberated, with more time to focus on strategic planning. Micro-management is systematized out; strategic thinking is systematized in.

3. Empowered Equity

Decentralization fosters a more equitable culture by flattening an organization’s structure. Fractional executives, as part-time or independent leaders, often bring genuine, deep enthusiasm to a company’s success–one that is entirely different from the traditional employer-employee work dynamic.

The paradigm shift from “You work for me” to “I work for me and you,” interlinking each person’s success, creates an environment where all employees and leaders share common objectives and aligned incentives. Teams feel more supported, and a strong sense of belonging is created. Power dynamics shift when aggregated control centers, as with Blockchain, are eliminated.

Ultimately, decentralized work environments empower employees to make their own decisions in local matters and take higher ownership over their roles.

Entrepreneurs and leadership teams gain heightened efficiency, faster decision-making, and more diverse work culture. Organizations overall become more creative, more flexible, save more costs, are infused with energy, and have access to talent and ideas they would not normally encounter.

Still hesitant about the power of decentralized, fractional hiring? Consider one of my favorite quotes, famously said by Seth Godin: “Change rarely fails because it’s too early. It almost always fails because it’s too late.”

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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