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Hello and welcome to The Upstream Leader Podcast. I’m excited to have you with us here today. We have got a fun conversation that we’re going to have. We’re going to focus our conversation today all about fractional executives, the rise of fractional executives, and what exactly that means for the accounting profession. And with me here today, I have Jen Hamilton. She is the founder of Hamilton COOs and Fractional COO Collective. Jen, great to have you.
Thank you for having me, Jeremy. I’m excited to be here and have this conversation.
I think it’s going to be a pretty fun conversation because fractional executives seem to be popping up all over the place from fractional CEOs, COOs, CMOs, all of the Cs, seem like they could be fractional at this point, which is a bit of an interesting idea when you think about some of the most important strategic roles in an organization being not even employees and part-time. But before we get there. I do want to ask you the same question that I ask everyone, because I think it’s going to be incredibly relevant to how you got to where you are: How did you become the leader that you are today?
So, being an executive doesn’t start with college, it starts with experience. And where I started my career was going into the accounting field. I started as a CPA. With PricewaterhouseCoopers, although we were just speaking about how it wasn’t there when I started because I was part of the mergers at the time. But one of the things that was really interesting is there was such an emphasis, especially ’cause I was new out of school on the technical training. But the complaints I was getting from my supervisors and managers with some of my EQ side and the soft side, the professional side. And so I had a manager that I really admired who had shared with me about some coursework that he had done outside, and I just appreciated him so much and he seemed so smart. He seemed like he had his life together and his business together, rose in the ranks.
So I decided to start doing courses in addition to my 60 plus hours a week in basically personal development and professional development. And I’ve been addicted to leadership development and professional development ever since I was 22 when I started, and I’m no longer that, quite a few years beyond that. But one of the things that I constantly am in love with is learning how people work and think. And so I find that I’m a much better leader when I understand human nature, what motivates us, what scares us, and can be more empathetic, understanding, and more influential when I can really get to the heart of what’s behind either them being stuck, or what’s behind, what will get my team to really step up into a whole new level of their own leadership and their own growth.
So it was really focused not as much on you, but helping you figure out how to interact with and understand others was really the transformational part of your leadership journey. Is that fair?
Yeah. It starts with you, it always starts with you, because it’s not effective as a leader to just be like, “Well, you are like this,” when really it’s like they say, “When you point your fingers, four come back at you, the one out.” And so I became much better by knowing me to be better at knowing who else is in front of me—whether, and actually it works for clients as well, not just team members—but much more effective by having my EQ raised, my emotional intelligence raised, up of myself and others.
I would imagine that it is critically important for fractional executives as well, having—I mean, don’t get me wrong, the technical side is important, but firms today don’t have a shortage of technical experts. We’ve got lots of technical experts. That’s the hallmark of the profession. But one of the challenges that we see at Upstream, and I don’t know if it’s a challenge as much as it’s, yeah, I’m going to go with challenge, it’s a barrier that firms are trying to overcome is how do we transition that mindset from where accountants serve their clients to where running a business that is an accounting firm? And I would have to think the emotional intelligence side plays a role there in executives, whether they’re fractional or otherwise being some of the key skills that they need.
Well, you know, I was a senior, what, two and a half years in? And I needed it then, you know? It’s not even at the executive level. It really starts—the moment you’re responsible for another human being’s productivity—it’s critical that you understand what it is that’s in their way and how to get them to produce at a higher level. Not by force, but by internal motivation.
Yeah and that’s a challenge at that level because so many firms are focused on the technical side. It’s, yeah, we know they need the professional skills, but first we need ’em to be really good at what they do. That’s what we find in our New Manager Academy program and why it’s had so much interest is, it’s really just focused on how do you manage people and engagements, which are two foundational skills for anyone in a supervisor-manager role, but they’re often the things that people are lacking the most. I always say that it’s one of the two promotions in our profession where it’s, “Hey, you’re really good at what you do, so we’re going to promote you to do something entirely different. You got this. Good luck.” Manager, and then unfortunately, partner, it is kind of the other one where it’s like, “Hey, you’ve been really good at all of these things. Now you’re going to be a partner. By the way, that means something entirely different than what you’ve done your entire career. Now you’ve gotta be a business owner, and you’ve gotta run a business. Good luck. You got this.” Is that consistent with what you see?
