CIO succession: Promote from within vs. hire an outsider

If you hire a CIO from outside the company, be prepared for fallout

Choosing a CIO is an important and potentially divisive decision. Many companies prefer to promote an internal IT candidate, but it's not always possible. Tapping an outsider can bring fresh perspective and experience to the CIO's office, but it also can have a negative effect on companies' efforts to develop IT management talent internally.

"You couldn't find a more polarizing topic," says Jack Cullen, president of IT staffing specialist Modis, of the insider/outsider hiring debate.

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In Cullen's experience, companies lean toward trying to hire from within. "In many cases, there's already a laid-out career path for people and a CIO's successor is being groomed," he says. "Often a CIO has a succession plan not only for himself but also for his leadership team."

Succession planning is critical, particularly since the average tenure of a CIO isn't terribly long. Management consulting firm Janco Associates reports that the median job tenure for a CIO is four years and two months.

Survey data from the Society for Information Management (SIM) finds greater longevity, but only recently. In 2012, CIOs said they've had their jobs for six years on average, up from 4.5 years in 2011 and 5.1 years in 2010. Over the last seven years, the average tenure of a CIO was 4.6 years, according to SIM.

Yet despite fairly predictable turnover, many CIO succession plans are inadequate. A majority of IT leaders haven't considered what will happen and who will fill their shoes if they're suddenly unable to work, according to Robert Half Technology.

More than three-quarters (79%) of CIOs polled by the technology staffing firm said they haven't identified a successor in the event they had to stop working unexpectedly. Just 20% of the 1,400 CIOs have a successor in place, and the remaining 1% are unsure.

That may be changing, however.

"As we've come out of the recession and as companies have started reinvesting in their HR departments, succession planning has become an important topic," Cullen says. "Loss of key talent costs companies lots of money. We're seeing much more attention at all levels being paid to succession planning."

The domino effect

Fairly predictable CIO turnover and a stronger focus on succession planning have inspired many companies to build a strong IT leadership bench.

"We know that CIOs move on, and that role becomes created again. In many cases, companies lay out a career path that they use to retain quality people," Cullen says.

There's a lot of upside to that approach and the loyalty it fosters. "Companies that can say they promote from within are typically companies that career-minded individuals want to work at," Cullen says. "If you make that hire from within, it helps you retain other key people."

On the flip side, there's a domino effect to consider. Passing over an internal candidate can put a company at risk not only of losing that candidate but also the team members who report to him or her.

Sometimes, it makes sense to look outside the organization. A company may not have confidence that an internal candidate is ready for the CIO job. Or a company may believe the IT organization needs a significant overhaul and a new leader to execute a new direction.

The decision to hire a CIO from outside the company could be fueled by another executive change: a new CEO. If a new CEO is brought in to make big changes at a company, that often means replacing other senior executives, including the CIO, Cullen says.

Regardless of whether a new CIO is chosen from within the ranks or outside, it's critical that companies maintain lines of communication with any internal candidates who were passed over for the job. Internal candidates need to understand what comes next and how to maintain their career trajectory.

"Those people want to know, 'Am I never going to get this? Or are there things I need to work on so that if this position opens up again, I have a shot?'" Cullen says. "There's got to be very clear conversations with an individual who's passed over. They're going to move on unless they see some other types of opportunities that make it worth staying."

Poor communication can lead to more turnovers -- which sometimes is just what new tech leadership intends. "Some companies want people to leave so they can completely change the entire department," Cullen says. "If that's not the case, then you have to pay attention to people who were interested in the opportunity but didn't get it."

Ann Bednarz covers IT careers, outsourcing and Internet culture for Network World. Follow Ann on Twitter at @annbednarz and check out her blog, Occupational Hazards. Her e-mail address is abednarz@nww.com.

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