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Succession planning

Succession planning

Unless today's CIOs take the time now to invest in tomorrow's leaders, what looms ahead is a potential leadership void that threatens the value proposition of IT, the legacy of the profession and the very health of business and the overall economy.

Barbra Cooper started as a CIO when the position was still called "VP of IS". In her more than 30 years in IT, she's seen the role become ever more strategic. Until now the CIO is in the unique position of being the C-level officer who can "see across the entire enterprise."

The CIO for Toyota Motor Sales USA thinks tomorrow's CIOs will be even more strategic and influential. But Cooper also worries about the future business and technology changes they face. "The next 10 to 20 years are going to be challenging," she says. As she talks about the challenges that lie ahead, the question arises: Where will the IT leaders come from to tackle them?

It's a question more and more IT executives are asking themselves. CIOs are moving up and out. The first full-career CIO generation is beginning to retire. Others are increasingly taking on broader responsibilities or moving out of IT and into other business leadership roles as the position evolves beyond its technology roots. In fact, the 2008 State of the CIO report found that 56 per cent of CIOs surveyed say long-term strategic thinking and planning is the executive leadership skill most critical in their current role, followed by collaboration and influence (47 per cent) and expertise running IT (39 per cent).

At the same time, many CIOs don't know who would lead IT if they left tomorrow. When you consider that just 17 percent of respondents to the State of the CIO survey cited people development as a critical leadership competency, that's not surprising.

Demographic factors are also at play. The Baby Boomers are bowing out: the first ones reach retirement age in 2011. Fewer young people are pursuing IT careers.

The skills to be CIO have also changed as the role has shifted from technologist to business strategist. It used to be that "we could afford to let the business tell us what they wanted us to do, be good at delivering it and keep our jobs," says Cooper. "Now, the physics and velocity of business and its demands mean you can't afford to wait until something happens."

Indeed, CEOs now look to the CIO to act more as a strategic business leader and less as a function head. TAC Worldwide CEO Robert Badavas says he seldom speaks about technology with his CIO; instead the two talk about "shaping the business value to our clients," he says. To be successful, he notes, the CIO needs to understand the value proposition of the business. "By staying in the silo of technology, HR, accounting or any other," says Badavas, "you're not going to be as valuable to the business." Or to the CEO.

With all that in mind, CIOs today must groom not only competent replacements for themselves but also next-generation IT leaders who are "business ready" and able to succeed in a more IT-intense and integral business environment, say leadership specialists.

"There's a skills gap that's been identified between CIO and one or two levels down," says Harvey Koeppel, executive director of the Center for CIO Leadership, which is funded by IBM. He points to managing talent, business process transformation and cross-organisation leadership as skills that CIOs need to develop in their staff.

Future IT leaders know they need these skills to ascend the ranks. The ability to manage up, build relationships and understand business strategy were deemed critical for professional advancement in a survey of the winners of the 2008 Ones to Watch award, presented annually by CIO magazine and the CIO Executive Council, to recognize IT's rising stars and the CIOs who've nurtured them.

Unless today's CIOs take the time now to invest in tomorrow's leaders, what looms ahead is a potential leadership void that threatens the value proposition of IT, the legacy of the profession and the very health of business and the overall economy.

The Dimensions of the Challenge

CIOs need to figure out the future of IT leadership in an industry where the future seems to change every day. "IT's relationship with the business is changing, and in ten years the job you do today won't be the same as you do then," says Phil Murphy, a principal analyst at Forrester Research.

Business is now digital-no company can run without effective technology strategies. Those that truly manage their information well really do gain advantages over the competition. That means effective CIOs have a seat at the head table.

The shift in business expectations means that CIOs have better job security than in the past. But it also takes longer to find good ones with the right mix of business and technical know-how. For example, Pete Walton is in his second stint as CIO at Hess Corp. The petroleum products company coaxed him out of retirement in 2005 when its CIO at that time left. Hess was wanted someone who could take its Information Services "to the next level," says Walton. Among other things, that meant finding a new IT leader who could "fuse with the business" and create a culture of innovation.

"CEOs want someone who's business savvy and can figure out how you can use technology for the business. Trying to find that hybrid person is hard," says Diane S. Wallace, CIO for the state of Connecticut and a judge for the 2008 Ones to Watch awards.

It will only get harder to find them, just for demographic reasons.

