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Published: February 3, 2014
 / Spring 2014 / Issue 74

 
 

How to Break the Cycle of CIO Turnover

Companies benefit from strong IT leaders. The trick is developing and retaining them.

In organizations around the world, new digital tools and technologies are adding efficiencies and enabling new business models. Chief information officers stand at the epicenter of this activity: As keepers of the IT wallet and managers of the firm’s tech-savvy talent, they stand to unlock the competitive advantage of digitization. But with digitization’s promise come challenges for those who manage how it is deployed and used.

To better understand the changing role of the chief information officer, Booz & Company surveyed 60 CIOs of large multinational corporations in a variety of sectors as part of its inaugural CIO Success(ion) Study in late 2013. These CIOs must coordinate an increasingly complicated set of internal and external resources and capabilities; oversee the development of complex new IT-enabled projects on time, on budget, and in a way that delivers the promised business value; and continually assess emerging technologies and solutions. Most important, they need to juggle all this while shaping and pursuing a strategic IT agenda for the business and balancing the inexorable demand for new services and solutions from every part of the organization.

For chief executive officers, the selection and retention of a skilled CIO has never been more critical. At many companies, however, a number of factors—including limited succession planning, the choice of reporting lines, and a lack of buy-in from key stakeholders for major IT projects—can make it difficult for the CIO to perform effectively, leading to a tenure shorter than those of other C-suite executives. Our study results reveal some steps chief executives can take to ensure that their information officers and IT professionals are set up to succeed.

For CEOs, the selection and retention of a skilled CIO has never been as critical as it is now.

The CIOs we surveyed identified certain constraints on their performance, starting with how the role itself is typically filled. About 60 percent of CIOs are recruited externally, the implications of which are unfortunate for ambitious and talented members of any current IT leadership team. Only a third of the CIOs we surveyed reached that position from within their own organization. Worse yet, a number of today’s CIOs who were promoted from within had switched organizations at the level just below CIO in order to be groomed as a successor. This implies that homegrown IT talent is ignored to a certain extent at many companies.

Why They Leave

For those who make it to the top, the situation doesn’t always improve. Our survey shows that many CIOs move from company to company, seemingly more frequently than other top executives, a trend we refer to as “the serial CIO.” About 33 percent of our survey participants were in their first CIO role, 25 percent were in their second, and more than 40 percent had held three or more CIO roles. This suggests that many CIOs don’t see room for advancement (for example, to chief operating officer) at their current organization, and they move on. Indeed, although almost half of our respondents have been in their current CIO position for three to five years, more than 40 percent said they don’t expect to be there beyond another year or two.

Our survey also found that one-third of CIOs are forced out of their jobs. CIO folklore would suggest that the most obvious cause was a failure to deliver day-to-day IT services such as processing transactions and sending email. But in reality, few CIOs have been let go for this reason, perhaps because advances in technology and service management have made major service failures far less common.

According to 70 percent of our respondents, the failure of a major IT project is one of the primary reasons that the tide turns against the CIO. And although failure doesn’t always lead directly to dismissal, the interviews we conducted show that it is often a contributing factor. These projects are typically big-ticket, multiyear, enterprise-wide programs involving new ERP, CRM, or core industry-specific solutions that promise to fundamentally change business performance and improve competitiveness. Unfortunately, such complex projects are often allowed to deteriorate into costly IT-driven systems implementation and replacement initiatives, which lack genuine ownership and buy-in from the business units involved. Seventy percent of our respondents said they inherited these types of programs when they became CIO; they also said that 60 percent of these programs were doomed to fail.

 
 
 
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