A hundred percent. And I think that we see it not just in the accounting field, we see it dramatically in any high level, high educated, high expertise, like accounting. I see it in law firms, I see it in, you know, any other sort of like engineering, you’ll see it as well, is that you want to recognize people for their incredible expertise, but yet you’re asking them to do a whole nother skill. We see it in sales like every industry, pretty much. Oh, you take your best sales person and you say, “Okay, lead the sales team.” Well, you don’t magically know how to make other people do the technical things well, but also want to do their job well. And that’s what you’re asking of a manager. And you’re really asking, like you said, of a partner not only to continue to manage people well, hopefully you’ve got that down by then, but also business development and like you said, really running your own business within a firm. It’s all new skill sets.
And when you step back, like you just said, when you step back and look it up from that perspective, one, if you’re feeling stuck and you are listening to this and you’re in that position, grant yourself some grace, ’cause you’re put into a position that’s difficult and get yourself some training. Come to Jeremy and get some help, but it’s not natural. It takes intervention through learning and development.
Yeah, it really does. And it’s also something that not everybody wants to do that, which is one of the things that I think has probably given rise to the prevalence of fractional executives, not only in public accounting, but in other industries as well. I mean, many accounting firms now have fractional CFO services. We call it outsourced CFO instead of fractional—I don’t know why that sounds better, but it’s the same concept.
Yeah,
We’re being their outsourced CFO or their fractional CFO, so we know that it works for everybody else. But I am starting to see more of it specifically in three areas of accounting firms: I’ve seen fractional CEOs seem to be on the rise, and I see that in firms that have partner groups that want to remain in production, but they know that they need somebody to drive the operations and make strategic executive decisions. I see it with the COO, so maybe a firm that has a good managing partner, but they’re growing, they can’t do it all, and they need that kind of right hand person. And then the marketing side, the fractional CMO seems to be on the rise because, well, I don’t know a lot of accountants that at the end of the day are like, “You know, it was really tough, I wasn’t sure if I was going to go accounting or marketing. I just, you know, flipped a coin and chose accounting.” They’re not always that related. So we see this on the rise. Talk to us a little bit about how you view the fractional executive and what gap that fills for the profession.
You are really pointing to something that’s truly important, and I love that you’ve transitioned from the technical skills to what I’ll say just generically, the business skills. And one of the things that I think people will look at me because I’m a fractional COO and a CPA, they’re like, “Oh, well you were trained how to run a business as a CPA.” Well, you all know who’s listening, that’s not what we’re trained on.
Yeah. Wouldn’t that be great?
Right! I think that there’s this misconception that if you have a CPA, you have an MBA. And those are not the same. Now you learn a lot about business, but you do not know how to run it, and I think there’s an additional pressure when you are in accounting that you’re supposed to know. This like, self-doubt creeps in and you may not want to admit it, but please hear us like you are not trained. You really are not trained. My path, I left public accounting as a manager. That wasn’t enough to have me know how to run a business. Like you said, that transition from manager to partner, it’s not enough to know how to run a business.
It took me, oh my gosh, how many years? I think 14, maybe even more than that years to really get enough business education, mostly because I went out on my own and did trial and error. Sadly, that’s a lot of how you learn, but I did continue to expand my own learning into how to run a business.So I think that if you don’t want to do all that, you don’t want to take all this time and investment, a timer just doesn’t appeal to you if you don’t naturally like it and it doesn’t motivate you, that’s what is so great—I commend the firms that say, okay, your gifts are in accounting. Your gifts are not in running a business or doing business development or in leading others, or like you said, doing marketing. And so why not take your best people and keep them in their best seats, and bring in people who are naturally gifted at it who have tons of experience because they’re at an executive level and have done it in many businesses, to come in as those fractionals to run those executive pieces?
