CIOs Can Strengthen Your Board of Directors

As technology permeates new products and services across industries as diverse as retail, media, manufacturing and financial services, companies ought to appoint more CIOs to their boards of directors. IT-based products are the very future of business. Boards hold the heart of a company in their hands. They have to understand this stuff.

As recruiter Linda Hodges told me, healthcare companies get it and are bringing CIOs onto their boards. They “recognize that technology is a huge part of their responsibility,” Hodges says. The corporate CIO mightpresent information to the board but often that’s not enough to go on, she says. Hodges leads the IT practice at recruiting company Witt/Kieffer. “Sometimes boards are asked to approve purchases and initiatives and if there aren’t members on the board who understand IT, they’re making decisions in a vacuum.” 

I’ve seen a few companies add some smart CIOs to their boards lately. Fossil, which makes watches and other accessories, addedTom Nealon, former CIO at J.C. Penney, to its board. Fossil just became a $2 billion company, made a strategic acquisition and plans to expand substantially its global business. Nealon’s enviable experience with transition and fast growth will help Fossil maintain its momentum. Nealon has also been on the board at Southwest Airlines since 2010. Southwest cites Nealon’s IT expertise and experience in planning and corporate strategy as key. 

C. Martin Harris, CIO and chief strategy officer at The Cleveland Clinic, joined the board of Thermo Fisher Scientific in March. He’s on two other boards–a healthcare consulting company and a medical equipment maker.

There’s a lot at stake. Martha Heller, president of Heller Search Associates and a CIO.com blogger, says boards miss opportunities by not including CIOs. As IT runs ever deeper through a company, risk management becomes that much more intertwined with technology, she writes. Boards have to understand thoroughly the risks a company faces. Plus, CIOs have a broad view of how a company works. “There is no part of the business the CIO does not know intimately,” she writes. “That’s a pretty powerful perspective to have on a board.”

Of course, CIOs get some excellent career-enhancing experience out of a board position. Some companies pay directors well for their special knowledge, too. Southwest paid Nealon $100,511 last year. 

Other examples: 

• The transportation company YRC Worldwide swept its board clean last summer, after a financial restructuring that helped it avoid Chapter 11 bankruptcy protection. The group of new directors includes James Hoffman, former CIO at MCI Communications and a 30-year IBM veteran. YRC paid him $92,927 last year for his technology and operations expertise. 
• Rob Carter, CIO at FedEx, has been on the board at First Horizon National since 2007, where he made $155,000 last year for his directorship. He also served on the board at retailer Sak’s, which paid him $159,000 in 2010, the latest year for which documents are available. 
• Doreen Wright, retired CIO of Campbell Soup, last year joined the board of Croc’s, which makes those plastic clogs you see everywhere this time of year. Croc’s paid her $163,913 last year. 

Robert Dixon, global CIO of PepsiCo, earned $44,275 as a board member for WellPoint last year. Dixon joined the board in June 2011, too late to get Wellpoint’s annual stock award for board members, which was $250,000 last year. WellPoint is diving into several business development plans anchored in IT. It is launching a system to let patients use mobile devices to hold video conferences with nurses and partnering with IBM to use the Watson supercomputer to analyze data on treatment plans. I bet Dixon will get a fat stock award this year.

But here’s the big question: Why don’t companies put their own CIOs on their boards?