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Guns for hire

Guns for hire

A new breed of business executives is filling the void when organisations find themselves without a suitable technology leader. Is their emergence proof that many companies are not doing enough to bring the next generation through?

When Phil Gray left the top technology hot seat at Jones Lang LaSalle in December last year he was able to walk away ¬content in the knowledge that he had ¬completed the main objective of his 15 -month stint. The real estate firm had effectively hired him to replace himself. Gray is one of a new breed of business executives that organisations turn to when things have gone wrong in the information technology department or they've simply been left with no suitable replacement when the chief information officer leaves the company.

After more than a decade in various roles at Qantas that culminated in running the airline's managed IT services, Gray formed his own company, Symbiotic ¬Consulting, three years ago.

These days his LinkedIn page says he specialises in "acting senior executive roles, delivering troubled projects and making outsourcing work".

Since completing his Jones Lang LaSalle engagement, Gray has thrown himself into a new interim CIO role with Veolia Environmental Services. He is charged with transforming the way IT supports current business needs, a project scheduled for completion in March 2011.

"We have to do a large piece of ¬remedial work to earn respect before ¬taking a seat at the table to deliver on an exciting company strategy," he says.

At the same time, he is working to identify a suitable replacement that he can hand control to once the change ¬program has been successfully completed.

As you'd expect with any CIO these days, that person must be able to handle both internal and external relationships, have a certain gravitas and show a flair for communicating in business language. Gray thinks the days of large-scale CIOs being technologists are numbered and that this shift can be clearly seen right across the industry.

"Whether the CIO role is filled by an internal or external candidate is client specific because it often depends on the strength of the current team – but both avenues are usually considered," Gray says. "You want to look at the internal capability and benchmark that against the market and what's required."

One of the beauties of an interim role, he says, is that you have no concern about your own longevity because finding a ¬suitable replacement is one of your key performance metrics.

"One of the challenges with succession planning is that there's always a fear that you are doing yourself out of a job and making yourself expendable if you have a completely trained and capable successor," Gray says. "If they report to you then they are probably cheaper.

"I've worked in organisations where that was a genuinely held fear but the organisations that do it best encourage you make yourself obsolete and step up into another role or step out."

Filling the void

Former Coles Group information chief Peter Mahler has also established himself as a troubleshooter in much the same vein.

He took the IT reins at financial services outfit AXA Asia Pacific Holdings late last year following the departure of long-time CIO Paul Croucher. He is currently working to rebuild the company's IT department after the headcount was reduced by about a third during the global financial crisis.

Prior to that he completed a six-month assignment as the acting CIO for the ¬Australian operations of dairy co-operative Fonterra. This included preparing the company for a major SAP project and ¬identifying a program director capable of leading it. Information services director John Kelvie was appointed in May.

The growing prominence of seasoned interim CIOs like Gray and Mahler poses an obvious question about whether many organisations are doing enough to prepare for when the top IT job becomes vacant.

Andy Cross, managing director of recruitment firm Ambition Technology, says most senior managers he talks to pay lip service to the concept of succession planning but do little to make it happen. "In an ideal world people like to promote from within, and it has become more ¬topical recently because of the difficulties associated with finding good resources, but new CIOs are recruited from within relatively infrequently," he says.

"We are definitely not addressing the skills shortage so if you can develop somebody then you don't need to go to market.

"But there seems to be too big a gap between the CIO and their second-in- ¬command so you could argue that succession planning isn't working effectively.

"It's a great notion but people are too busy to invest time in it, resources have become too stretched [by headcount reductions imposed during the global financial crisis] and people have been too concerned about ¬justifying their own existence to worry about bringing somebody else through."

Even when an organisation has a ¬highly credible internal candidate for a vacant CIO role, Cross says, it will go to the external market "99 per cent of the time" either to explore the possibility of snaring talent from a competitor or to consider somebody from a quite different ¬industry that will bring a fresh perspective.

Recent departures

But he thinks succession planning needs to be given more serious thought.

There have been a number of high-profile CIO departures in the past couple of months but none of the organisations in question appear to have a long-term replacement waiting in the wings.

The local telecommunications industry lost its two most recognisable technology executives with Telstra's John McInerney and Optus's Lawrie Turner both calling it a day. Ashley Lazaro has been unveiled as the acting CIO at Telstra but executive headhunters are scouring the global ¬market for a bigger scalp as the company transforms itself from a networking outfit to one focused on selling media and ¬communications products and services to consumer and business customers.

Optus is undergoing a restructure of its own and has confirmed that the duties of Turner, who left to join Queensland Rail, have been subsumed into those of the technology and products division managing director, Andrew Buay.

In the public sector, the federal Department of the Environment, Water, Heritage and the Arts information chief Peter Woods has ended a seven-year stint as CIO, while the NSW Department of ¬Education and Training's Stephen Wilson took off to join Qantas.

DET's short-term solution to the ¬problem has been to announce that Jim Breen and Maria Claudia Romero will each step up for a six-week spell as acting CIO while it conducts an external search.

