When it's time to add a technologist to your slate of executives, what are the best practices to follow?
Over the past decade, the position of chief technology officer has gained a place of prominence at the executive tables of corporations around the world. From tech-centric start-ups to, well, the U.S. government (which appointed its first CTO last year), more organizations are finding that the position is integral to organizational success.
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. How's that different from the role of a CIO? Where a chief information officer 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."
So, roles vary a bit – and so do actual titles. A vice president of engineering or a VP of technology is a CTO without the executive-level title – and, really, any technologist at the head of a large department performs a CTO-like role. That's the case at 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 CTO 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 CTO to impose order can be a good move, Berray says.
Hiring a CTO: Define Your Needs
A new employee – especially a high-ranking hire who will be managing staff, overseeing a budget and reporting to your board of directors – needs to be part of the long-term corporate strategy. If you can visualize where you want to be in five years, one year and even next quarter, it will be significantly more natural to see how a new employee 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 they report 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.
Oftentimes, what a company is looking for in a CTO is an individual who can effectively engineer a new and crucial product, says Dan Woods, CTO and editor of Evolved Media.
"We all as small businessmen take on the role of managing our own portfolio and managing existing technology solutions," he says. "Sometimes, you realize there is the opportunity to build a system that works better for you, and you can't rely on an outside person to build that. That's the time for a CTO."
But before starting the hiring process, it's important to step back and ask whether you actually need to make the significant financial investment of adding a position at the executive level. Ask: is the project you have in mind something the company's current developers are capable of executing? Do you really need another visionary leader capable of overseeing a department, or do you just need a solid technologist? Is it time for your organization to grow, or is it best to stay nimble and outsource new technologies? Remember, hiring a CTO is not a quick fix, it's a long-term strategy that will require an average of 90 to 120 days of the hiring process and even longer to on-board a hire.
Hiring a CTO: Recruit Wisely
If your company is in the position to hire an executive-level technologist, chances are you have ample 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 bunch of candidates you'll need to prepare to spend significant time on calling and networking with current CTOs and engineers, or 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," Teree says. "If you're in the tech business looking for a CTO, it's almost an assumption that you're going to know someone you could play with, or you can get on LinkedIn and network."
Berray, an experienced recruiter of CTOs and CIOs, 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 CTO position if it's located in an odd 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.
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, 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 CTO 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 CTO: 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. " The more you can use abilities to have specific conversations with other CEOs as to what they pay their CTOs, the better off you'll be," Woods says. But, he cautions, 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 CTO'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 CTO: Go the Extra Distance
As with hiring any executive-level position, its important to treat the hiring process as a way to not only grow, but to shape and transform the future of your business. Experts say its important to allocate 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 CTO 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. 'Have the interviews be focused on how the new CTO might approach these goals, the resources they would need, and the troubles they might foresee in achieving those goals."
In addition, you'll want to incorporate behavioral lines of questioning that can help you better understand and analyze the candidate's personality traits. Woods suggests one of the most important traits for a CTO to possess is top-notch communication ability.
"The best ones know that a lot of the people they talk with are not technologists, so they need to be able to escape that world of technology and present a clear model to everyone else," he says.
Of course, each CEO has her or his own standards to meet. For Teree at 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," he 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.
One target area to focus on in CTO interviews is the growing – and occasionally volatile – nature of their trade. Woods says CTOs are often capriciously dismissed for a variety of reasons, from a mismatch of expectations to an abandoned project. Ask for reasoning behind job transitions if the candidate has many, and specifically inquire as to what they could have done better in the position. 'For me it's a warning sign when people can't explain what they should have done better,' Woods says.
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.
In order to ease the transition, because an executive-level hire will likely not have a training program to go through in entering the company, some veterans suggest pairing the new hire with a project manager from the start. The project manager can help the CTO navigate some of your company's intricacies and cultural elements.
Despite that you'll be working closely with your new CTO day in and day out, don't forget to maintain new-employee HR standards, including having a formal progress assessment 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 CTO: Additional Resources
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.
The CTO Handbook/Job Manual: A Wealth of Reference Material and Thought Leadership on What Every Manager Needs to Know to Lead Their Technology Team,by Mark D. Minevich. Aspatore Books, 2004.
Adventures of an IT Leader, by Robert D. Austin, Richard L. Nolan and Shannon O'Donnell. Harvard Business Press, 2009.