Now, as you look at what is it that you need in those seats, when you are small to mid-size firm, as you grow, you may need to fill those seats with full-time people. But there’s a long time before you actually need that. When I look at the COO seat, people are like, how do you run a business part-time? There are very critical pieces that I make sure is like the foundation that’s put in place, and that the team is working together. But a lot of times when you have a full-time COO, if you think, oh, I need a full-time COO, they’re probably doing more like office manager stuff or firm administrator stuff too. So what is powerful as well with a fractional, and you can do the same thing with marketing, is you can split out the true executive strategic leadership decision making things just for that expertise and pay only for that. And then you can have other people on your team who can execute with that leadership. It’s a really powerful combination.
Something you just said—I want to just hit on it for just a minute here: You said the true COO level, right? The executive level, strategic and decision making. I personally believe that’s what separates the C-suite from the director level, and that is not to discount at all the director level operations, directors, accounting directors play a critical role. But I view that as more of an executing role, whereas the C-Suite is more the strategic role. Both of those roles and maybe even the next tier down to where from a, just a kind of a governance operations strategic hierarchy where they’re also then doing the tasks. So you’ve almost got one person playing three roles, so what I’m hearing you say, Jen, is for a lot of firms, they already have a fractional COO, they’ve just wrapped it around a bunch of other stuff, and perhaps it makes sense to let that person execute if that’s their strength, and then just bring in that person for the strategic side. Is that where you play most often is on the strategic side rather than just the project management side, so to speak?
Yes. And that’s part of why I think the rise in fractionals, if you truly are taking advantage of their experience, their strategic mind, their problem solving, and the fact that we have a bit of a consulting feel to it. There is that We can talk about the difference between fractional consulting, I love moving from consulting to fractional for specific reasons, but the fact that you bring in a consultant because they’re working with other companies and can see other things and bring something that when you’re only in the business, like you said, if you really have a COO that’s only in the firm, you don’t get the value of being like—I mean, almost every week I’ll say to one client, Hey, I just dealt with this with another client on Monday. You know, there’s something so beautiful about kind of having a view into somebody else’s business that you can then bring in that we also bring.
So one of the things that I think is a—and I’ll speak to our financial brains here—is a misallocation of funds is, if you are paying for someone to be executive director, execution, project manager, as you said, doer, somewhere along the way you are pricing this wrong. You are way overpaying or you’re way underpaying. I would rather have multiple people doing the different pieces, like you said, where they’re experts, where they’re the best, for the right investment to get the right return from my people.
So it really is, it’s interesting in an effort to perhaps minimize cost, we’re actually reducing our return on what we would’ve gotten out of that investment anyway. So you mentioned the difference between consulting and fractional. Talk me through that a little bit because I’m curious—my gut tells me consulting is probably project or initiative based, whereas fractional is long-term relationship, strategic based. But I feel like there’s a disconnect there that I’m probably missing. So help me understand that.
You are pretty right on. I think the biggest thing, so I had been doing operational consulting and leadership and management coaching as a combination for services before I started doing the fractional COO work. Now, the reason I spell that out is like that’s pretty much what a fractional COO does, right? Operational consulting, getting the leadership and management, helping the teams work together. What the difference was that got me super excited and just absolutely love this industry, a fractional COO, and part of why I have a collective, part of why I feel called to be the leader and advocate for this fractional COO industry, is that there is a mindset to the client, and to the consultant that is missed when you are a consultant role versus a COO role. So being in the role with authority, with being a part of the team, versus a consultant being on the outside. Looking in is oftentimes what would frustrate me as the consultant is I would put in heart, soul, blood, tears, all of this to really figure out what they need, and a plan for them to do it and they wouldn’t do it. Because I didn’t have the authority. I didn’t have the role as an executive of the team to cause the accountability to make it happen.
