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 organisations 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 challengeââ,¬"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 organisation 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 organisational structure of the company to show the importance of the IT department and the CIO position.
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