CIO SUCCESSION PLANNING: Why it matters and what to do about it...?

CIO SUCCESSION PLANNING: Why it matters and what to do about it...? - CIO&Leader

“Great leaders create more leaders.” – The Light in the Heart, Roy T Bennett


Between January to December 2021, CIO&Leader reported 73 new enterprise CIO appointments in India. Out of those, 66 were hired from outside the organization. Only seven (that is less than 10%) were promoted or moved to the role from within the organization. The companies included moderately sized single product companies to large, diversified businesses, new generation firms to far older manufacturing behemoths.

What does this indicate?

“It very clearly indicates that those organizations did not find anybody within their organization who can take up the CIO role. That is a very sad state,” says Vijay Sethi, Chairman of MentorKart and erstwhile CIO of Hero MotoCorp, who also held the portfolio of Human Resources and Corporate Social Responsibility at his last company.

Sethi laments that ‘CIOs themselves are not grooming their successors’, while adding in the same breath that grooming IT leadership is not the responsibility of CIOs alone. “The organization is equally responsible,” he adds.

But is appointment of an outsider always an indicator of lack of suitable candidates internally? After all, organizations do often go for outsiders – like leaders from different verticals – purely for getting fresh ideas and newer perspective.

That does not seem to be a convincing argument, considering that in about half (32) of the 66 companies who recruited CIOs from outside the company, hired them from the same industry. A few more came from similar industries.

That there is very little effort towards creating next line of leadership becomes evident when you look at the structure of the CIO organization. In a survey conducted by CIO&Leader in August 2021 covering more than 70 CIOs, only 2% CIOs said that they have only one direct report. About 5% more said they have two to three direct reports in the team. In other words, as many as 93% CIOs have more than three people reporting directly to him/her. In as many as 47% cases, the direct reports are more than five.

In such a scenario, it is natural to expect that the direct reports are technology specialists and there is little planning to groom a succession leadership line.

What ails succession planning?

While only 2% CIOs said they have one direct report, in the same survey, almost one-third CIOs claimed they have a clear No 2. That is not entirely impossible. In many organizations, the senior-most in the IT team—a specialist with a functional responsibility such as security or applications – is the designated No 2.

Such a No 2, in most cases, is a standby for the operational tasks of CIO, in his/her absence.

“He is one that the senior leadership can call if there is a problem in IT, when the CIO is not available. So, he is there for convenience and not really as a next line leader,” quips a vice president, himself such a No 2, in a large consumer products company, who does not wish to be named. To be fair to his CIO and his company, he is actually a designated No 2, and that is clearly communicated to the rest of the team, though a few others report to the CIO directly. In the absence of CIO, he takes certain operational decisions. In many companies, there is no designated No 2.

In some companies, where there is a genuine No 2, in charge of the entire technology operations, often the person is too preoccupied with the operations. Neither the person nor the CIO finds it important to make his/her time available for getting involved with business decision making and interacting with other departments at a strategic level, because ‘he is too important’ for the present responsibility that he is handling.

Atanu Pramanic, Joint President and CIO, Hindalco Industries, points to a new trend that is becoming prevalent these days. “There is an executive CIO and there is a head of IT. The two roles are separate. While the CIO interacts with business and takes business decisions regarding IT, the head of IT manages the nut-and-bolt of the tech operations,” he elaborates.

That kind of arrangement has its own advantage in terms of a smoother day-to-day management of IT while freeing the CIO to spend time on business issues, but it does not make succession planning any easier. While that model, by itself, is not a hindrance to succession planning for CIO, a manager, who is not groomed to be a leader, irrespective of whether she is No 2 or not, cannot seamlessly take on CIO’s responsibility, which is essentially a corporate leadership role.

One thing is for sure. An internal candidate, to be considered suitable for the role, must not just be good at technology or understand the organization, he/she must be groomed to be the leader, which is lacking today.

