In search of the ideal CIO.

Looking for the right person for that top information slot? This recruiter explains which CIOs are winning the top jobs - and who's falling through the cracks.

Asked why their CIOs failed to measure up, senior executives in a recent survey had a long list of complaints. "Our CIO is history," the respondents said, "because he ...

* Was too internally focused and didn't pay attention to markets, customers and competitors.

* Was always reacting; he failed to anticipate problems and opportunities.

* Didn't communicate well with the rest of the business.

* Constantly promised more than his organization could deliver because of the lack of user involvement and buy-in."

This survey shows that while some CIOs are making the transition to business partner, others are still lagging behind in their thinking. If you oversee your company's information-technology area, here's a window into why and how successful CIOs make that transition to business partner, and how that affects functions in the rest of the organization.

Today's CIO is often required to have a bachelor's degree and even a master's degree, and 10 to 20 years' experience is ideal. Hardware-specific experience isn't as important today as it once was, because the technical people underneath the CIO now provide the hardware information. But certain other types of experience, such as telecommunications and multimedia, are becoming much more valuable.

Also, industry-specific experience is very important for CIOs in high-tech, transportation or retail fields. It's very common for someone in high tech or transportation to move up from a CIO position to a senior management position. On the retail side, it's more common for the CIO to advance by assuming additional responsibilities, such as distribution, store management or real estate.

The typical CIO's staff is changing to accommodate new business ideas. In the past, large staffs connoted power for the CIO. Today, a smaller staff that's heavily outsourced allows the CIO to get rid of the mundane and become more of a business partner, and thus a survivor. But outsourcing shrinks the traditional kingdom of the CIO, and the danger here is that the information-technology area can become merely the keeper of the infrastructure.

WHO GETS THE BIG BUCKS?

In 1995, the average U.S. CIO earned $147,000 in total compensation. CIO compensation commonly includes options with one- to three-year vesting, restricted stock with three- to five-year vesting, or stock appreciation rights.

If you categorize CIOs by educational level, you find a 17-percent jump in compensation for a bachelor's degree and 37 percent for an MBA degree. Unfortunately, a doctorate tends to bring reductions, because CIOs with advanced degrees often work for colleges or bio-tech companies, where the pay for CIOs isn't as high. We tell our candidates, "Don't highlight your doctorate if you're applying for a commercial position."

Women are still quite behind on the pay scale, even though they're in the most demand today. Female CIOs make about 21 percent less than men do in equivalent companies for equivalent jobs.

Geography matters, too. A CIO in New York makes about $210,000, while a CIO in Houston earns about $285,000. The big oil companies pay well, because they tie their CIOs into the business. According to our survey results, the salaries of CIOs in the San Francisco area are up 7 percent over salaries in New York City, but the average salaries for the rest of the West Coast are still behind New York's.

The most important compensation factor, however, is still the ability to partner. High-tech manufacturing CIOs who do this successfully make 156 percent more than those who don't. In other manufacturing areas, that figure is 61 percent. Those are big numbers, but that's the premium these executives earn for partnering successfully.

THE RIGHT STUFF

What qualities do these standout CIOs share? Technical ability is a top core competency, but it's really a given - a baseline. The ideal CIO should be able to envision the best way to leverage information technology in terms of the company's weaknesses, strengths, competition and opportunities. A good CIO can communicate inside and outside the company with anyone from the boardroom to the janitorial staff. On the technical side, companies particularly value information executives with experience in outsourcing, the Internet, re-engineering, cycle-time management, total quality management, electronic-data interchange, client-server systems and legacy systems management.

CIOs also have their own wish lists. They want more face-to-face access to the knowledge leaders, and they want the idea of openness at the senior level to be reality, not just a sales pitch. They also want to determine the information that every position needs and then focus on getting it, to establish data management throughout the company as a meaningful and supportive activity and to find a better source of outside expert information on technology and business trends.

The CIO's relationship with the CEO can be critical in achieving these goals. Suppose your CIO has just walked into a new company and wants to start building new relationships. Or he now reports to the CEO or COO instead of you, the CFO. One of his first moves should be establishing a company-wide committee on the strategic use of technology. By chairing it, he gets the frequent access to the CEO he needs.

And he should focus on how he can help peer executives achieve their goals. This is extremely important for CIOs, who often need to establish business credibility among their peers in addition to maintaining their technical expertise. CIOs often find themselves alone in the decision-making process because colleagues don't understand technical matters, and they may also be quick to suspect CIOs of an attraction to technology for its own sake rather than for business reasons.

Therefore, building a reputation for careful, wise planning is one of the tallest challenges CIOs face. Political pressure to invest modestly has induced many CIOs to pursue too lackadaisical a program of technology and infrastructure for improvements. In other words, they're not fighting hard enough all the time to get to the next level.

FAST FORWARD

For the CIO of the future, four main models are emerging. The first is strategic/tactical. Some organizations are bringing in one or more senior technology managers to handle architecture infrastructure and day-to-day operations. Typically the top technology manager reports to or is a peer of the CIO. The CIO usually has a chief telecommunications officer and a chief technology architect reporting to him.

In the internal/external model, one information systems executive focuses on the internal technology needs, while the other looks outward. In this model, the internally focused officer, often the CIO, handles the daily operations, technology infrastructure and the internal architecture. The other executive, often called the chief technology officer, scans the horizon for new business or research and development opportunities. They both report to the CEO or CFO. It's becoming a fairly common structure.

In a third paradigm - technical/ customer service - a chief technology officer deals with the infrastructure, emerging technology and commercial opportunities, while a chief applications officer is in charge of the customer interface and project management. In one multibillion-dollar company, the applications officer is actually the senior officer in his group, rather than the CTO. He's an operating executive who's had full profit-and-loss responsibility in the field and runs a group that's four times the size of the CTO's group.

Recently he was promoted to chief marketing officer. His career track is very relationship-oriented. If you look at this from the CIO perspective, this demonstrates how the lack of people skills and the inability to bring projects in on time and under budget cost the CIO of that company and future chief technical officers their positioning in senior management.

Finally, the dispersed model is five years to 10 years in the future. CEOs and CFOs have become more hands-on. The CEO knows enough about technology to need only a technical advisor, not someone at an officer level, to advise him of new technological developments. Two big food companies come the closest so far to this model. All the MIS functions and the research and development functions report to the CTO. These companies have taken technology away from the financial side and brought it over to the research and development side.

THE VANISHING ACT 

In the future, I predict the CIO position will disappear. If CIOs can't partner, and many are proving they can't, the CFO will step in as the business partner. Already some companies that can't find a CIO from the MIS ranks are looking in the operations and finance areas. In the past, the CIO spoke a language no one else understood. But as officers and users become more competent technologically, the need for a separate information officer will decline, and the CIO's function will get pushed further down into the organization. Only the CIOs who can prove their strategic value in an organization will be left standing.

This article was adapted from a presentation at a recent meeting of FEI's Committee on Finance and Technology (formerly Committee on Information Management).

Mr. Palmlund is a managing partner at Lamalie Amrop International in Dallas. You can reach him at [phone].