The cost of short-term CIOs

Back in the June 10, 1996, issue of Computerworld U.S., I first reported on the average longevity of CIOs in their jobs. Based on comparisons between 1994 and 1995, I calculated the one-year turnover rate for CIOs to be 24 per cent, which translated into an average job-tenure expectancy of 25 to 28 months.

Those estimates were widely quoted in many articles by authors who arrived at various conclusions about the significance of my numbers. One author believed that the rapid turnover rate offered telling evidence that future CEOs were groomed for advancement by passing through a brief tour of duty in the CIO position. Others saw it as proof of the persistent failure by top management to understand the performance requirements for the CIO job. Frequent swapping of people in and out of the CIO position was seen elsewhere as an example of managerial confusion about the rising importance of information economics.

To my best knowledge, there have been no published studies of CIO turnover in the eight years since. The time seems ripe to check whether the CIO position has acquired greater permanence as IT budgets have more than doubled.

In press reports, 244 companies identified the names of their CIOs both in 2002 and in 2003. Fifty-one CIO names were different from one year to another, offering an individually verified one-year attrition rate of 21 per cent. However, the press also mentioned 111 CIOs in 2002 who didn’t reappear in 2003. There were also 100 CIOs listed in 2003 who escaped press attention in 2002. If we assume — and from my experience, it’s a safe assumption — that about half of these unidentified CIOs left their jobs in the interim, the one-year attrition rate climbs to 34 per cent.

The best way to interpret the attrition numbers is to calculate the time it takes until only half of the original CIOs remain in their positions. Using the 21 per cent attrition rate, there will be only 79 CIOs left out of 100 after a 12-month interval. After 24 months, there will be only 62 left. Half of the CIOs will thus be gone in 35 months. Using the 34 per cent estimated attrition rate, there would be only 66 CIOs left after 12 months. Half of the CIOs would be gone after 21 months.

There is no way of telling whether the half-life of the estimated CIO population of well over 2,000 is 20 or 35 months. Based on the only data available to the public, one can assume that the number is somewhere between the two time periods and not much different from what it was in 1994/1995.

I take this view because the sources of my information — the IT press — favour stories about CIO winners and therefore offer a positively biased view about CIOs who may be enjoying management’s favours. Such a bias would tend to shift the actual life expectancy closer to the most conservative estimate of 21 months because the CIO loser would never get the attention from the press, whether he was coming or going.

I find these observations worrisome, in the same way that I did in 1996. The CIO’s role is to guide the development, preservation, security and enhancement of a company’s information assets. Such assets now exceed in value the financial assets that are guarded by the CFO establishment, which must comply with a long list of precedents, regulations and public scrutiny.

The only way to compensate for the absence of such consistency in policy and precedent is to put in place leadership in the person of the CIO, who will steer a steady course and be able to provide the necessary guidance for the IT organization. A leader can accomplish that only by taking a long-term view. Holding a job for only a brief time is inconsistent with committing to and then making progress against lasting objectives.

CIOs are likely to view the high turnover rates as incentives to make choices that will look good on their next r