“The moment you move from N-2 to the CXO level, while you still wear the technology hat, you have to get into a leadership perspective. That is where most of the planning fail. You have to know when you are there, how you behave as a leader, how you interact with other CXOs, how you think about business value of IT, not the technology value” says Sethi.

Pramanic blames two factors on this lack of succession planning.

The first factor, he says, is the relatively late realization by Indian companies about the value of IT. “Indian companies have realized very late in the day that IT can be an enabler. Earlier, it was just a cost center. So, it occupied relatively less importance in the strategic plans.” This, he says could be a reason why planning for leadership succession planning in IT may not have been in the agenda.

The second issue that he points out is a deeper cultural issue with Indian companies. “Why only CIO,” he asks, “while many MNCs in India do plan for leadership succession for all senior positions, very few Indian companies do. They don’t do that for any position at any level. Some even don’t have a succession plan in place for CEOs or MDs. Maybe, it is a cultural issue.”

“Maybe, it is some kind of insecurity,” he adds.

And that brings us to the issue of CIO’s insecurity that has long been discussed by the next-in-line managers informally. In fact, the very question was posed by a delegate to the CIOs in a panel discussion on succession planning, as part of the annual CIO&Leader Conference in September 2021. He asked if this ‘insecurity’ was the reason behind CIOs shying away from planning their successor. Does the CIO see the potential successor as a risk for himself?

Vijay Sethi answers in affirmative. “I tend to agree with this observation. Many a times, leaders do not focus on creating next line leadership because they are too scared of their own job.”

Anjani Kumar, CIO, Strides Pharma, a comparatively younger CIO, agrees only partially. “I have seen this. So, I will not say that this does not exist. It comes to how secure you are in the organization; how confident you are yourself as a leader,” he says.

“If I prepare the next leader, I might be kicked out of the job. All these things do play a role,” he says illustrating the mindset of some CIOs.

But he is quick to clarify that there are many CIOs and other leaders who do create the next line of leadership, sometimes to grow themselves further such as taking a group CIO role or a newer role.

That is true. Many of the good leaders among CIOs are given additional responsibility in some organizations. Sethi himself was given HR and CSR to handle in his previous company. Maruti Suzuki CIO Rajesh Uppal too is responsible for HR in his company. In IT-ITES companies, it is common to see CIOs taking up frontline business responsibilities with P&L, in addition to their CIO roles.

With technology getting more aligned with business, the opportunities will hopefully grow for the CIO—reducing any possible insecurity or lack of confidence. That, in turn, could help change this mindset of staying away from creating next line leadership.

But that is not the only major challenge. One broader issue that becomes a major hindrance is the lack of enough good talent for enterprise IT positions.

In a way, it is peculiar to India. Because of their size and influence, Indian offshore IT services companies are more attractive destinations for young Indian IT talent. Before this wave of digitization started sweeping the Indian enterprise users last 5-6 years back (and which accelerated during the pandemic time), the growth opportunity – often equated by young workforce, with the opportunity to learn and work on new technologies – in enterprise IT was much slower compared to IT industry. Also, brands like Infosys, TCS, Wipro, as well as those like Google, IBM and Microsoft who recruit in thousands, are far better known among the young. So, enterprise IT struggles to get good talent. The lack of realization of the importance of IT and digital in business by the top management just aggravates the issue. Instead of trying to hire all round managers, technology savvy managers, they try to compete for the same tech talent recruited by the IT industry and clearly lose out to the latter, that offer much more to these youngsters – like opportunity to work on new technologies, money, foreign travel, things that are on the priority list for them.

However, the IT industry can also be a potential hiring ground for the potential CIO (See Box 1).

Why internal grooming is important?

With digitization of most businesses – consumer services to heavy manufacturing – digital technologies are getting more and more ingrained into the business. Earlier, technology came as a solution to a business problem, after the business problem was defined. Now, technology is being proactively applied to business for creating new opportunities and preventing problems as well as solving them as and when they happen.

