In the fast-evolving business landscape, CEOs are often confronted with the pivotal decision of how to fill critical leadership gaps, particularly in technology. As the search for the right talent becomes more urgent and specialized, leaders might ponder: "Should I invest in a prolonged executive search, or is there a way to integrate top-tier leadership talent immediately?" This article explores such quandaries, delineating the differences between traditional executive search methods and the innovative Leadership-as-a-Service (LaaS) model, with a special focus on Technology Leadership as a Service (TLaaS). We'll delve into the criteria that may guide a CEO towards one solution over the other, ensuring that the chosen path aligns with the organization's immediate needs and long-term strategic goals.
What do you need? LaaS may be the answer.
The criteria for choosing between traditional executive search and Leadership-as-a-Service (LaaS) could include:
- Urgency of Need: If the need for a leadership role is immediate, LaaS might be preferable due to its quick placement.
- Duration of Role: For interim or project-based roles, LaaS offers flexibility that traditional search may not.
- Cost Constraints: LaaS may be more cost-effective, eliminating search fees, long-term benefits, and severance packages.
- Level of Experience Required: LaaS providers offer access to leaders with extensive experience, often over 25 years.
- Adaptability: If a company requires flexibility to scale leadership up or down, LaaS provides an adaptable model.
- Specialization: For highly specialized technology roles, LaaS can offer leaders with specific expertise tailored to the company's sector or challenge.
- Risk Management: With LaaS, the risk of long-term commitments is reduced, providing a safe trial period for the leadership role.
- Organizational Impact: If the company seeks minimal disruption and a quick integration of leadership, LaaS can be more advantageous.
- Strategic Goals: For strategic repositioning or digital transformation, LaaS provides leaders who are strategists, not just operational experts.
- Internal Resources: If internal HR lacks the resources to conduct a thorough executive search, LaaS can fill the gap efficiently.
Selecting the right service depends on how these factors align with the organization's specific circumstances and strategic direction.
What is Executive Search?
Executive search, often known as headhunting, is a specialized recruitment service targeting C-level and executive jobs, such as CEOs and other C-suite roles. This process is about finding high-performing, top-level talent, usually for strategically significant positions within organizations. It involves a targeted and strategic approach to identify and attract these individuals, many of whom are not actively seeking new opportunities. This search can be exhaustive and typically demands a significant upfront investment from the hiring organization, both in terms of time (often 6-9 months) and cost, and it usually culminates in making a long-term commitment to the hired executive.
What is LaaS?
Leadership-as-a-Service (LaaS), provided by firms like Fortium Partners, Chief Outsiders, Seaton Hill, and Wolf’s Edge, contrasts executive search by offering immediate access to experienced leaders, sidestepping the lengthy search and onboarding process associated with traditional executive searches. LaaS is a more flexible solution that can provide seasoned executives, like CFOs, CMOs, CIOs, and CISOs, tailored to the specific needs of a client organization on an interim or fractional basis.
This model minimizes the risk and cost associated with the long-term commitments of a permanent hire, as there are no search fees, employee benefits, or severance to cover. LaaS is designed to adapt quickly to an organization's changing needs, providing leadership expertise immediately, which can be particularly beneficial in navigating digital transformation and confronting rapid market changes.
In contrast to up-front fees for executive search, Leadership-as-a-Service embeds fees for the leader in the monthly cost. Fees only last as long as the leader provides the needed value and can increase or decrease in response to the natural rhythm of innovation and stability over time. Models vary, but a general rule of thumb is that Leadership-as-a-Service costs, on average, about 20% more than the base salary of an equivalent leader in a full-time role. However, the cost of a CTO for 2-3 days per week with more experience across all three dimensions without hiring risk may be similar to, or less than, the combined acquisition, ongoing, and severance cost of a full-time, employed, possibly less-experienced, CTO with the associated hiring risk.
Executive search offers a custom approach to finding a perceived perfect fit for an expected long-term role. In contrast, Leadership-as-a-Service provides a ready pool of experienced leaders for immediate engagement under flexible terms.
Leadership-as-a-Service (LaaS) is a managed service that allows an organization to engage vetted, world-class executive leaders in as little as a few days to 2 weeks. Technology Leadership-as-a-Service (TLaaS) is the LaaS concept applied exclusively to the CIO, CTO, and CISO roles.
What is TLaaS?
To narrow it down even more, Fortium Partners offers Technology Leadership-as-a-Service® (TLaaS), a LaaS service model designed to fill the gap in technology leadership swiftly and efficiently. Unlike executive search, TLaaS provides immediate access to a pool of senior Technology Leaders ready to step into roles such as CIO, CISO, or CTO on an as-needed basis, whether part-time (fractional), interim, or as an Advisor (see graphic below).
This model is especially valuable when a technology leadership role is vacant or when an organization cannot attract or afford the talent it requires. With TLaaS, companies get the flexibility to add experienced technology leadership quickly and without the obligations of the traditional hiring process. Fortium's partners are distinguished leaders with decades of experience in evolving technology executive roles (former CIOs, CTOs, and CISOs of enterprise-level companies) and are adept at addressing and solving complex technology challenges within companies.
TLaaS may be appropriate when an objective review of the organizational needs, required experience, spend, and availability allows for a CTO in an interim or fractional role. TLaaS may also offer a Technology Leader (CIO/CTO/CISO) in a situational leadership capacity to facilitate an important initiative such as an assessment, transformation, or consolidation for a specific outcome.
- Fractional Technology Leaders engage for 1-2, 2-3, or 3-4 days/week, and the relationship is generally open-ended - continuing as long as the arrangement works for both the client and the leader.
- Interim CTO roles are full-time and generally assumed to end when a full-time, employed CTO is found - usually through executive search. Hybrid models allow a fractional or interim leader to be an employee of the client without requiring a long-term commitment while remaining connected to the larger community of technology leaders. Finally, most Leadership-as-a-Service firms offer a path to becoming a full-time employee of the client for a placement fee.
In contrast to up-front fees for executive search, Leadership-as-a-Service or TLaaS embeds fees for the leader in the monthly cost. Fees only last as long as the leader provides the needed value and can increase or decrease in response to the natural rhythm of innovation and stability over time. Models vary, but a general rule of thumb is that Leadership-as-a-Service costs, on average, about 20% more than the base salary of an equivalent leader in a full-time role. However, the cost of a CTO for 2-3 days per week with more experience across all three dimensions without hiring risk may be similar to, or less than, the combined acquisition, ongoing, and severance cost of a full-time, employed, possibly less-experienced, CTO with the associated hiring risk.
For a CEO considering the services of executive search firms versus LaaS, there is a trade-off between the traditional, more rigid search process and the flexible, immediate access to leadership that LaaS offers. With the rise of digital disruption and the need for agile leadership, LaaS or TLaaS presents a model that aligns with the rapid pace of change in today's business environment, allowing organizations to leverage experienced leadership on demand without the traditional constraints of executive search processes.
If you enjoyed this article, you might want to read the following:
- Why Hire an Interim or Fractional Technology Leader?
- What is LaaS (Leadership-as-a-Service) all about?
- How Technology Leadership Helps CEOs Break Through Hiring Limitations (Part 1 of 3 parts)