CIO Employment Contract Negotiation

Here’s a fairly common phenomenon:

During their interviews, CIO candidates talk about vision and growth and innovation and strategy, and everyone is happy and excited. One lucky CIO is awarded the job and then, soon after he starts, he informs the executive committee that he has done an in?depth assessment, and has discovered that the infrastructure is in rough shape and in need of some major improvements. Everyone is annoyed, frustrated, and nervous about the big-ticket investment required for the turnaround, and the CIO has already failed at expectations management.

“If you wait for your first day on the job to begin the process of developing your transformation strategy, you may find that the train has left the station without you,” says Ron Kifer, former CIO of Applied Materials.

Kifer joined Applied Materials in 2006 to run a massive IT transformation. The company had a sparse corporate IT function with seventeen different IT groups, all of which reported into their respective business leaders and had no accountability to the corporate function. The CIO position reported into finance, several layers away from the CEO. The IT budget was a 90/10 split between run and build, and the company’s M&A growth strategy was not supported by a concomitant technology integration strategy.

The IT organization had no standards for project, program, or portfolio management (nor had the business, for that matter) and had not participated in any certification programs in its basic technical domains. More than half the IT staff was on contract, and they were employed by more than twenty different firms.

In the midst of this dysfunctional IT environment, the company was about to begin an end?to?end SAP implementation as part of a program to reengineer business processes across every business domain.

Ron Kifer’s mandate was not insignificant. He was expected to lower costs, improve delivery, establish transparency, execute perfectly, and, while he was at it, change the culture of the IT organization and improve its relationship with the rest of the business. And he needed to create a way for this IT transformation to fund itself.

With such a formidable challenge in front of him, Kifer knew he had to have a certain amount of support and authority. So he put his success criteria on the table during his interviews.

Ron had four requirements that had to be met before he would accept the CIO role, and he made sure those requirements were included in his acceptance letter.

·First, he had to report to the CEO. Not only would that give him direct access to the CEO, it would also send a clear message to the organization that IT was changing its status at the company.

·Second, the CIO would be a peer to the other executives on the senior leadership team. “This gave me complete freedom to build the relationships necessary for a successful transformation,” he says.

·Third, “We had an agreement that I would consolidate all of IT within the company very rapidly,” a decision that meant that Kifer did not have to negotiate with sixteen business leaders to assume leadership of their IT organizations. The IT teams were his from day one. “If it doesn’t report to you and you don’t control the budget, you can’t change it,” he says.

·Finally, Kifer received a free hand to form the new leadership team within IT. Head count, hiring, and a shift from the heavily contract-based model were entirely within his control. “These conditions were nonnegotiable,” says Kifer, who was prepared to walk away if he was unable to secure them.

We all talk about “executive sponsorship” and “CEO support.” Those are pretty words, and they are fun to say, but they don’t always happen once the transformation gets off the ground. By putting his demands right into his offer letter, Kifer sent a clear message that CEO support was not a nice?to?have.

As a new CIO, once you have accepted an offer and started work, it is tough to go back and make new demands of the executive leadership team.  In addition to compensation, what do you believe should be a part of your offer letter?  Please post a response and let us know!

Martha