"We have this triple threat of labor shortage: The Boomers are retiring, young people are not going into IT and fewer people are getting degrees," says Robert D. Scott, who in February retired as Procter & Gamble's vice president of Global Business Services. Scott says he noticed a drop in IT interest during the technology bubble of the late 1990s. Then the rush to outsourcing created a cloud around U.S. IT jobs. That pall persists despite strong job growth in IT, which is expected to add more than 200,000 jobs by 2016, according to the Bureau of Labor Statistics.

P&G is a case in point. It outsourced about half its IT staff in 2003, but IT employment is now back to the level it was five years ago. Scott says that this is because the company outsourced its commodity IT, and "internal IT moved up the food chain, and is creating more and more business value."

Scott says P&G continues to attract strong candidates for IT jobs. But the hiring pool is not as deep as in years past. Plus, P&G believes strongly in promoting people steeped in its culture. It worries about keeping its Generation Y employees. The triple threat is already creating an IT brain drain. Wallace says 40 percent of her staff of 518 will be eligible for retirement in the next two to three years. Barbara A. White, CIO and associate provost at the University of Georgia, says she's lost 90 years of experience in April when three staff members retired, and has a bulge of staff likely to retire in the next 10 years.

The situation facing IT reminds Jonathan Kass of his days in the aerospace industry. Kass, vice president of operations and CIO at Veterinary Pet Insurance Co., started his career as an aerospace engineer in the 1980s. As a new hire, he found that he was mostly reporting to people in their 40s and 50s. An entire generation of leaders was MIA, their ranks thinned by the layoffs that swept the industry in the 1970s to mid 1980s. Kass sees the same phenomenon emerging in IT in the wake of the job insecurity sparked by outsourcing. And he worries about what it means for fast-growing companies like his own that need strong leaders at all levels to innovate and compete. "You're talking about hiring very junior people who won't be ready for leadership," he says.

How can today's CIOs help their companies bridge this leadership gap? There are ways to cultivate the next generation of leaders. But it takes dedication to managing people, not just information.

Nothing succeeds like succession

Toyota's Cooper is dedicating time to prepare her organisation for the future. That future includes being as proactive as possible, staying ahead of the business needs. It also means a commitment to active succession planning.

Two years ago, Cooper sat down for 90 minutes with each of the direct reports of her direct reports, 27 people in total. Each meeting was an open coaching session structured around her ideas of what IT leaders will need to be in 10 years. She then crafted a 3 to 4 page letter for each team member, detailing the capabilities she wanted them to develop and a plan for showing how they were achieving them. Her direct reports received a summary of what she sent to their reports.

Cooper didn't stop there. She's pushing her senior management team to hold similar leadership coaching sessions with their staff. She herself has fireside chats twice a quarter with the next tier of managers, bringing in five or six of them at a time to talk about management challenges and the need to think strategically about business and IT.

She also rotates high-potential IT staff into the business, to prime them for a broader understanding of the company. She sends them for training, both internally and externally, such as to Boston University's "Pocket MBA for CIOs" and Gartner Group's CIO boot camps.

Cooper says she spends about 30 percent of her time on coaching and mentoring. But Cooper believes it's been worth it. "It's subjective...but I think the quality of decision making and general performance is quite improved," she says. By the same token, Cooper adds that "if someone had done this for me when I was early in my career, and I had insight into how much work I still had to do or what my strengths were, that would've been a huge thing."

Mentor early - and often

Getting attention early in his career was a boon for VPI's Kass. "I've had the benefit of really solid managers who took an interest in me," he says.

Kass became VPI's CIO in October 2005 after 10 years at PacifiCare Behavioral Health. There, he worked in a variety of IT jobs under then-CIO Kerry J. Matsumoto. Matsumoto delegated aggressively. He gave Kass opportunities to do planning, budgeting, forecasting and eventually to function in many ways as the CIO. Matsumoto developed this leadership approach after working for a CEO who believed strongly in coaching and mentoring, and who had sent teams including Matsumoto to the Center for Creative Leadership. There, Matsumoto learned to do things like 360-degree performance reviews, where he would interview peers, direct reports and business-side workers as part of the process of preparing his employee reviews.

"I coach all my direct reports," says Matsumoto, now CIO at Caremore Health Plan. "Sometimes you're coaching them to get rid of something they didn't do well. In Jonathan's case it was mentoring-coaching to get him to the next step."

