WSJ: Corporate Tech Leaders Get Back to Basics
Recruiters say companies are looking for incoming CIOs to focus more on efficiency, cost savings and tech fundamentals
“It’s all about balancing priorities across both keeping the lights on, as well as new innovations, in order to support business needs,” said Sharmeelee Bala, Chief Information Officer at JCPenney. Photo: Krisztian Bocsi/Bloomberg News
The era of the unicorn chief information officer is over, executive recruiters say. Many companies are now looking for IT chiefs who can deliver on the basics—including uptime, security and cost optimization—rather than tremendous innovators who can push boundaries and drive major change.
To blame are tighter budgets, lower appetite for risk and a realization that some companies haven’t done a great job of keeping their foundational IT investments in order in the first place, recruiters said. The shift is a natural symptom of the economic cycle, they said.
In line with the conservative approach, salaries for the CIO role are growing at a slower rate than they have in the past, with median CIO salaries up 10% between 2021 and 2022, compared with 21% between 2020 and 2021, according to staffing firm Mondo, an Addison Group Company.
“The war for talent where organizations would pay nearly anything for an innovative CIO has slowed,” said Dennis Baden, global managing partner of the technology officers practice at Heidrick & Struggles International Inc., who said also he’s seeing clients pull back on innovation labs and other costly investments.
“Many of the aspirational goals are being reconsidered, and rightly so—it’s forcing organizations to figure out how to get the basics right,” said Paul Groce, partner and CIO Practice Leader at executive search firm Leathwaite. “There’s a certain amount of realism that’s entered the conversation.”
During the late 2010s, the CIO role grew in scope and responsibility as tech chiefs moved from the back office to strategic decision makers—a shift that was accelerated by Covid. Companies at the time were looking for innovative change agents who could lead ambitious digital transformations and use analytics to drive profits. They were also splashing out huge costs to secure that CIO talent.
But in some cases, they were “out over their skis,” chasing the shiny new object without ensuring that proper IT basics were in place, said Mr. Groce, like rolling out next-generation analytics tools while ignoring proper data collection fundamentals. Mr. Groce said he would sometimes send candidates out on interviews who would report back: “They’re looking for people to change the world but they’re still operating like it’s the 80s.”
Greg Beltzer, head of technology at RBC Wealth Management, said that during the time he saw large investments go into the development of new and innovative customer-facing features and products, and less investment go into more basic middle and back office core system upgrades.
The point that some companies hadn’t put enough time, focus or investment dollars into those core systems was driven home during the holidays when a breakdown in Southwest Airlines’s crew-scheduling technology, which was due for a major overhaul, stranded thousands of passengers during one of the busiest travel weeks of the year.
Today, the priorities are shifting, said Mr. Beltzer. Recent market events have put greater awareness on the criticality of the basics that might have been looked over in the past, he said. Even in the last six weeks, in financial services, he said, he’s seen a bigger focus on security, safety and hardening infrastructure.
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“I’ve seen a lot more of those conversations vs. ‘when are you going to have this functionality or that functionality?’” he said.
“If there’s a market event, can I handle all of my clients logging in at once and looking at their balances? Things like that I think people took for granted in the past,” he said.
Mr. Groce said there is also less movement in the market for CIO talent, and he has found it more challenging to get senior executives to consider leaving solid, stable roles. “No one wants to be last in with the recession looming,” he said.
Craig Stephenson, Korn Ferry senior client partner and managing director, North America CIO/CTO Practice said he is seeing a greater focus on CIOs with experience in resiliency and business continuity. In part that’s because of the economy, he said, but it is also partly due to core business operations’ growing reliance on technology.
For incoming CIO candidates, Ash Athawale, a managing director for Robert Half’s Executive Search practice said he sees a greater focus on security, privacy and doing more with less.
“Transformation helps businesses and their customers, but there is not an unlimited amount that companies want to spend,” said Mr. Athawale, who added the stakes for falling victim to a cyberattack are much higher than the stakes for not innovating fast enough.
“In a tighter economy, the balance may need to lean to ensuring the core operations and foundational digital investments are reliable and current as there is less room for failure,” said Scott McKenna, Chief Information Officer of Nova Scotia Health & IWK Health. But he also added, “Keeping a lens on innovation in the industry needs to continue to happen in order to stay competitive.”
“You have to start with a strong foundation,” said Sharmeelee Bala, Chief Information Officer at JCPenney. “That said, it’s all about balancing priorities across both keeping the lights on, as well as new innovations, in order to support business needs.”
This article was written by Isabelle Bousquette and originally published on wsj.com.