How CIOs Became Scapegoats During the Recession

Don Tennant
Slide Show

The Four Futures for IT and CIOs

The end of the year is a requisite time for reflection, and I’ve found myself reflecting on the people whose lives were turned upside down by a recession that since 2009 seems to have taken an especially hard toll on CIOs, and that only this year appears to have ameliorated some. I know quite a few very capable CIOs who were laid off during the recession, and I’ve often wondered why the CIO position took such a substantial hit.

I recently discussed this phenomenon with Martha Heller, co-founder of CIO Magazine’s CIO Executive Council, president of executive recruitment firm Heller Search Associates, and author of the new book, “The CIO Paradox: Battling the Contradictions of IT Leadership.” I asked Heller how those laid-off CIOs are doing now, and she said she thinks for the most part, they’ve been absorbed back into active employment. She also said she thinks they were scapegoated.

What’s so fascinating about the CIO role is that every time there is a change in an economic cycle, it seems CEOs look across the table and say, “Time to swap out our CIO, because we were in growth mode and we were spending a lot of money on IT, but now it’s all about efficiency and budget management. Our guy’s a spender; we need an efficiency person. Before it was business as usual, keeping the lights on; now we need an innovator. We need somebody who’s really going to bring value.” So I feel like the CIOs tend to be scapegoated — all the ills of the company are laid at the feet of the CIO. But that can be to a CIO’s advantage if you’re on the market — if something changes for a company, they’re going to be eager to get a new CIO.

I also asked Heller how companies fared after laying off their CIOs — whether it tended to backfire on them or proved to be a prudent measure — and she said it pretty much backfired on them:

One of the paradoxes I talk about in my book goes like this: As CIO, your many successes are invisible; your few mistakes are highly visible. So if you’re trying to build credibility on something nobody can see — the computers worked today — the CEO needs to make a hard choice about which expensive executive gets the boot. It’s the one whose successes are invisible. But then what happened with all of these layoffs is a lot of times they wound up elevating an IT operations director to the CIO role, but without that title — they kept him as a director. Or the CFO wound up running IT when the CIO was out. What’s happening now is all of a sudden it’s all about technology again — consumer technology, mobility, the cloud, and you’ve got to get innovative again. The company under-invested, and now has to do a major investment just to get up to speed. So it was a matter of cutting off your nose to spite your face. Laying off those CIOs has created a little pit for a lot of those companies that they’re now having to spend a lot of money to climb out of.

So what are CEOs looking for at this point when they’re out to hire a CIO? Heller said they’re looking for CIOs with experience in their particular industry:

We used to say that good technology leadership transcends industry expertise—it doesn’t really matter what your industry background is. If you can run a good IT organization, you can run a good IT organization. I still believe that. But I’m seeing CEOs much more interested in the specific industry background of their CIOs than they used to be. IT is so integrated with the business, the thinking is, “If my new CIO doesn’t have a manufacturing background, and can’t go out and talk to the head of manufacturing operations, can’t talk to our suppliers in that language that we all share, he or she is going to take a longer time to hit the ground running.” So from my perspective as a recruiter, many companies really are focusing more on the industry background of the CIO than they used to. I’ll add another thing: What’s very interesting is it has been a long time since I have done a search for a CIO where they have not actually valued technology experience. We all talk about CIOs who grew up in the business and they moved over to IT, and how important it is to have a business background, because an IT leader is a business person first and an IT leader second. However, I see that happening most often when it’s a trusted business leader who moves over within the company to lead IT. You find less often, unless you’re talking about a really huge company, the CIO coming from the outside as a business leader. I’m finding, in the searches that we do—[companies with revenue] anywhere from $1 billion to $10 billion—those companies still value an IT background in their CIOs. They don’t want them to be technologists, but they do want them to know the ins and outs of living in and running an IT organization.



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