In this scenario, there is a need for the technology managers to be conversant with not just business of an organization, but also its culture. An internal candidate for any leadership position has an upper hand when it comes to understanding organization culture. Earlier, technology was a bit isolated from the rest of business, as it was more an inhouse supplier. With that changing and technology moving hand to hand with business, a CIO who is an insider has a better understanding of organizational culture. This aspect becomes far more important when an organization is going through a transformation, leveraging digital. Hence, an internal CIO is a bigger need today than it was in the past.

It does not mean that organizations cannot hire from outside, for availability of better talent or getting a fresh thinking. But such a manager should be able to spend some time to understand the culture to effectively play a role in organizational transformation.

“The CIO does not need to be a veteran in that company. But he/she should have spent some time – anywhere between a year to two – to understand how things work in the organization,” says a chief digital officer of a manufacturing company. Many organizations have unrealistic expectations from a newcomer. Other organizations do realize this handicap but still choose to allow that time to the newcomer to understand the organizational culture.

The challenge is there because a new CIO joins after/almost at the same time that the older one leaves. So, he/she has to take the decisions from Day One.

A groomed internal candidate, even if she is just a year old in the organization, has a hang of both the technology setup in the organization and the organizational culture.

It also helps organizations retain talent. “If the managers know that they can be the CIO, they are far more motivated. Else, they do leave and join smaller companies as CIOs for their career growth,” says Sethi.

Whose responsibility is it?

Whose responsibility is it to groom the future IT leadership?

Of course, it begins with the IT managers themselves. “In most of the companies that I have worked in, a large part of the career progression responsibility is given to the individuals themselves. They have to show that hunger. That is one ingredient that the superior has to look for,” says Sanjay Prasad, CIO, RPSG CESC.

But he does not discount the role of CIO in grooming his successor. “In typical appraisal processes, while many of these things can be looked at, they are rarely looked at in order to meet the deadlines, etc.,” he says.

Prasad reveals that he actually spends a lot of time with the -1 and -2 level managers about what they want to do in the future - in both functional and technology areas – in the rundown to the appraisal. “That gives me a lot of confidence in picking out the right guy for the right responsibility,” he says.

“If this step is not taken, you will later regret that I have not left a good legacy behind,” he adds.

But the entire debate we see around succession planning for CIOs is around that issue itself. In other words: are CIOs doing enough to ‘leave a good legacy behind’?

Vijay Sethi rejects the idea that succession planning in IT is the job of only CIOs.

In fact, he outlines a danger. “With all good intention, left to himself, a CIO will choose someone like himself, because he will see from his view. When it is at organizational level, that bias (however unintentional it is) can be avoided, as organization will look at it from a broader perspective,” he says. 

“It starts with the organization culture. Are they wanting to groom their own leaders? We know there are lots of organizations in India which are considered leadership factories,” he says.

One such company is TCS, especially considering the CIOs that it has supplied to various organizations, both inside and outside the Tata Group. There are at least 6-7 serving CIOs in various companies in India who have come from TCS, though they were not trained to be CIOs. So, what makes the organization produce so many leaders that others find particularly suitable for CIO role?

Says Vinod Bhat, CIO of Tata SIA Airlines (Vistara), who was with TCS as a business leader before joining Vistara as a CIO, “You get to work for clients in different verticals. And while your one foot is in technology, all you are thinking about is clients’ business. What are their exact pain points? What are they aspiring? What are they thinking at a particular time?”

“Not only does it give a thorough understanding of the clients’ business, the job requires you to think how technology can bring the best value for their business. Not just that, you put your neck in the line to deliver that through technology,” he adds.

Isn’t that what a CIO is supposed to do?

While TCS may be in an advantageous position because of its nature of business, how can other organizations do it?

The answer is good, old training – just that the focus has to be on leadership programs and not just on technology, soft skills or even strategy workshops, though all of these are important components.