Robertson Search partner Paul Rush says the gap between CIOs and their direct reports is usually quite significant – ¬specifically in terms of board interaction and executive presence.

"You can only have so many people presenting board papers, or spending time with the executive, because otherwise you have too many people around the table and a decision never gets made," he explains. "Plus you have the time that it takes to get so many people involved when you are running a business. It's just the nature of the beast."

Rush says a number of organisations have tackled this problem in recent years by creating a relationship management practice that provides an opportunity for more executives to get senior management exposure.

Darryl Warren, CIO at brewer Lion Nathan, brought David Harvey into that relationship management role, for example, and HSBC CIO Brenton Hush joined the bank in a similar capacity. Hush went on to be appointed full-time CIO for the bank's Australia and New Zealand operations two years ago when Chuck Stegan was promoted to an Asia-Pacific role in Hong Kong.

"It's very dependent on the organisation going to a shared service model and on the particular CIO," Robertson Search's Rush says, "A lot embrace succession ¬planning around personal development and investment in people but don't ¬completely let go of the reins to bring a specific individual through."

Gray spent almost 18 months as the leader of relationship management at Qantas in 2005-06, a practice formed three years earlier as part of an ambitious change agenda driven by the airline's chief information officer Fiona Balfour. But he doesn't think it is an ideal stepping stone to a CIO role.

"The experience I gained in terms of the exposure and strategy was more in the actual day job of being the relationship manager than it was in being the practice leader," he says.

A growing problem

Rob Mackinnon, an adviser with business research firm IBRS, says succession ¬planning has become a major issue for many Australian organisations because of an ageing demographic in the existing CIO ranks and the continued focus on driving costs out of the business.

Despite management rhetoric about IT being a business enabler, and C-suite ¬executives expressing a desire to have the CIO at the table when strategic initiatives are in the planning stages, Mackinnon says this is still not happening to any large degree. Nowhere is this more true than in the public sector, he adds, especially at state level where a number of CIOs have voted with their feet.

A common complaint is that the focus of those roles has morphed from business enablement to cost extraction.

"In our practice we see little evidence of serious CIO succession planning," Mackinnon says. " We have observed what I'd refer to as faux succession planning in which a compliance approach is taken to identifying future incumbents. However when the crunch comes and the CIO leaves, many organisations seem to think it wouldn't do any harm to have a good look around for someone that can drive IT and see things with a fresh pair of eyes."

It is not a new problem. Mackinnon's colleague Alan Hansell remembers interviewing the CIOs of 20 large public and private sector organisations about their performance measurement years ago.

Tellingly, he says, not one of them had the need to develop a successor in their criteria. "Organisations typically insist managers, as part of their disaster planning, nominate up to three people they believe could act in their role if they were unavailable," he says. "But this is not ¬succession planning.

"If a CIO is underperforming, it is often assumed by default that his or her team is also failing to meet expectations. This is often the catalyst to look for new blood and is why a member of the previous CIO's team is rarely appointed to the role."

IBRS advises organisations to take a more mature approach to succession ¬planning, first by selecting potential CIOs that can easily be visualised as operating effectively in the executive suite, then by tasking them with activities that allow their potential to be proven.

Mackinnon says he would like to see more effort being put into IT staff development across the board so that good staff can be groomed for the future. He also thinks key staff analyses should be ¬conducted by C-level executives.

"All organisations have key people, whether in IT or otherwise, whose loss would be significant in the event they decided to leave," he says.

"Defensive strategies need to be developed to retain such people. Indeed, based on current technology market activity, now is the time to act – as the balance between supply and demand is beginning to favour sellers rather than buyers."

Plan to succeed

Practising what it preaches, Ambition appointed a dedicated talent acquisition and retention manager last year with a specific focus on how the organisation develops its people.

"It's all about looking at your skills and seeing where the gaps are below you," managing director Cross says.

"People don't always choose to move on – they might become sick or get hit by a bus – so succession planning is part of ¬disaster recovery. You need that plan in every team and every division. It was a lot more in vogue a decade ago but has been given more lip service than real support in more recent times."

The profile of the CIO has been on the rise during the past five years and succession planning is a much bigger problem for technology executives than, for example, those running the financial function of an organisation because the technology role is much more diversified.

Less crossover in roles

"It's another example of the fragmentation that the technology industry has gone through because everybody has such a niche role and key set of deliverables that there really isn't the fat that there was five or 10 years ago," Cross says.

"People aren't crossing over between roles as much as they were, which makes it harder for somebody to step up – even more so last year when it was all about cost and organisations didn't have any fat in terms of responsibilities."

Finding internal candidates that can step up to the top job is particularly ¬challenging at the moment with many organisations assessing the very nature of how they source technology resources as cloud computing threatens to tear traditional models apart.

Growing financial pressures during the past couple of years have also made it a difficult time for a new face to handle pressure from the board.

As a result, it is understandable that many organisations have turned to old hands that have seen it all before. But with highly skilled resources in short supply, organisations that work at grooming the next generation of IT leaders are likely to be well rewarded for their efforts.

