Traditional corporate reporting structures tend to have the company’s senior technology manager (CIO, VP of IS, CTO) report directly to the CFO. In my 20-year management career, I’ve reported into all different levels and believe that in today’s world we need to look at a different approach.
CIOs of the corporate world should report to the CEO for many reasons, as I’ll explain in this article. In fact, I feel so strongly about this need that I made it one of my stipulations when I joined my former employer as CIO.
Why the CIO usually reports to the CFO
To understand why something needs to change, you must first understand the current concept behind what’s in play. The CFO is typically responsible for the corporate services organizations of a company. These include accounting, accounts payable, payroll, human resources, purchasing, and IT. This structure is especially prevalent in small- to medium-size companies.
Several reasons support this reporting structure:
- It provides a consistent management structure across all corporate services organizations that is simpler for the operations staff to work with.
- In many companies, corporate services departments are heavy users of technology, so it’s a natural tendency to have IT report to the CFO.
- CFOs often want the control of IT because they are detailed types and control oriented, and their own business organizations depend heavily on technology.
- CEOs and presidents don’t normally want the responsibility of IT and welcome having the CFO hold the reins. As we all know, managing IT is definitely a challenge—possibly the toughest role in the company.
But while all this reasoning is logical, and most CEOs do welcome the CFO supervising the CIO, it’s not always the best reporting structure for the CIO.
Making a case for reporting to the CEO
When I applied for my former CIO role, the company was trying to position itself for major growth through acquisition and had significant technology issues. What the company wanted in a CIO was someone who could turn IT support services around quickly and position the company for the acquisition efforts and planned growth.
The opportunity was very appealing to me, and after the company met my compensation requirements, I sat down with the CEO and CFO to discuss my request to report to the CEO. I explained why I couldn’t accept the position unless the reporting structure was right for the business need and used some of the following reasoning:
- The CEO is closer to the operations side.
It’s important for a CIO to be closely involved with the operations of the company. A CFO understands the financial side of the business but is not always savvy to the inner operations of the company. A CIO’s role is to help the company improve productivity and profitability through technology, and in most companies the best opportunities to do this are within the operations staff and organization.
- The CEO drives strategic initiatives.
I know that when I was part of a fast-growth company that acquired more than 35 other companies, the fact that I reported to the president made a huge difference in my early involvement with new strategies. This early involvement was critical in both my personal preparedness as well as my ability to position our IT organization for what lay ahead.
- The CEO is usually a stronger manager.
This may not always be the case, but many times the CEO or president is a stronger manager than the CFO. Reporting to the strongest manager always helps you develop more skills that benefit you in your career.
- Reporting to the CEO gives the CIO more clout.
There are often times when you may need to make significant changes in an organization, possibly even cultural changes. Major changes inevitably affect the employees and managers in other departments of the company. It helps to have the support of the CEO verbally as well as in the organizational structure of the company to show the importance of the IT department and the CIO position.
- Most of your internal customers are operational staff.
When most of your technology users are part of operations, reporting to the CEO or the operations side of the business gives lots of credence to your position.
- It helps prepare a CIO to become a CEO.
More and more CEOs are coming from the CIO position as companies become more technically oriented. Working directly for a strong CEO helps you develop new skills that are needed if and when you decide to seek the top position in a company.
- It provides the CIO exposure to the board of directors.
This may not seem important but it is. The higher you go in an organization, the more you need to be able to communicate at a high level and present your ideas for improvement. Bigger initiatives require more dollars and tougher cost justification. As the CIO, you are in the “big leagues” now, so you need to start getting comfortable with your board of directors.
- The CIO should be an “operations advocate.”
When both the operations departments and the IT department report to the same executive manager, it allows differences to be managed more effectively by the senior manager. For example, because one company president acted as my mentor, rather than getting confrontational with a regional operations manager, I could use the president to position controversial issues so that IT was always viewed as an “operations advocate” or “operations partner” and not an adversary.
Position yourself as well as you can
In terms of a CIO’s career, one of the most crucial reasons I’ve outlined is that CIOs looking to move up to the CEO perch, and those in a CIO role where they’re making major decisions that affect corporate structure, need to be able to step right into the CEO’s office.
The CIO has to be aware from the start on how to position the technology of the company to support many new initiatives the company may want to take. Having a direct relationship with the chief executive is vital.
In one of my prior CIO roles, I reported to the company president and it was by far the best move for me. Reporting to the CFO, a visionary but a poor manager, would have been very difficult in that situation. In reporting to the president, I had the support I needed, was kept informed of strategic plans, learned a lot, and was close enough to the CEO to be exposed to what went on in the CEO office.
The point is that you should try to report to the appropriate senior executive in relation to the tech leadership role you’re taking on. Considerations you want to evaluate include:
- Strategic initiatives planned by the company
- Changes you need to make and support needed
- Ability to learn from your manager
- How the position and reporting structure are viewed in the company
- Company growth (high growth means lots of change)
- Personality compatibility
- Positioning yourself for career advancement
It’s undisputed that strong CIOs normally excel no matter whom they report to because they always know how to get “early warning” news on new initiatives, and they network well within the company at all levels. Yet, if there is an opportunity to make the decision, your career and your professional achievements at the company will be greatly enhanced by reporting to someone above the CFO level.
Mike Sisco is the CEO of MDE Enterprises and has been an IT manager and CIO for more than 20 years. His company is dedicated to the training and education of IT managers to help them achieve more success. For more of Mike’s management insight, take a look at his IT Manager Development Series.