Chief information officers are hankering for busman's holidays:
taking time off to advise other companies on their corporate
strategies, often for very little pay. Julia Vowler asks why and
how do heads of IT benefit?
Heads of IT lust after non-executive directorships, those advisory
roles on the boards of companies which may only entail a day or two
a month out of the office. A survey of chief information officers
by CIO Connect (Computer Weekly, 27 April) finds that "the
most-coveted non-CIO role is a non-executive directorship in
another company. Nearly half of CIOs have a strong interest in
obtaining such a position."
According to the survey, heads of IT have their career sights set
on jobs with profit and loss responsibility, such as becoming chief
operating officers or even chief executives, and they see taking on
non-executive directorships as the key to their own organisation's
board-room.
"The non-executive directorship is more common as CIOs increasingly
become business people," says John Handby, chief executive of top
IT chiefs' networking forum CIO Connect. "When they were parked as
techies it was a far more difficult move to make."
Is a non-executive directorship something you should do?
"Absolutely," says Justin Gilbert of head-hunter Odgers Ray
Berndtson.
A non-executive directorship can help your current role as head of
ITand it can give you a second career beyond being a CIO, when the
non-exec directorship may be a timely component in a post-salary
portfolio of jobs.
Being a non-executive director provides board experience at a time
when that is an increasing passport to professional success. "As a
career move any kind of board experience is tremendously valuable,"
says Brinley Platts, membership director at the Impact Programme
for senior IT directors, which runs a series of development days
for CIOs as non-executive directors.
However, he warns that being a non-executive director is not a
cut-price route to get you on to the board at your own
company.
Nevertheless, it can deliver very useful experience of life on the
board and confer valuable exposure, says the Institute of
Directors.
But when many non-executive directors have a background in finance,
what does a CIO bring to the table? Gilbert says organisations that
are going through major change and transformation programmes find
appointing a CIO as a non-executive director particularly useful.
Heads of IT can use their existing experience of and expertise in
such programmes, which are heavily dependent on IT.
"CIOs can bring large-scale corporate change programme experience,"
says Platts. "And change management is a major core competency for
all organisations."
As the head of IT you have a broad, aerial view of your own
organisation. IT stretches across the enterprise, and so that clear
vision will prove invaluable in a non-executive directorship.
Moreover, heads of IT are used to operating as influencers across
areas of the business where they have no direct fiefdom - again,
very much the way that a non-executive director has to
behave.
CIOs work by gaining consensus and winning hearts and minds, and
these are good skills for a non-executive director. "IT is a huge
corporate expenditure, so CIOs need to be able to justify that
spend, which makes them very good liaison people. They make links
very well," says Gilbert. "And, unlike a sales director, who is
only judged monthly when the sales figures come in, a CIO is judged
every single moment, which makes them enormously answerable."
However, heads of IT who have non-executive directorships have to
remember that they are not there to run the other company - let
alone its IT. "Your role is advisory, not hands-on," says Platts.
"You are there to be part of corporate governance, advise on
strategic issues and protect shareholders."
Chris Montagnon, former head of IT at Sainsbury's and now a
non-executive director at retail software company Novasoft, agrees,
"Your power is via the vote and through your influence. You have to
act by remote control."
If you have concerns about the company's internal IT, the most you
can do, says Platts, is ask the CIO to make a presentation to the
board and offer a mentoring shoulder to the CIO, especially if it
is a much smaller or newer company than your own.
"You are not there to check the functionality of their systems, but
to check that they have covered the issue of the functionality of
their systems," Montagnon points out.
Heads of IT in user organisations are in a strong position to be
offered non-executive directorships at IT suppliers. The reason for
this is less subtle: having a CIO of a major company on the board
lends kudos and respectability to an IT company, especially a
start-up. It can serve to reassure users and win new clients and,
perhaps most importantly, provide invaluable contacts with
potential customers at very senior levels through existing
CIOnetworks.
"You will be of interest to medium-sized or small players because
you understand their customer space, lend credibility and know
people," says Platts.
But despite the growing enthusiasm among CIOs to take on
non-executive directorships, is there a downside? Several, say the
experts, and all must be factored in and assessed before going down
this route.
"Being a non-executive director can be very time-consuming," warns
Gilbert.
On paper a non-executive director may only be required to work 12
days a year - and that includes attending board meetings - but
combining this with the day job is not easy. "It may be only one
day a month but it will inevitably take more time than that. If you
are a globe-trotting CIO can you really commit that time to being a
non-executive director?" asks Gilbert.
Montagnon says, "When I was CIO I had no time to sleep, let alone
take on a non-executive director's role."
It is also something that must not cause problems on the home turf.
"Your employment contract might say you need to get permission,"
says Platts. And although your employer will probably encourage you
to do it, you will be expected to take a holiday rather than do it
in your firm's time.
If your non-executive directorship is with an IT supplier, the
caveat applies even more. "There probably would not be any conflict
of interest or difficulty, but if, say, there is a legal dispute
[over a supplier contract] then it would be inappropriate for you
to be a non-executive director," he warns.
