When you need to put your IT house in order, is a chief information officer the right hire?
When you need to put your IT house in order, is a chief information officer the right hire?
When your IT department needs a clear-cut leader, it's natural to consider hiring a chief information officer. That's because the definition of the CIO position has shifted and gained prominence over the past decade as smaller, tech-centric companies opt for hiring a chief technologist with an executive-level title rather than just an IT director or vice president of technology.
As the head of IT, even the title CTO is falling out of fashion. Really, the two positions – CTO and CIO – are almost interchangeable in definition, though they mean very different things depending on what company you ask.
Hiring a CIO: What's in a Name?
The focus of a CTO, a position akin to and occasionally still referred to as "vice president of engineering," is typically to develop and implement new technologies. A CIO, in contrast, is predisposed to solve problems through researching and implementing ready-made technologies. A CTO generally works to develop new technology solutions. Where a CIO may, for example, manage in-house technology such as an IT department, a CTO's role is typically more outward-facing, according to Tom Berray, a managing partner at Cabot Consultants, an executive search firm based in Virginia.
"As a general rule, CIOs are more internally focused while CTOs are more focused on working on products for external clients," Berray says. "That said, there are nuances. Some companies have a CTO focused on operations under the CIO. Others have the CTO as the top person for technology at the company and the CIO reports to that person regarding internal systems."
In 2008, according to a study by CIO magazine called "State of the CIO," 60 percent of U.S. heads of their company's IT department surveyed had the title CIO. That's the highest percent in the survey's history. Comparatively, 11 percent had a VP title, and 4 percent were CTOs.
So, roles vary a bit – and so do actual titles. A vice president of engineering or a VP of technology is a CTO/CIO without the executive-level title – and, really, any technologist at the head of a large department performs a similar role. That's the case at San Francisco-based Ticketfly, the ticket-sales firm founded two years ago by Dan Teree and Andrew Dreskin. "In a start-up context, bands are formed sometimes by happenstance, and my head of engineering absolutely acts as the CTO," Teree says. "We are not big on titles here but make no mistake, he is the guy in charge."
So when is it time to add a CIO to your roster—or to dole out that exalted title? For tech-oriented start-ups, the answer might be from Day One. For existing companies, the moment you begin to have multiple lines of business and staff based in offices across different time zones, hiring a CIO to impose order can be a good move, Berray says.
Hiring a CIO: Define Your Needs
While it's true that any new employee needs to be part of the long-term corporate strategy, that couldn't be more important than when hiring an executive teammate. Visualizing where you want to be in five years, one year, and even next quarter, will be critical to see how a new CIO fits into that matrix.
The cleanest way to plot out that role is through a well-crafted, future-oriented job description, which can be the single step that begins the hiring process – and makes it simpler, from start to finish.
The basics of a solid job description include title, to whom the position reports (here, it's the CEO and board of directors) and a summary of the position and bullet-pointed specific job duties. For a more thorough document, add names and positions of colleagues that position will work with closely and minimum qualifications.
Even if you do not include them in a description, executive search experts advise thinking specifically about what accomplishments your ideal candidate should have – say, overseeing the creation of a technology parallel to what your company currently needs or managing a team of developers that has grown a technical company as much as you'd like to grow. Remember, for any executive-level position, you need not only be searching for someone with education, qualifications and who's a good match personally, but also someone with a proven track record of growth success.
Because the role of a CIO can vary from company to company, you'll want to assess which departments of your organization the CIO should oversee – whether it's just the IT department or also aspects of the research and development department. Also, ask yourself whether you want to allow some flexibility in hiring based on the strengths of your best candidates.
Hiring a CIO: Recruit Wisely
If your company is in the position to hire a CIO, chances are you have a significant budget for doing so. If that's the case, have you also budgeted for the time and energy it will take to find an ideal hire?
Because most top candidates from related fields are likely entrenched in great jobs already, they're unlikely to be trolling job-posting sites. To reach out to a qualified group of candidates you'll need to prepare to spend significant time on calling and networking with peer CEOs and COOs who oversee and hire for the CIO position – and finding current IT directors in your professional network who might be prime candidates for a leadership position. The other option is to fork over what can be a large fee to enlist the help of an executive search firm.
"You could use a search company, but a lot of start-ups don't have that 20 percent to spend on a head-hunter," says Teree.
Berray, an experienced executive recruiter, says his firm rarely turns online for finding executive-level candidates, due to the daunting task of weeding through "hundreds if not thousands of responses – and getting a lot of irrelevant stuff."
There are exceptions, though. He recommends posting a CIO position online if it's located in a remote geographic area or is in a field different from the one you'd like to hire from. "If you're looking for some cross-industry pollination – if you're open to some people you wouldn't normally think of, it could work," he says.
If you do decide to post a job listing online, let the job description you've already crafted be your guide. Include minimal qualifications, educational background, relevant fields of previous work, and what sort of a track record you're looking for.
For CIOs, you'll want someone who's a demonstrated great leader with a perceptive nature and great business sense. That's on top of being a tech whiz with a knack for profitability. Minimizing cost while maximizing results of technology - be it back-end programming or front-end product distribution – can be a big focus of the CIO's job.