Rush says the obvious way for CIOs to improve succession planning is to work with their direct reports and be very open.

"Have the succession plan formalised so you can work with those that are interested and have the capability," he says.

"Create a plan for two people that builds in some risk mitigation if one of them gets another opportunity before you finish the process.

"The hard bit is telling those that don't but you need to be honest with them. Really good CIOs will develop those people internally and lose them to better opportunities elsewhere."

An active approach to succession planning

Mentor potential candidates so they are aware of what they have to do to succeed.

◊ Give them the opportunity to act in the role when you are absent or undertaking higher duties.

◊ Formally assess their performance at the completion of their acting CIO or other relevant assignment.

◊ Encourage them to participate in external programs to develop management and people skills.

◊ Recognise achievements in external programs so they can apply for more challenging roles.

Source: IBRS

Grow that CIO: key points

A new breed of interim CIOs are being appointed by a growing number of organisations. They may or may not be tasked with a major overhaul of IT operations but are expected to find a permanent replacement.

This raises serious questions about whether organisations are doing enough to bring through the next generation of technology talent.

The need for effective succession planning is becoming more acute because of the ageing demographic in the current CIO ranks and the growing focus on driving costs out of business.

It has been particularly difficult for organisations to appoint an inexperienced CIO in the past couple of years because of economic pressures.

The very nature of sourcing technology is also in question as cloud computing threatens to rip up the rule book.

Nevertheless, those who formalise succession plans are likely to reap the benefits in an increasingly tight recruitment market in which key staff need to be retained.

Lend a strong hand to develop future leaders

“Your old road is rapidly ageing,” Bob Dylan proclaimed to the powers that be in 1964.

“Please get out of the new one if you can’t lend your hand,” he sang. Recent experiences have brought to mind that now iconic line – a reminder of how important it is to consider whether you are standing in the way of your successors or offering them a hand.

In the past few weeks, I’ve listened to Bill Clinton deliver a commencement speech to my eldest child and his classmates; completed a half day session on leadership with 10 General Electric company officers, followed by dinner with chief executive officer Jeff Immelt; and led a meeting with the dozen or so physicians who constitute the senior executive corps of the University of Pennsylvania School of Medicine.

I can’t stop thinking about Dylan’s song and wondering how we’re doing on developing a new generation of leaders.

Hard as it may be for those in positions of power to see the world in a new light and embrace it, these managers are trying their best to lend a hand to the next generation.

Smart senior supervisors who want to leave behind a positive legacy will pay attention to these examples, learn from them and follow suit in a way that works in their own organisations.

For decades, GE has been the most prolific net exporter of leadership talent in the corporate world because it has a strong tradition of developing people – supported by the tangible commitment of time and money.

A recent Businessweek article about GE’s efforts was inaccurate in describing the company’s leadership development system as out of step with these digital times.

Look no further than my visit to corporate headquarters for some evidence.

My purpose was to stimulate dialogue and raise provocative questions about what leadership means today and what it should mean in the future.

With the full support of GE chief learning officer Susan Peters, I encountered a readiness to challenge the status quo – to examine leadership not just from the perspective of work but from the perspective of the whole person including family, community and personal life.

This holistic approach was as refreshing as it was inspiring. Taking time “to address the soul,” as one attendee put it, might not have been GE’s philosophy in the past, but, in 2010, recognising that the world has evolved and that a new leadership model is necessary for the people who will run GE in 2020, the current executives at this visionary company are taking important steps to critically evaluate and revise their approach.

The University of Pennsylvania School of Medicine is the site of a study funded by the US National Institutes of Health on the impact of a series of interventions – including, full disclosure, my Total Leadership program – on the careers and lives of talented up-and-coming female faculty in academic medicine. This pioneering project is an extension of remarkable efforts led by the FOCUS program, a initiative dedicated to advancing the careers of female faculty.

We will begin in earnest later this year, but we held a meeting recently to brief the top team on what we are undertaking, and why.

There, senior executives from one of the most tradition bound fields engaged in a practical discussion about how to enable the next generation to experiment with new approaches that align with the demands of their lives beyond work; in other words, to rethink the culture of academic medicine.

Former president Clinton aimed one of his rhetorical arrows at this same target: To his audience of fresh faced graduates, he declared that, as the rising generation, they must focus on creating sustainable change and devising new ways to live and work that are compatible with the needs and interests of their careers, their families and the world around them.

Tomorrow’s leaders need all the help we can give them. Fortunately, there are some wise men and women who recognise this and are dedicating serious effort to exploring innovative ways to prepare these talented rising executives.

I have seen them struggle to figure out a way forward on the new road, and my impressions lead me to be optimistic, despite the enormous resistance inherent in the status quo and the challenges of successfully inventing new forms of organisation that will work better than what we have now.

Is my hope warranted? It depends in part on whether you and your organisation choose to help or hinder. How are you remaking leadership development? MIS Australia

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