As well as taking up more time than you might easily spare from the
day job, a non-executive directorship may not be very rewarding
financially. At small companies, it could pay as little as £5,000 a
year, but even at the top end it will only be about the
£40,000-a-year mark. According to the Institute of Directors, a
non-executive directorship at FTSE 250 companies will pay about
£23,000 a year, and FTSE 100 businesses will pay about
£44,000.
The CIO Connect survey shows that 27% of CIOs earn more than
£200,000 a year, and the "great majority" make between £100,000 and
£200,000 a year, so the pay for holding a non-executive
directorship can look like peanuts.
"You should not look at it as a money-making enterprise," warns
Gilbert. "The experience you gain is the driver, not the
money."
That may be true, says Handby, but without some kind of financial
recompense few CIOs would undertake being a non-executive director,
certainly not if it is part of a portfolio career. "One
non-executive directorship won't keep you in beer," he says.
More critical than remuneration, however, is the question of
responsibility. A non-executive director has legal liabilities and
failure to give them sufficient attention could result in lawsuits
from shareholders and, in some cases, the threat of
imprisonment.
"It is a serious commitment," says Handby, "Some heads of ITtaking
on non-executive directorships do not always think that
through."
You must have insurance to cover your new legal responsibilities,
but don't rely on personal indemnity insurance, warns Handby. The
company at which you are a non-executive director should ensure it
has the appropriate insurance for its board members but if it is a
start-up organisation, you should not take it for granted that this
is in place.
Even if there is no legal fall-out, being associated with a company
that is less than pristine can be damaging. "Your current employer
will not be too happy, and it will reflect badly on your career,"
warns Gilbert.
Given the degree of responsibility a non-executive director
undertakes, you should pick such posts carefully. "Because you can
go to gaol you need to carry out due diligence," advises Platts.
"If you have any reservations, turn the directorship down."
Montagnon agrees, "Get detailed information about the company and
the issues it faces. You should make sure it will not go belly up
and that you will be supplied with the information you need. You
may not be told the whole truth by the board so you have to go and
see what is happening in the field. You need to be financially
savvy and be confident you will be able to spot things that are
going wrong."
There is no recipe for being offered such a directorship, says
Handby. "It is more of a networking activity. For example, I am a
non-exec of a company that I used when I was a CIO. As a customer I
built up a relationship of trust with the business," he says.
Venture capitalists, too, can be keen to see experienced CIOs on
the boards of start-up businesses, says Handby.
Montagnon, similarly, was invited to be a non-executive director at
a company run by someone who used to work with him. One of his key
roles there is to be a mentor, he says, a neutral, but experienced,
source of advice.
A key target for your networking activities has to be the executive
search firms. "Get on the head-hunters' radar screen for
non-executive directors," recommends Gilbert. "Increasingly
head-hunters are looking for people to fill these jobs on behalf of
companies which have major change coming up. You need to make it
obvious to the head-hunters what you can do."
Do not be overly ambitious, however. "You can probably rule out the
FTSE 100," says Platts, but the companies in the FTSE 250 and FTSE
500 lists are within the CIO's grasp.
Despite the recommendations of the Higgs report, commissioned for
the Department of Trade & Industry, to increase the pool of
non-executive directors that organisations draw from, the chances
are firms will still go for people with board experience, warns
Platts.
The Impact Programme surveyed 33 of its CIO participants and found
that about a third were non-executive directors on the non-PLC
boards of other companies.
However, Platts does see another avenue opening up for CIOs with
ambitions to become a non-executive director. "One stepping stone
is via the not-for-profit sector," he says. "There are about 100
major programmes run by government departments, and some senior
[non-executive director] IT experience could really catch potential
problems."
Moreover, most government appointments are advertised on the
Cabinet Office website, Platts adds.
The other not-for-profit category is charities. But to work with
them you have to make a commitment that goes beyond professional,
he says. "Don't do anything that does not sit with your personal
values," he warns.
Is the current enthusiasm to become a non-executive director a
passing fad? "No," says Handby. "It will simply normalise into the
CIO career structure. It certainly will not go away now that heads
of IT are becoming increasingly business-oriented. Their interest
in being a non-executive director, and their desirability as one,
will go up.
"It is becoming the mark of someone who is a rising senior
executive, and wants to be seen in that mould."
Key tasks of one non-executive
directorship
Chris Montagnon, former head of IT at Sainsbury's, is now a
non-executive director of retail software company Novasoft. His
role, he says, consists of:
- Keeping a close eye on the numbers. You have to understand the
accounts and the balance sheet for which you have a legal
responsibility
- Supporting the managing director. This is a mentoring role,
acting as a sounding board and a source of neutral advice,
especially when the chief executive is less experienced than
you
- Understanding the business. With a background in IT and retail,
Montagnon can see how Novasoft can best serve its market
- Promoting the company. This is done when Montagnon participates
in broad spectrum activities, such as chairing conferences
- Assisting in selling. "I add gravitas," says Montagnon. He also
encourages Novasoft to look at contract profitability
- Developing strategy. Because of his experience and the fact
that he has no executive power, his key role is to encourage
Novasoft to look ahead.