Training to create CIOs 

Before getting into ‘grooming CIOs’, one must answer the question: what makes a good CIO?

Rajiv Sikka, CIO, Medanta Hospitals, puts it very succinctly, “While technology understanding is a given, a new age CIO has to have four qualities. One, he must believe in continuous improvements, without getting too attached to what he has developed; two, he must think about business value of technology or applications of technology and not just technology; three, he must be customer-centric, be it internal or external customers and finally, he should have trusted relationships within the organizations.”

Except for the second one, which requires a CIO to understand technology, all others are qualities of a good leader.   

That is what Vijay Sethi reiterates. “When you talk of creating a future CIO, you are talking of creating a leader who can think like a leader, act like a leader—not just a good technology manager,” he says.

In fact, that is the difference between the next level IT managers and CIOs. It is not about experience and maturity. A CIO is a leader first.

And that gives a cue to where to start – training CIOs through leadership programs.

“Yes, forget for a moment whether it is CIO or any CXO. Let us talk of a leader. How is a leader groomed? Take Tatas. They have dedicated leadership institutes. These institutes are benchmarked against best of the best – in terms of content, in terms of faculty, in terms of training. I feel that plays a huge role,” says Bhat of Vistara.

Tatas are not alone. Today, Infosys, Mahindra, Wipro, Hindustan Unilever and many other organizations have similar programs.

If grooming a CIO is mostly about grooming a leader – at least that is the big gap area – then, isn’t the same leadership training model suitable for future CIOs?

The broader CIO community agrees on the importance of training. As much as 98% of 70 plus CIOs polled in a survey in August 2021, said training is required to prepare CIOs, in contrast to only 2% who believed on-the-job learning is enough. As much as 21% believe training is most crucial to create good CIOs.

When asked what kind of training is most important for the -1 and -2 levels to make them prepare better for CIO’s position, most CIOs believe business and strategy skills (56%), leadership skills (44%), and understanding of business value propositions of emerging technologies (42%) are the most important training needs at this level.

It is not just the ‘what’, but the ‘how’ that is equally – arguably more – important. When asked about how these trainings would be most effective to create CIOs, almost two-third (63%) CIOs said what is needed is an integrated capsule training program for the CIOs. About 19% of CIOs believed that workshops with fellow IT professionals from other companies, from time to time will help them better. 

Pramanic agrees with the need for an integrated capsule program, while lamenting the non-availability of such a program. Anjani Kumar of Strides Pharma points out the success rate of the only program to identify future CIOs, NEXT100, could give a cue. NEXT100 is a 12-year-old program by CIO&Leader’s sister publication, IT NEXT that, through the help of community (senior CIOs), identifies 100 IT managers who have the potential to be the CIOs every year.

One important difference with organizational leadership programs that most CIOs have implicitly pointed to is to have these training programs (at least partially) at the inter-organizational level.

One of the reasons could be being familiar with emerging digital technologies and their business value – a must acquire competence – is best done at a community level.

Apart from that, one other component of the leadership training program that CIOs point out to is how to lead change through technology. With fast changing digital landscape and companies digitizing most part of the business, the CIO has to be at the forefront of proactive change management. And that could be an important part of the leadership program.

But the training could also be beyond a training program. Vinod Bhat of Vistara points to the practice in the Tata Group – and that is true about many other large organizations – is the rotation of every manager with multiple functional departments. While IT managers could be part of functions like finance, marketing, production and sales to understand the business better, it could also be argued that other functional managers could have their stints in IT departments. With the millennials being very comfortable with newer digital technologies, who knows we may see IT leaders emerging from tech savvy non-IT managers as well!

Whichever way they do it, it is time for organizations to be serious about grooming next generation technology leaders, to begin with, grooming a successor for CIO. As CIO’s role becomes more and more important, leadership vacuum can seriously mar a company’s business.

CIO succession planning is no more a good practice. It is an imperative.

Read the CIO&Leader December 2021 Magazine

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