And so that’s why I love that the fractional executive is both. I get to bring in, like we said, that outside perspective that is so brilliant to have somebody from the outside. I don’t care if it’s a consultant, a peer, you know, someone you met at a conference, like how are you doing it, right? We want to know that. But then how are you getting that team to hold accountable? A consultant usually stops at the recommendations, because they don’t have the authority to make it happen. And so while you are still strategic, like you said, you still have this, it’s not even so much that I’m project managing, but I’m causing the team to make the projects happen.
That touches on what I feel like is one of the biggest barriers in our profession to bringing in executives from the outside, and that is allowing them to have the authority. And I’ve worked with a number of firms that are at that point from a business maturity wise, where they’re looking at adding a C-suite. There is just this weird dynamic. I’ve got some firms that they have COOs that came from the partner group, and I’ve joked with some of them that they’d probably be more successful if they weren’t a partner to start with, because now it’s like, “Oh, well you’re a partner, but you’re a COO and you have to behave like a partner even though you need to be doing these other things.” There’s a weird dynamic there. But on the flip side of that, Jen, when someone says, we’re going to bring in an outside COO that has experience in other businesses and other industries, it’s almost immediately, “Well, but they’re not a CPA. So how would they know this? They’ve never been a partner.” I’m sitting here thinking, something is wrong because we don’t want the partner to do it because they should be doing partner things, but we don’t want an outside person to do it because how would they know how to tell us what to do? So how have you found to overcome that barrier to where you can get partners in accounting firms to give you or someone else in your collective authority, as a COO from the outside who is part-time, that is not one of them, and get them to actually do it. Because I bet there are some managing partners that even in their role would be like, “I’d love to know how this authority thing works, because nobody listens to me either.” So how do you do that?
It’s an excellent question. So my clients, my firm and I, we serve accounting firms, law firms, and management consulting firms. Now, I’ve been a management consultant. I’ve been a CPA, so I don’t have the same sort of—
That helps.
“Well, you don’t understand us.” That helps. But I have not been a lawyer. So I get it from that point of view, although I’m married to one, so it feels like it’s the same thing.
Close enough. Right? Law, you’re adjacent.
Very much. You know, I play one on TV kind of feels like sometimes, right? Because he just sits on my shoulder and is like, there’s a risk! But anyway, I digress. Where I see the misunderstanding happening from a partner point of view, from a managing partner point of view, is that they are misunderstanding the role. If you really look at what the role of a COO is, it is about running a business, not being an accountant. And if you truly have experts who are leading the service delivery, you know, the different partners and the different divisions, the COO leans on them, and actually elevates their ability to be experts on that technician side, that leading the team side. They work in partnership with the leaders of each division, whether it’s marketing, whether it’s service delivery, you know, like the overall folks who are responsible for getting the team to do it, that’s their job, that’s their expertise. We just make them better.
And then of course, you know, the back office, right? So we are not going in, and this is, I think especially in a COO seat, gets confusing, is that we are not director of operations, we are not director of how do we do our service? We are director of how do you run the firm? That’s a very different role.
How do you get partners on board with that? How do you convince them that you’re telling the truth that you’re not going to come in and tell them how to run the audit practice? Because that seems to be the fear that I hear all the time is, well, they’re just going to tell me to do my job and they don’t know how to do my job. But what I’m hearing you say is you have no desire to go in and tell somebody how to go do their job. Instead, you’re trying to get the strategic side of the firm going in the right direction and elevate them. How do you get those skeptical partners on board that this actually makes them better at what they do, rather than almost like, you know, policing of an accountability coming in and saying, you didn’t do this, and you didn’t do this, and you didn’t do this. How do you do that?
So one of the things that I would say, I go back to what we were talking about, being that EQ and being able to be an incredible leader. And part of why I just wish I knew you when I was rising in the ranks of accounting and being able to truly understand what it means to lead, is that you need to be on the same page with whoever it is, so you know if it’s a partner leading a certain division and maybe even leading other partners, what is their frustration? What’s getting in their way of their success and their goals? We have the same commitment: I want to remove obstacles. And so we get on the same team of what are those obstacles and let’s work together to remove them. It’s about fixing their challenges because if the leaders are challenged in being able to get their goals met, their objectives met, their team productive, I care about that. I want to work with them, not against them, otherwise, neither one of us are successful in our roles.
