Why Is The CIO Position Reporting Structure Broken?

September 30, 2011 by  Filed under: Management 

Don’t look now, but there’s something wrong in the world of CIOs. The CIOs that I’m working with are being asked to do more and more for their companies. It would be fair to say that IT has become an indispensable part of the companies that these CIOs work for. Then can you tell me why at some companies CIOs don’t report directly into the CEO?

The Bad News

In a recent survey of firms, less than half of the firms that responded said that the CIO reported directly to the CEO. This means that even as IT becomes more and more important to the economic well-being of a firm, the person who has been tasked to implement the firm’s IT strategy is being prevented from participating in the planning the company’s overall strategy.

What does this actually mean? In a nutshell, it means that a critical line of communication is longer and more apt to break than it needs to be. Considering all of the challenges that modern firms face, the CIO needs to be at the right hand of the CEO when ways to move the company forward are being discussed.

A good example of what can possibly happen if the CIO does not report directly to the CEO happened at Sony. Their PlayStation network was hacked and confidential customer information was taken by parties unknown. As big and as sophisticated a company as Sony is, their CIO reports in to the Chief Transformation Officer who in turn reports in to the CEO. Talk about a broken pipe!

A Ray Of Hope?

The solution to this problem is clear: the position of CIO needs to report directly into the CEO. The challenge is finding out how to convince those 50% of firms that don’t have this structure to make the changes that will be needed in order to make it happen.

The big question is what will motivate these firms to make this kind of change? As with all things in business, the reason for making a change needs to be based on the company’s bottom line.

In the case of the CIO, it’s the IT department activities that don’t have anything to do with keeping the lights on that will provide a compelling story for having the CIO report directly to the CEO. Tasks such as mining the customer and sales data that the company has collected in order to gleam new customer needs and buying patterns are things that the CEO needs to both lead and respond to. The only way that this can happen is if the CEO and the CIO are directly talking.

Additionally, as the specter of digital break-ins becomes ever more possible, the CIO needs to be working with the CEO in order to determine what data needs to be stored, how long it needs to be stored, and when collected information can be disposed of. Only by agreeing on a company-wide policy and then implementing it can firms start to deal with creating an effective defense against being hacked.

What All Of This Means For You

All too often companies give lip service to the importance of IT to their overall success while at the same time relegating their CIOs to report to someone who is not the CEO. This contradiction clearly shows that something is broken at the top of many companies.

Recent surveys have revealed that CIOs reported directly to the CEO at less than half and maybe even fewer of the companies surveyed. What this means is simply that the CIO is not being heard where he or she needs to be heard: at the top of the company. As security threats grow and the value of business data becomes more and more important, this kind of organizational structure cannot be permitted to remain in place.

The change that needs to occur is that CIOs need to report directly the company’s CEO. It’s only by setting up this kind of reporting structure that the types of conversations that need to occur around data retention, infrastructure security, etc. will happen. Considering what the rest of the company is asking the CIO to accomplish, it sure seems as though inviting them to the big table is something that has to happen sooner rather than later.

Dr. Jim Anderson

Your Source For Real World IT Department Leadership Skills™

Dr. Jim Anderson has spent over 20 years consulting with a wide variety of IT firms from the very big to the very small. He provides you with his insights into the leadership needed to combine the separate worlds of business and IT strategy. His guidance offers hope to firms everywhere who are struggling with this challenge.

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