CIO Careers: The Scandal Effect

It used to be that a company, especially if it was in the Fortune 500, could lure a new CIO with little more than an attractive compensation package and a handshake meeting with the CEO.

But today, CIO candidates are looking at potential suitors — particularly public companies — with a sharply critical eye. They’re demanding meetings with boards of directors and insisting on clauses that provide generous severance packages should some preexisting condition cause the company to crash. They even want to study the latest audit and know who is doing the accounting. (Is that you, Mr. Andersen?)

“The impact of Enron, WorldCom and others has shown that solid due diligence and business process management reviews are back in vogue,” says CIO job-seeker Edward Nesta. Nesta has been looking for a CIO position since leaving his post as senior vice president of operations at The Leading Hotels of the World in New York City last September. “I have excluded companies from my target list due to what I have heard, read or knew,” he says.

Recruiters report that Nesta’s account is not an isolated one. Sept. 11 made job-hoppers more cautious. Add to that the chilling effect that recent corporate scandals have had on executive recruiting, and you begin to see that CIOs have good company. “There’s a lot of reticence out there. What it boils down to is people are being a lot more cautious, and they’re hesitant to make a move without a lot more guarantees,” says Robert McHale, who heads up Korn/Ferry International’s mid-Atlantic CIO practice in Tysons Corner, Va.

Russ Tessman, leader of the IT division at recruiter Vermillion Group in West Des Moines, Iowa, says he recently had a CIO pull out of an interview because of a drop in the company’s stock price. “A year, a year and a half ago, he would have been much more willing to take that risk,” Tessman says.

David Blumhorst, laid off last May as senior director of IT of Clarent, a Redwood, Calif.-based telecom equipment company, has been doing contract work for various companies as he looks for the right fit for full-time work. “I’ll contract for a while, and if there’s a fit I’ll hire on,” he says. Blumhorst is currently contracting with Project Arena, an Oakland, Calif.-based project management solutions provider as vice president of services and is in discussions about taking on a permanent role. This is not to say that no one is taking on new CIO jobs (see our monthly On The Move page). Public companies with a proven CEO, solid financials and a clean ethical history will continue to draw top CIO talent, says Rich Brennen, leader of the global CIO practice at Spencer Stuart in Chicago. Brennen placed Jean-Michel Ares (former CIO of GE Power Systems) at Coca-Cola and Patricia Morrison (former CIO of Quaker Oats) at Office Depot in Delray Beach, Fla., among others in the past year.

And Brennan recently placed a new CIO at a company facing asbestos litigation, which he declined to name. “We finally got someone to accept, but not until he spent a lot of time with the general counsel of the firm to find out that the problems were not as bad as the newspapers were making them out to be,” Brennan says.

McHale says the rash of scandals has been a boon for the public sector, where CIO positions have gone begging at top federal levels. “CIOs are starting to look at these positions in a new light,” he says. “Ordinarily they wouldn’t have considered a federal government position as interesting, but boy, compared to what’s going on in the private sector, it seems like a good place to be.”