At Ecolab, Rob Tabb is the 13th head of IT in 26 years, according to a longtime employee. This turnover rate is even more stunning considering that the CEO has been with the $3.4 billion chemical company for more than 45 years and that most of the other executives have fairly long tenures. The CFO, the heads of human resources and global operations, and the president of the international sector all have at least seven years under their belts. The COO joined three years ago but has already been promoted to president. It’s just the CIOs who don’t stick. Number 12, Jeff Kubacki, arrived in November 2002?a few weeks before number 11 was put out to pasture?and served as interim CIO for almost a year. Tabb, formerly vice president of IT at Nike, became IT head number 13 in October 2003.
Tabb and Kubacki, who is now the vice president of global infrastructure and operations (reporting to Tabb), realized that before they could start any of the strategic projects that are the cornerstone of a good IT department, they had to figure out a way to stop the CIO turnover. After all, no one in the company?neither the business executives nor the IT rank and file?would sign on to the plans if they thought the CIO turnstile was still spinning.
As their predecessors at Ecolab proved, it can sometimes be tough for CIOs to stay put. While the CIO position is generally more stable than it used to be, CIO churn isn’t all that uncommon. Lots of companies have experienced it to a degree, and some are veritable revolving doors for IT execs (see “Musical Chairs for CIOs,” Page 81). It can happen for many reasons: inadequate
CIOs, dysfunctional cultures, and mergers and acquisitions. Each instance may have a good reason, but the big picture shows a high rate of CIO turnover is bad for the organization, and it creates a challenge for any IT leader brave (or foolhardy) enough to boldly go where many have come and gone before.
“A lot of these positions are set up to fail,” says Larry Bonfante, the fourth CIO in 10 years at the United States Tennis Association (USTA). The problems at companies that have experienced CIO churn are systemic?the business doesn’t understand IT just as much as IT doesn’t get the business. The result can be a catch-22: High-profile CIOs won’t take the job, and lower-profile CIOs don’t immediately command the respect necessary to turn the position around.
But IT leaders such as Bonfante who have walked into companies with historically high rates of turnover believe it’s possible to stop the cycle?and keep their jobs?if the CIO can manage two things. The first task is to market IT to other departments and the rest of the executive team, making sure that they understand IT’s goals and accomplishments. Yes, you’ve heard it before, but communication about IT has never been more important. Simultaneously, the CIO must improve morale in his department, rallying the troops behind a singular guiding vision. Kubacki believes that CIOs must patiently work toward these two ends before doing anything else.
Say It Once and Say It Again
The reason for Ecolab’s high CIO turnover rate was clear to Kubacki the first time he met with the company’s executive committee. “They all said that [IT] spends too much money and we don’t get any value for the investment,” he recounts. They were right to a certain extent, and Kubacki made it his number-one priority to cut and shift costs. But the comment also showed that Ecolab’s executives were more aware of what IT wasn’t doing than what it actually was accomplishing. Kubacki knew that in order to change this perception he would have to improve communication between IT and the rest of the company.
And during his first three months on the job, that’s what he did. Kubacki and Ecolab’s vice president for solutions development conducted extensive interviews with the company’s general managers, asking each about his perceptions of IT. Responses ranged from the general?IT doesn’t understand the business?to the specific?the help desk isn’t very good. Kubacki then formed an IT steering committee that included these business leaders, along with Ecolab’s COO and CFO, to discuss and help formulate the company’s IT priorities?something none of his predecessors had done.
Tabb, the current CIO, who also holds a vice president title, is at pains during committee meetings to explain IT in terms that business executives understand. For example, one IT project that will save the company money is standardizing on one kind of laptop. But the executive committee doesn’t care if IT standardizes on laptops?that doesn’t materially change the way they do their jobs?and so Tabb just talks about it briefly and only in terms of dollars and cents.
The application environment is another story, however. Ecolab has several manufacturing systems and multiple finance systems. The heads of the various business units would like to be able to cross-promote and get a unified view of external customers, but that’s impossible in the current application environment. Tabb says that application consolidation is the sort of project that CIOs should discuss with other execs, provided they stick to the business impact?the cross-promotion opportunity. “Applications are complex,” he says. “But this goes right to heart of the business strategy.”
Discussing the business goal of each IT project with the IT steering committee has gradually helped business execs better understand the role IT plays in the company, Kubacki says. This, in turn, has built trust and credibility for IT. To make sure other people throughout the company also got the message, Kubacki started sending out a weekly multipage e-mail newsletter that describes everything IT is doing and how it helps the business. “Someone in finance recently said that he felt weekly was overkill,” says Kubacki. “But at this point I don’t think there is such a thing as overcommunicating”?especially if he wants to keep his job. After all, it’s harder to fire someone whom you know well than someone who’s a remote presence.
Lesson learned: Be visible.
Raymond Karrenbauer, CTO at ING Americas, the U.S. subsidiary of the $97 billion Dutch financial giant, hasn’t had to face a revolving-door role per se, but he joined the company during a similarly chaotic time in 2001, as ING Americas was centralizing the IT departments of the 20-plus companies it had bought during the previous decade. His take: No matter how tangled the business-IT disconnect has become, “the CIO has the ability to make a difference. It is up to him. But he can’t just sit in the back room saying, ’The business doesn’t understand.’ You have to make them understand.”
