CIOs Sidestep Wage Declines

March 7, 2016 | Wall Street Journal

Even as economic growth slows and wages fall, chief information officers will continue to command top salaries from employers, thanks in part to their evolving role from backroom IT administrators to front-office decision makers, industry analysts and recruiters say.

Indeed, in a sign that many companies are still in the process of transitioning to new digital business models – or have been slow to embrace tools like cloud computing or data analytics as core revenue drivers – the wage gap between the lowest and highest paid CIOS is also growing, they say.

That’s creating something of a two-tiered job market for CIOs, where some fetch top-dollar executive salaries to drive business growth through innovative digital technology.

Across the board, U.S. wages in February fell 0.1% from a month earlier, stripping roughly three cents off average hourly wages, and pushing year-over-year wage growth to just 2.2%, the Labor Department said Friday.

By contrast, over roughly the same period average, wages for CIOs increased 4.9%, as of the end of December, according to the latest figures by staffing service Robert Half International Inc. Similar gains were seen for chief technology officers, chief security officers and other high-level IT staffers.

CIO salaries now range between $172,000 and $268,250, up from a range of $157,000 and $262,500 a year ago, the report said.

CIOs Sidestep Wage Declines
A spread is fairly common for executive level jobs, said John Reed, senior executive direct of Robert Half Technology, which specializes in IT staffing. “Not all CIOs are created equal.”

Part of the wage disparity is a factor of location, industry and company size, but “many companies are only now starting to appreciate the value of technology for driving growth, and not everyone is there yet,” he said.

Even as companies cut back elsewhere, amid cooling sales and global market uncertainties, many continue to seek out CIOs that have a “proven track record and can drive growth through technology,” Mr. Reed said. “And that’s increasing their value.”

As competition for executive-level tech talent heats up, Fortune 500 companies are pushing the top-end of the CIO wage scale, said Craig Stephenson, managing director of the North American CIO practice at executive recruiter Korn Ferry.

Average annual compensation for CIOs at large firms in industries ranging from technology to consumer products, health care and financial services, has climbed to $1.5 million, from $1.3 million in 2012, in cash alone, he said. Meanwhile, average CIO tenure over the past five years has also grown, to 4.3 years from 3.5 years, in a sign that more employers are taking a longer-term view of the role of technology in creating revenue growth, he said.

“The CIO profile is evolving rapidly in that it’s becoming much more strategic and playing a bigger role in the boardroom,” Mr. Stephenson said. “When you look at the amount of budget dollars spent on technology, corporate boards want to get a handle on those numbers and CIOs are the people who manage that,” he said.

More than half of the CIOs tracked by Korn Ferry said they report directly to a CEO, he added.

Not all IT jobs are immune from an economic slump. For the second straight month, the government revised its IT numbers downward, saying that 112,500 IT jobs were created in 2015, compared to 125,700 the agency reported in January, according to an analysis of Friday’s Labor Department data by consulting firm Janco Associates Inc. It also found the moving average of IT jobs growth is declining, dropping to less than 1% last month.

Peter Metzger, a technology and cybersecurity specialist at executive search firm DHR International, said growth in CIOs’ salary is unlikely to be derailed by a downturn.

Employers that are already cutting back to gird for an expected downturn, are willing to pay a premium for a CIO to help them “do more with less,” he said.