Kass found Matsumoto's 360-degree reviews extremely helpful, and he has adopted them as a way to cultivate leadership among his own workers. He also has followed Matsumoto's practice of heavy delegating. Kass says he pushes whatever he can down as far as it can go within his 40-person staff-administrative tasks, strategy committee roles, decision making, even budget planning, because it gives IT people a sense of how the business makes decisions, and it helps them to become business people themselves.

Delegating is also an effective tool in recruiting, Kass says. He can't tell potential hires that they'll only be working on cutting-edge projects, "But if you say, 'no position is isolated-you'll see how technology helps get jobs done in all aspects of business, and you'll be as involved as you want to be,'" it can help seal the deal.

He confesses that his direct reports sometimes would rather he didn't push things down as far as he does. But, says Kass, "Leadership's job is to groom that next generation. If you're not doing it, you won't get there." "Mentoring is a vital aspect of human capital development. It provides value to both the mentor and the mentee," agrees Koeppel, of the Center for CIO Leadership.

Follow the leader

Barbara A. White, the CIO and associate provost at the University of Georgia, is addressing the potential leadership gap in her IT department using a variety of strategies, such as a mentoring program. The program includes a mentorship committee, handbook and identified 'mentors' to assist middle managers. White calls the program a powerful tool to improve performance, retention, morale, and career progression.

Another tactic that is in the planning stages is the creation of a shadow program, where IT staff can follow White and other senior IT managers to get a sense of what it's like to be in a leadership role. She got the idea when she was CIO at the University of Utah, where the school's president had a shadow program.T"A lot of people on my staff don't know what a CIO does," she says. In the shadow program, potential leaders will get to follow her for a day or two, perhaps once a month, to see what her job is really like. They'll also follow her senior managers. Thus, they'll see different parts of the IT puzzle. "It goes back to this whole issue of building the staff, the level of expertise, of keeping good people. We have quite a few people who want to move on to the next level, and we need to help them better understand the organisation," White says. "Shadowing is an absolutely valid approach" to developing a new type of leader, says Forrester's Phil Murphy.

Create a fast track

Procter & Gamble has a corporate culture that promotes from within. But it saw that good technical talent was getting harder to keep, and it also understood that Gen Y employees expect to change companies frequently. To combat both challenges, it blazed a new, faster IT career path for its younger workers. IT leadership adopted an accelerated development program, as a part of the career path, says Scott. It would place a new set of top performers in a Career Executive Development Program, designed to provide them exposure to high-level IT executives and assignments to help accelerate their growth. It comes with one caveat: if you don't perform, you'll be looking for another employer. It's a modified version of what's in place in the company's fabled brand management department.

"We wanted to signal that we were very serious about growing people, and were willing to invest extra time and energy" in them, he says. The program is only two years old and is too new to have clear results (no one, for instance, has been asked to leave yet).

P&G also created what it calls "The CIO Circle," which rewards long-time IT people who have mastered an area of technical expertise. This "master's" designation allows P&G to acknowledge their status as knowledge leaders even if they are not on the management track. Rewards programs encourage employee loyalty, says Laurie Orlov, a consultant and principal of LMO Insight. Fast track development in particular should help companies cultivate Gen Y leaders. And with so much training and management exposure, they have every reason to stay, she says.

Make room at the top

CIOs who are serious about developing leaders in their group have to be willing to invest time in their people and to give them opportunities to grow, even if that means letting them fail sometimes. It might also mean getting out of their way when the time comes.

Hess Corp.'s Walton says that his goal at all of his jobs has been to identify and develop replacements for himself. "You do that by creating opportunities for them, you make them look like leadership heroes in the eyes of their business and let them take all the glory," says Walton, who is 63 and retired from Hess for the second time last month after the company named Jeff Steinhorn, who served under Walton, as its new CIO.

Like most CIOs who aim to develop their staff, Walton has used a multipronged strategy for helping people along-he mentors, he provides role models and he moves staff into new opportunities. He invests heavily in education-selected top managers were sent to a Harvard Business School executive program, and IT has two memberships to the BSG Concours Group, a strategy and executive education firm.

He sees the coming leadership challenge as a plus, not a minus.

"There is a gap, but it's an exciting one to fill," says Walton. For one thing, he thinks the blend of experience and technical savvy available when you mix Baby Boomers and Gen Y is a powerful one for companies that work to bring these generations together. He is talking with Hess about how to do it and may want to take on such a role in the future. But now that a new IT leader is in place at Hess, he can relax for a bit. "I'm going to get my handicap down," he says.

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