Yeah. Makes sense.
So I look at, again, going back to the EQ, what’s in it for them? Just like we would with clients, like what is it that’s going to have them want to move the needle? And then we come together to create what the needle moving needs to be.
That makes sense. So if there’s a managing partner listening to this and they’re thinking, all right, we don’t have that right now. We don’t have anybody in that role, how can. Is ready for a fractional COO or a fractional any type of executive. But just thinking about the COO, because that is the one that more and more firms seem to be adding as they grow, as they try to be more business minded rather than just, you know, solo practitioners all under one roof minded, right? They’re making that transition. How do they know? Because I would imagine not every firm is ready for this. They may think they are, but they’re not. What do you find are the characteristics of a firm that’s well positioned to bring in a fractional COO?
I think it starts earlier than you think. It can start at the founder level, so if you’re really like truly growing your firm, a lot of my clients, the manager partner is still the founder and the owner, and they’re just starting to bring in and sometimes it’s bookkeepers, sometimes it’s others, like they’re starting to bring in the back office, they’re starting to bring in the marketing type of thing. And what is happening, and you’ll see it in a larger firm too, is that they’re adding complexity by adding teams. So the complexity comes in two ways: More clients—potentially more services—and more team members. The moment you have complexity, the moment you need to have foundational ways you run your firm so that everyone is rowing in the same direction. You have clear expectations, you have clear times that you’re meeting, and you have clear times that you are figuring out what do we need next? So strategic planning: quarterly, annual, those kinds of things. Those are some of the key business foundations.
You can avoid having someone responsible for ensuring that we are all working together on the same focus, that we’re all working together and communicating what’s working, what’s not working, and fixing it. You can avoid that. What’s going to happen is you will have more chaos. And that chaos will exponentially impact more complexity because what you have is essentially people doing their own things. When you are really committed to say, it is time for us to work as a team, to work as a firm, that’s when it’s time to bring in, not necessarily a fractional, but bring in an operational mindset. Now, if you are a managing partner who is gifted with that, or has gone and done education, then just know you’re being called to do that. If you’re a managing partner or founder who is like, “I hate that. I don’t know how to do it. I don’t want to know how to do it…”
You need to call somebody to do that.
Exactly! Because if you ignore it, and you’re just like, “Can I just be the rainmaker? Can I just like let my team do it?” I wish I had a magic wand I can give you where that would happen, but you actually have to be intentional. You cannot just hope. You have to be intentional with putting in the structure so people know how to work together and it actually frees up your time. So if you are busy trying to ask questions: “What’s happening with his client? What’s happening? What are you doing? Where’s that at?” versus having a system that informs you, you are probably reaching burnout. And it’s because you don’t have that operational structure in place.
So a couple like signs too, besides burnout and chaos is if you feel like you are directing—you’re telling everyone to do, they kind of come to you for direction, they’re not leading on their own and they’re not taking initiative, or they feel like I tell them to do stuff and they’re not doing it, there’s a lack of operational systems. And whether you bring in a fractional COO like myself or people in my community, or you find someone who’s naturally good at that or knows how to do that, or you can be that. I mean, a CEO and a COO are often the same for a while. But just remember you do have two roles that you are playing if you don’t have someone else sitting in that role of how do we run well as a firm, not as a bunch of individual, little silos.
Yeah. And it does all go back to that idea, as you said, of being strategic. You know, doing the decision making and having that structure in place is really what this helps you to accomplish. And I like what you pointed out that it could be just a founder, it could be a sole practitioner that’s looking to grow. You know, I’ve got some firms that come to mind that are, you know, north of 15 partners, that they’re at that phase where they’ve been very successful, but they want to become more successful and maybe they want to 3, 4, 5x the firm and really take it to that next level. Structure, processes, strategic decision making, all of those things come into play. It seems like when it’s divvied out among all of the partners, you get bits and pieces of it, but you don’t get a comprehensive or cohesive strategic approach. And that’s what it sounds like, you’re saying that whether it’s a fractional or full-time COO, that’s the role of a COO is to bring the cohesive, strategic approach that allows everyone else to do what they do even better.
