Downturn may pay off for IT bosses
- 17 November, 2008 22:00
A budget-busting economic downturn could propel corporate technology chieftains higher up the totem pole, benefiting from fatter pay
packets as businesses view IT as a means to cut costs and boost
Chief information officers outside the financial services sector are
also encouraged to act more like their banking counterparts if they
wish to rank alongside the elite money earners in the sector, who take
home seven-figure remuneration packages each year.
That's the advice from recruitment advisers, who say executives who
run information systems at the country's largest organisations can
turn the credit crisis to their advantage over the next year.
"It is time for CIOs to show how integrated they are with the
business," says EWK International senior partner Marianne Broadbent.
"They will need to be prepared with answers for what to do if the
budget has to be cut, or what opportunities there are for growth. The
best CIOs will be in tune with the levers in the business."
Ambition Technology managing director Andy Cross says that in recent
years the retail sector has demonstrated how the shift in the
behaviour of information systems bosses, and how they're viewed by
their superiors, can play out.
"If you look at the activity at a CIO level and the investment in
technology in retail - globally as well as locally - you will see that
for years and years they didn't address modernisation, whether it was
merchandising, point of sale or fully integrated ERP [enterprise
resource planning]," Cross says.
"Large-scale retailers and some of the medium-sized guys are now
realising that this is the only way they are going to continue to
increase profitability and growth."
That awareness is expected to expand, as businesses in sectors from
mining to transport and manufacturing seek ways to eke out cost
savings across their operations and pursue greater efficiencies.
Experts tip that IT will play a key role in achieving those goals,
elevating the importance of corporate computing bosses.
"The dominant reason is the realisation that if you strip a business
back - whether it's a bank, a mining company or a retailer -
technology runs the business on a day-to-day basis," says Talent2
recruitment specialist Paul Rush.
"If you overlay the strategic importance of the use of technology and
information, and the potential capex [capital expenditure] spend on
technology and information management, then it is a board-level
discussion, whereas five years ago it probably wasn't."
But an Australian Financial Review survey of S&P/ASX 200 companies has
shown that CIOs still have some way to go if they are to scale the
most lofty peaks of the corporate world. Of 200 businesses in the
index, just 26 have an executive with IT responsibilities among their
most richly remunerated managers, and many of these executives also
hold non-technology roles.
The most highly paid was Telstra chief operations officer Greg Winn,
who has overarching responsibility for the telco's multibillion-dollar
IT transformation. He took home $11.2 million last financial year.
The pay packet included a base salary of $1.9 million, a $3.2 million
cash bonus and a $5.7 million bonus linked to technology
transformation and contract fulfilment incentives.
Not in the same league as Winn, but also well remunerated, was former
Westpac Banking Corp IT and operations boss Diane Sias, who picked up
a healthy $3.4 million package for her one and only year in the job.
Other CIOs who received total remuneration worth more than $1 million
include Suncorp's Jeff Smith ($1.3 million), AMP's Lee Barnett ($1.6
million) and Commonwealth Bank of Australia's Michael Harte ($2.7
million). Metcash CIO Bernard Hale scored a spot in the millionaire's
club with a $1.6 million pay packet last financial year, as did Origin
Energy's chief financial officer, Frank Calabria, who earned $1.1
The AFR survey shows that CIOs in the financial services sector
continue to broadly outrank their peers in industries such as mining
Technology companies also tend to have a CIO among their most highly
remunerated executives, and Cross says IT bosses outside finance
should mimic their banking peers if they want higher pay or greater
"You have to be a certain type of person to be pushing into that
sector at the moment," he says.
"It is probably a generalisation, but they are just more switched on
about illustrating their worth in terms of a cost-benefit analysis and
showing the value that IT delivers."
But Cross says chief executives and company boards that want to get
the best performance out of their businesses during an economic
slowdown need to think about whether they should be giving their
technology chiefs a more prominent role and a fatter pay package.
"I think it should be changing," he says. "We have talked for the last
few years about the importance of IT and as we go into this economic
cycle and as people keep reiterating the value of IT as a vehicle for
driving business efficiencies, then you need to have executives up
there in terms of the top remuneration."
Australian Financial Review, Fairfax Business Media