Karrenbauer cautions that communication is important, but making sure it is the right kind of communication is even more important. “Let’s say you walk some people through a data center,” he says. “They may think that it is pretty slick?they see some lights flashing?but they don’t understand the complexity of what is going on.” Rather than explain what each little gizmo is, the important thing is to explain why the data center exists, how it works and show its reliability. Karrenbauer uses the analogy of a car showroom: Someone buying a car, he says, wants to know that it is reliable, that it gets good gas mileage and that it can go zero to 60 mph in five seconds. They generally don’t look under the hood, and they never cut it in half with a chain saw so that they can examine each little part. “You are buying a car on metrics,” he says. “They buy IT the same way.”
Rally the Troops
There’s an old sports clichŽ that comes up whenever a bad team gets rid of its coach: “Can’t fire the whole team.” But in one of his first acts as CIO of the USTA, Bonfante did fire the whole team. During his first nine months, he turned over five of his eight-person in-house staff and half of his outsourcing contractors. The changes came as a shock, especially in an organization that had never experienced that kind of turnover before, but “we had to get the right people with the right aptitude and attitude,” Bonfante says. He realized when he first took over that, no matter how inspiring his plans and priorities might be, his employees were not confident that he would last any longer than his four predecessors. Bonfante made sure the new team shared his vision for IT and had confidence that it could succeed.
In most organizations, though?and certainly those the size of Ecolab?75 percent turnover of the IT staff is not an option. Thus, changing the culture in an IT department that has experienced repeated changes in leadership needs to be handled with caution, says Tabb. Employees feel “a cynicism that builds up over time,” he says, which prevents them from taking their new bosses too seriously. A new CIO has to win over his employees if he is going to stop CIO churn.
Tabb has observed that CIOs commonly made the mistake of coming in and pressing for immediate change without having an accurate read of the situation. This causes employees?who may well be passionate about the projects they are already working on?to lose energy. “Nothing gets done, and people look at new projects with a jaundiced eye,” says Tabb. The trick is to encourage them to continue the projects that help the company, while constructing a vision to guide all IT efforts.
At Ecolab, that vision is to create a global IS organization with common objectives. Kubacki inherited a decentralized org chart, in which each business unit has its own IT group whose success metrics are tied to the business unit’s performance. Kubacki says that in the past, this structure has caused the staff to challenge the CIO’s priorities. “One prior CIO said we were going to do global SAP, and the business units said, We don’t want to do that,” he recalls. “Then the CIO said we will do EAI and a data warehouse,” rather than explain why the original project made sense. The current IT priorities support the vision of a unified department, including standardizing on one desktop and consolidating servers, which should ultimately reduce IT costs and give the department more money to invest in strategic projects. The new administration says it will stick to its guns and explain to its staff why its decisions make business sense.
Karrenbauer faced a similar challenge when he joined ING Americas as part of the company’s IT centralization project. Until then, the corporate IT department consisted of a handful of people who were simply administrators; the former CIOs of the acquired companies still ran their fiefdoms. Karrenbauer had a vision to integrate and standardize the company’s IT. But he had to win the proverbial hearts and minds of the IT managers and their staffs before he could get them to accept his plan. He began what he calls a grassroots campaign, soliciting best practices from each group. His goal was to sell them on his architecture plan rather than simply ordering changes that would breed resentment. Instead, he has tried to let the ideas speak for themselves, telling employees that if they can come up with a better idea, the company will do it. So far, the response from employees has been overwhelmingly positive, he says, which has helped him solidify his standing.
Quick Wins Versus Big Projects
On the surface, a big, ERP-type project may seem like just the sort of thing to motivate the department?and ensure that you will stick around for the three or so years it takes to complete it?but that is exactly what not to do, says Karrenbauer. “Every quarter, you need to have credible wins,” he says. “It is no different from quarterly earnings. You need to show your returns.”
If you have to tackle a large project right away, it’s still possible to show results every three months or less. When Bonfante joined USTA, he was told to fix TennisLink, the suite of applications that the association’s 675,000 members use to register for tournaments and sign up for leagues. Bonfante convinced the executive committee that the system, which previous CIOs had tried to fix by bolting on new functions, was a $12 million loser. But even as he embarked on his two-year plan to fix TennisLink, he realized he had to break it up into small projects that could be delivered every few months.
To date, Bonfante has developed an IT scorecard, instituted a project management office, overhauled the help desk and created service-level agreement reports. When he brought each of these segments in on time and under budget, he says, “they were turning cartwheels in the boardroom.” So far, Bonfante has done three IT evaluations with executive clients and key stakeholders, and each time the results have come back more positive, increasing the credibility of his organization, himself and IT in general.
The good news is that probably fewer and fewer companies over time will go through multiple CIOs. Charlie Feld, founder of the CIO-for-hire agency the Feld Group, which was recently acquired by EDS, says that CIO churn may simply be a symptom of the position’s own short history. Most companies didn’t use any sort of technology 25 years ago, CIOs weren’t common until the past 10 to 15 years, and longtime execs in more established job roles have had to adapt to IT on the fly. “The CXO community is becoming much more sophisticated relative to IT, and the CIO is becoming more sophisticated relative to business,” says Feld. “I think [high CIO turnover] is starting to fix itself as that dialogue is becoming richer.”