Right. Absolutely.
Jen, this has been incredibly helpful, this conversation. I’m curious for, you know, leaders that are out there, and I’m going to ask you this a couple different ways. So the first way that I’m going to ask this, leaders that are out there that are thinking I want to get better, I love the operations side, I actually enjoy it. Maybe I do feel called to that. What are some great resources that are out there? Whether it’s books, courses, podcasts, TED talks, whatever it may be. What do you recommend for an operations executive or an individual that wants to become an operations executive to go improve those skills?
Oh gosh. This is a very hard question for operations. Marketing, different. Finance, different. Operations, challenging.
So broad, right? It’s operations.
Yeah. There’s no COO school. There’s no COO book. It’s part of why we are kind of a small, but growing, group of the fractionals—like there is a lot more fractional CFOs or outsourced CFOs, marketing, etc. We are like tiny, because if you look at it, it’s about experience to grow as an operations person. So I can give you some resources, but know that you really just need to be willing to try different parts of the firm and let them take a chance on you. So I would take initiative where you’re at, take on extra projects that are on like the back end side of things. Look at maybe some of the business development side of things, the HR side of things, just really start to realize you need to know how every piece runs. That’s the best way. I think there is some more training and intentional understanding of how a firm works if you kind of look at more the firm administrator path, if you want to go there. I would rather hire someone from a firm administration background and experience and grow them into the COO, than a partner who has been doing the accounting side of things. So that’s a great place to go.
A book that I love and many of us use—it’s not enough in my opinion, but it is a great understanding—is the book Traction and the system EOS from Gino Wickman. The book Scaling Up with Vern Harnish is another one. Any of those, like E–Myth is another good understanding. Just like understanding what does it take to have a business that runs. Part of why I have the Fractional COO Collective, and then I do these different round tables, is to be able to help these operational conversations. So I do free round tables once a month, we had it yesterday, for CEOs and COOs and really those operation people who want to learn. And there are CEOs, COOs, fractional, full-time operational people where we dig into a specific issue. It’s free, but I do it because there is no school. And so now what it really is, is about peer mentoring and learning from others. “What are you doing” is the best way to grow into that executive, because there isn’t that school, there isn’t that way to keep growing. So that is part of what I’ve been doing to give back so that we can grow more operational professionals.
It’s interesting you mentioned that we run peer networks at Upstream. And the one that is probably the most active, most growing and most engaged—and that’s not to discount anyone that’s in any of our others if you’re listening to this—is the operations side: it’s operations, it’s HR, it’s L&D, it’s that operations side of the house and the firm. It’s exactly what you said, there’s not a lot of communities out there catered to that. There’s plenty of audit partner or tax partner or manager—like there’s plenty of audit, tax, consulting, CIS, all the different things. Managing partner. Tons of communities. But not a lot of community for that operation side, which I realize everybody wants to talk about the client service side, and yes, we work with a lot of client service professionals. You and I were both on the client service side of firms in our careers. But without the operations side, there is no firm. It does not run the same. Yyou become a bunch of sole proprietors trying to get work done, but you don’t have a firm without operations. So I love the fact that you have that. How can folks find more information out about the Fractional COO Collective and contacting you?
The easiest is through my website, although I’m on LinkedIn, but when your name is Jen Hamilton, there’s like a gazillion. So we can probably share a link. But my website is HamiltonCOOs.com and it really is about empowering the COOs and being able to access that mentorship, that guidance, that support, or sometimes us sitting in that role.
Very good. Jen, thank you so much for your time today. I have really enjoyed this conversation and I. Hope we can have another one perhaps in the future.
Sounds great, Jeremy, thank you so much for having me. It’s been a pleasure.
