by James Hallahan

CIO Pay = B + I + X factor

Jan 12, 20124 mins
CareersIT Leadership

Agreeing what a market rate salary is for a typical CIO might sound like an easy task (after all, executive search companies like Harvey Nash provide this advice for our clients on a regular basis) but you’d be surprised. There are so many factors to consider.

For a start there isn’t really such a thing as a typical CIO. What’s more there’s not really such a thing as a typical CIO role.

That said there are a number are number of pointers that can help in the task, and Harvey Nash’s 2011 CIO Survey, with salary data from over 2,500 IT leaders is not a bad place to start.

After removing the top 5 per cent of salaries, which included a number of CIOs on $1m+ packages, and the bottom 5 per cent with packages that looked suspiciously un-CIO like, the mean remuneration is $196,589 (£128,042) + 25 per cent bonus.

Does that sound like you?

If not, that’s because a number of factors have a major impact on whether you are above or below this average.

The B The most significant is, not surprisingly, budget — B. Big budgets command big salaries.

What’s interesting here is that the big step up in salary (and bonus) comes when you move into $100m (£65m) or bigger budgets, where base salaries get close to $300,000 (£195,000) and bonus around the 40 per cent mark.

The I Another factor that has an impact, although less marked, is industry — I.

Very roughly, Information or eCommerce based industries tend to have higher salaries, not-for-profit and product based industries less high. See figure 2 on the next page for a full breakdown of pay based on vertical markets.

The X Factor So B and I are the main drivers, but there are other factors that influence, although only under special circumstances.

For instance location does influence, but only if you are from the US – where you can expect your salary to be 15 per cent above the global average.

Live anywhere in Western Europe and your location doesn’t seem to have much of a bearing of your salary.

One thing that’s interesting to note is that the US/Europe pay gap appears to be closing. Four years ago it was over 20 per cent.

Another factor that influences salary is length of service, but only if you have been with your company less than a year, where you can expect your salary to be 7 per cent greater than the mean.

In other words companies are paying a premium for new hires. Once you get past the first year mark though, there is little correlation between length of service and salary.

In short, loyalty alone does not pay. That’s not to say you can’t increase your salary over time with your employer, but it just comes through other things, like budget increases, rather than length of service.

Gender is also a part of the X Factor. If you are a female CIO you can expect to earn 4 per cent less than a male CIO.

But actually this isn’t quite the full picture. Women have less representation in roles commanding budgets of $100m+.

If you group males / females together according to their budget size and then compare salaries, the difference disappears. And, in the case of budgets under $10m (£6m) it actually changes in favour of women.

The other side of the coin But what influences salary only tells half the picture. What’s really interesting is what doesn’t influence salary.

You would think that a CEO/MD reporting line would increase the salary, after all the opportunity to regularly meet the CEO and to have the agenda agreed directly with the CEO would be an excellent way to influence salary discussions.

But actually it doesn’t have much impact, CIOs who report into FDs, COOs or other board members enjoy similar levels of remumeneration as their CEO reporting colleagues.

Similarly you might think that being part of the operational board increases salary. Again, no it doesn’t.

It appears that when CIOs get prominence through board membership or CEO reporting lines they have little inclination (or limited ability) to turn this influence for personal gain.

James Hallahan is MD CIO Practice at Harvey Nash