You must also consider how to convey what kind of candidate will be a strong cultural fit. Performance-management expert Jamie Resker, president of Employee Performance Solutions in Boston, suggests looking for characteristics that already exist in your office. "It's not an exact science, but you want to find out whether this person is going to be a good fit culturally in the office is important," she says. "For that, you just need to tap into the best qualities your existing employees share."
If you fear getting a flood of applicants, listing a salary could narrow the pool. Otherwise, experts suggest it is not necessary, and is highly variable at the executive level. With the listing complete, post to your company website, and supplement that with listings in targeted trade publications and specialized media and postings on online job sites.
Hiring a CIO: Be Competitive
In order to attract top candidates, you'll need to offer a competitive salary. Searching competitors' job listings can be a useful means of finding that industry information if you aren't in the position to purchase salary study information or work with a firm that conducts compensation research. Other simple sources of information can be PayScale.com and Salary.com – and they adjust for geographical inequalities in pay.
Some executive search firms offer compensation data and recommendations based on candidates' experience and qualifications. Another way to gauge salary norms for technology executives in your area is basic networking. Woods cautions that, salary demands from a candidate will likely match their individual experience and track record, so be prepared to pay more for someone who has overseen repeated successful growth.
If you're still unsure, it's perfectly acceptable to ask applicants about their salary expectations, including whether they expect additional bonus or incentive compensations. It's also worth asking what sort of salaries the candidate expects for his or her staff.
And don't ignore the power of benefits to affect a CIO's decision to join your company. In small companies, benefits send important signals about the culture and company's stability. "If you're like Google and have incredible benefits, then you might not need to pay that much. But if you don't offer health insurance, you might need to pay more," Matuson said.
Hiring a CIO: Go the Extra Distance
As with hiring any executive-level position, it is important to treat the hiring process as a way to not only grow, but also to shape and transform the future of your business. Experts say its important to adequate time for a search, and to recognize that the interview process is far more complex than it would be when hiring a junior-level employee.
"The hire is going to be so important to the cultural fit and the personal chemistry on an executive level,' Berray says. 'After [a search firm or the company itself has] done the vetting, sitting down one-on-one with the CEO should really be the first step.'
Berray suggests bringing in the applicant again for a first-round of interviews with the CEO and possibly the chair of the board. The second round would include any peer executives, and a third round of interviews could take place with anyone who would report to the new CIO as well as additional members of the board of directors.
When you're looking to seal the deal, consider doing it out of the office in a more casual environment, such as a restaurant.
The meat and bones of these interviews should examine the candidate's skill set, social skills and other qualifications. 'One way you can help understand who is going to work for you best is have a clear statement of your goals for the short-, medium-, and long-term,' Woods says.
In addition, you'll want to incorporate behavioral lines of questioning that can help you better understand and analyze the candidate's personality traits.
Of course, each CEO has her or his own standards to meet. For Teree and Ticketfly, new hires should be genuinely interested in music, ticket sales, and the technological infrastructure that goes into the operation.
"You want people who really dig it," Teree says. "Just as you don't want an architect who loves modern homes rebuilding an old Victorian, people are going to be at the end of the day more productive if they like what they are building."
And, on the flip side, they should not be in it for just a good "next step" or resume-builder. "I'm always wary of people who are looking for titles," he says. If your company is also not keen on cushy titles, consider the core roles of the CIO you are hiring, and consider proposing the position be called an IT "manager" or "director" or simply be given a VP title.
Checking a candidate's references is the most overlooked part of the hiring practice, but experts say it is absolutely essential, even at the executive level. Many employers also ask that applicants agree to credit-history checks and pre-employment drug screenings; those are optional, and often depend on vocation.
Of three references, have a phone conversation with at least two, and pay attention to the tone of a reference's recommendation, not just its content. Most people feel that it is not wise to hamper future employment for a past employee or coworker, so savvy references won't say anything negative. One tip: Leave a voicemail message that says, "I would appreciate a call back only if you feel this candidate is exceptional." If a reference truly believes in the candidate, he or she will return the call quickly. If you do not hear back from them, you can read into that, too.
"I work hard to find someone who worked with the particular person, but who wasn't their recommended reference," says Ellen Rudnick, the executive director of the Polsky Center for Entrepreneurship at the University of Chicago Booth School of Business. "Through one or two phone calls, you can usually track somebody down to get an unbiased opinion."
When you have an ideal candidate with whom you can agree on a salary and benefit package, begin the on-boarding process as quickly as possible, because helping the new executive become acclimated to your business, its culture, and its standard procedures can be a lengthy process.
Despite that you'll be working closely with your new CIO day in and day out and the person will be functioning as a near parallel executive, don't forget to maintain standards of having a formal assessment of their progress two or three months after their start date. Take time every few months at least for the first year to allow for questions from them on expectations and review any problems they might be having on projects or in the position.
Hiring a CIO: Additional Resources
The Real Business of IT: How CIOs Create and Communicate Value, by Richard Hunter and George Westerman. Harvard Business Press, 2009.
IT Savvy: What Top Executives Must Know to Go from Pain to Gain, by Peter Weill and Jeanne W. Ross. Harvard Business Press, 2009.
World Class IT: Why Businesses Succeed When IT Triumphs, by Peter A. High. Wiley, 2009.
Breakthrough! Exploding the Production of Experienced Recruiters, by Steven M. Finkel. 2008.
Hire With Your Head: Using Performance-Based Hiring to Build Great Teams, by Lou Adler. Wiley, 2007.