The Very Expensive Cost of Title

When I joined the Navy, I probably should have been named Admiral immediately. It would have made things much easier for me. I could have flown around in my helicopter from ship to ship, eating steak and shrimp with all of my people. The young prince with all the knowledge in the world and no experience, leading our forces! Oh for sure, I would have been able to fake it until I figured it out. Don’t you think?

At the time, no matter how often I would envision or dream this dream, it was extremely unlikely. Without delving into “what if” this happened, let’s talk about this improbable scenario becoming a reality for many people today. This post aims to help us identify and discuss the high cost of giving out titles.

In IT, everyone is now a CIO.

When I worked at Chubb Insurance, I worked a few floors away from our Global CIO. Going to meet with him was a pretty big deal. When I was preparing to meet with him, it was very similar to preparing for a senior military officer. I needed to have my facts together, my thoughts organized, and be well prepared for a discussion. When I met with him, we had active discussions that were highly engaging. We discussed technology and business outcomes. There was something unique about his knowledge and experience. He understood the nature of the business, the technology, the people, the political situation, and the value of asking questions. At the time, there was only one CIO.

I was provided a unique opportunity at the time to represent Chubb in many forums. I would meet with senior leaders from many companies. I was invited to participate in events and townhalls with Global CIOs representing many of the largest companies in the world. Early on, these meetings would have 5-7 people with facilitators and possibly some vendors representing their company products and interests. Over the years, I would attend these meetings and notice the population increase from a few people to rooms packed with people. The packed rooms became packed halls and larger venues. The titles were from Director to Executive Vice President. I started to notice people taking on the title of CIO.

Many of the companies had over time developed more complexity in each of their technology areas. For example, Cloud Computing became an important discussion point. The older CIOs had to learn about Cloud and some of these other new technologies. In many cases, instead of becoming an expert, they would hire experts. The experts wanted money and title. Many of the technologies were very new and the experts were young and hungry. Human Resource departments were shrinking and more energy was placed into getting things done with immediacy. Getting things done could very well mean, “activity” as an outcome. Sitting in the corporate rocking chair doing a lot of movement but not getting far. In times like these, what do companies do? They hire consultants! Many consultants recommended new corporate structures which used a “separation of concerns” type of approach. This meant they would break roles down and change the way companies ran IT from the fundamentals. They created titles with divisional CIOs. They also created new titles, Chief Technology Officer, Chief Data Officer, and all sorts of Chiefs.

This evolution was as unnatural. The title did not match the area of responsibility. In many cases, the “Chief” person couldn’t make important business decisions on their own. They had to go to someone else. Having the title didn’t mean and doesn’t mean having the ability to execute. The creation of these titles didn’t cost money until it did. Many people that took on a title had been promised money. They were told, “next year” we will compensate you or “next cycle” and they didn’t get the money. What did they do? They looked for other jobs and left the role they were in. Now they had this title of CIO but they may have been a divisional CIO or a CIO of a very small area of business.

Some of these CIOs were able to convince companies that they were prepared to run a full shop end to end. The problem was and still remains that they are not prepared. They don’t have the business knowledge, the mindset, or the political ability to hold up. They don’t have the leadership ability and most of all the support of their people. Many new CIOs get destroyed by their staff intentionally undermining them. New CIOs have a short lifespan in many companies.

Result and Importance

I believe that Information Technology is the lifeblood of business. Technology is critically important to the success of companies today. Companies have divested investment in their talent and taken actions for short-term gain resulting in long-term costs. Creating and providing titles for various reasons creates a leadership vacuum. The lifecycle of leadership in IT has shrunk. It is now common for IT leaders to jump ship leaving behind countless people confused and bewildered. Many of the CIOs who inherit the shop by taking the next job start with the epic failures of the person holding the mantle before them. What do they do? They hire consultants to come in. What happens next? Reorg!

Many companies continue to run and operate their business at extremely high risk. The lack of leadership and compounded loss of expertise create excessive risk and failure. Any savings the companies may have achieved wind up being reinvested through transformation efforts. These are masked in corporate initiatives around data, security, and technology investment.

Finally, many companies choose to outsource. This becomes an operational expense nightmare. Once the work is outsourced, CIOs lose much of their ability to maneuver. Demands can go unanswered for long periods of time and the result is that companies will seek to switch to another outsourcing provider. While the rest of the world sees the stock price, the CEO of these companies are left looking at a confusing spreadsheet. The assignment of title may not seem like a big deal but I would argue that it is one of the top three reasons why companies struggle with their IT costs today. I’d also argue that it spills over to other areas beyond IT.

Full stop. Companies must first identify this problem before they can tackle it. I believe they need to establish their mission, vision, and values clearly along with their objectives. Once they have these established, they need to make a long-term commitment to their people. A promise and investment with their people. They must also limit the number of people with fancy titles. If companies keep giving out participation trophies, the only thing they will get is short term low value participation. They will continue to bleed out people and scratch their heads wondering what the heck is happening. They will continue to hire people or outsource at crazy high rates while complaining about the high cost of labor.

What do you think?

Chief Blogging Officer of The Cohenization Project signing off!