Developing Leaders - Industry Trend or Event

CIOs must identify and nurture human potential

"THE TASK OF THE LEADER IS TO GET HIS PEOPLE FROM WHERE THEY ARE TO WHERE THEY HAVE NOT BEEN."

Henry Kissinger

Leadership is essential to the information-based economy that represents the future. Real leaders are difficult to locate and tough to retain. Recognizing individual potential and nurturing leadership must move up the list of business priorities, since a shortage of seasoned leaders will leave Global 2000 companies vulnerable in the coming decade.

The statistics are not promising. Recent META Group research indicates that 20% of G2000 companies will lose 40% or more of their top executives over the next five years. This makes it imperative for the current crop of executives to begin now to develop the leaders that will carry the organization through 2005 and beyond.

Given current record-setting high employment levels and intense competition for seasoned executives, much of this responsibility in IT organizations will fall to the chief information officer (CIO). CIOs must lose no time identifying and developing leaders from within the organization who have the ambition and skills to assume this position. Taking on a mentor role will also better position a CIO to assume the role of chief operating officer (COO) or chief executive officer (CEO).

Today's Challenges

CIOs must cope with a unique set of challenges. Technological, social, and economic forces compel current leaders to address various issues to meet the service requirements of the strategic business units. These challenges include:

* Globalization of business, which will lead to: (1) cross-cultural human capital management (domestic versus international work rules); and (2) greater demand for travel (domestic and international).

* Growth of strategic alliances, partnerships, and outsourcing arrangements.

* Information overload.

* Decentralization (and democratization) of access to information.

* Daily innovations in technology and business processes.

* A culturally diverse workforce.

* Changing expectations of a more educated workforce.

* Flattening of organizations.

* Increased workloads.

* Expanding workforce skill requirements.

The CIO Barometer

All companies want to develop good leaders, but few take the time to define the competencies that are representative of good leadership. And when it comes time to evaluate the CIO, very often the IT organization is also under scrutiny. CIO performance in this case becomes a barometer for understanding how the IT organization as a whole is doing.

Among the areas required for CIO success are:

Competence as an executive. Among the qualities integral to a CIO are vision, and the ability to set targets, align with lines of business and enterprise initiatives, allocate scarce resources well, establish clear milestones, take initiative, articulate concepts, supply meaningful feedback to peers, facilitate learning and improvement, strive for consensus, improve teamwork, and have key leadership skills. What exemplary personal skills, behaviors, and characteristics does the CIO exhibit? Can the CIO take on more responsibility, accountability, and visibility?

Performance. What specific actions has the CIO taken to improve the IT department's value and contribution to the business? From financial and customer perspectives, what planned and unplanned accomplishments were achieved? What integrated end-to-end process improvements were achieved under the CIO's initiative? Were these processes streamlined, efficient, and value-added?

Communication and interpersonal skills. How thorough is the CIO in communicating, using tools and media, educating executives, setting goals, and linking rewards to performance? How good is the CIO at forming and creating (virtual) teams? Are supervised personnel encouraged to develop multiple skills, share goals, and collaborate? Does the CIO share information about overall performance and business strategy with as broad a base of constituents as possible? Does the CIO actively seek out partnerships and build relationships of trust with customers and suppliers?

Key leadership skills. Does the CIO demonstrate intellect, passion, and courage for IT issues and challenges? Does the CIO use leadership to break down vertical and horizontal boundaries?

Human capital concerns are front and center for virtually all organizations, and developing--and retaining--leaders must move to the top of the human capital critical issues list.

A primary obstacle to leadership development within organizations is cultural intransigence. It will remain a primary hurdle for CIOs as they are pressured to elevate IT to an accepted business discipline capable of driving business change. Therefore, leadership development will be a focus of successful IT organizations. Furthermore, leaders (15% of the G2000) will recognize the inability of many traditional IT workers to transition from technology management to value management and will develop walls around legacy systems and skills, with an eye toward elimination. By 2005, 28% of IT organization skills will be sourced primarily from traditional business functions.

During 2000-02, META Group predicts that there will be over 450 unfilled CIO positions in the U.S. alone. This is the result of continuing high demand for seasoned CIOs, in part due to declining available potential candidates resulting from baby boomers nearing retirement. In addition, the "wealth effect" of the "i-conomy" (information economy) is resulting in early retirements or job burnout and will further drain the existing talent pool through at least 2003-04 and possibly into 2005.

Through 2001-02, IT organization development will be (if it is not already) a critical pain point for existing CIOs. And, although technology complexity is increasingly difficult to manage, it will take a back seat to the ability to create organization processes, structures, and competencies that support agility. In fact, a growing number of CIOs are increasingly assuming total responsibility for IT employee leadership training and succession career path planning, often as a function of the HR organization's inability to address IT organization and leadership development. This further strains the CIO's ability to focus on other strategic concerns.

At the same time, some organizations are attempting to improve these processes, and by 2002, more than 40% of G2000 IT departments will have their own, proactive HR "in-house" staff assisting in IT career planning, management development, and succession planning. By 2003-04, we expect this number will approach 60% of G2000 firms, with an ever-increasing emphasis on CIO succession planning. This is an urgent need, since by 2003-04, most IT organizations will have formed centralized shared services. This organizational development will place a greater demand on IT organization and client management skills.

Identifying Potential Leaders

So, how does a CIO identify individuals with the highest potential for leadership development? The effectiveness traits of individuals with the greatest likelihood of success are found in employees with the following personality traits:

* Comfortable with change and uncertainty.

* Increasingly take on high-risk/high-reward assignments.

* Share power.

* Acknowledge shortcomings and limitations.

* Elicit the trust and respect of fellow employees.

* Exhibit uncompromising integrity.

* Willingly put the interest of the team ahead of personal ambition and self-interest.

* Control both their emotional and rational sides.

* Project a positive, upbeat, optimistic outlook even in the face of adversity.

Manager or Leader?

The dynamics of leadership begins with individuals who might be called "kairos" versus "chronos" oriented (see sidebar, p. 62). The Greek word "kairos" indicates the ability to know when something needs to be done, whereas a "chronos" person is more concerned with getting things done according to a schedule. Leaders anticipate events and actions; managers execute tasks according to a schedule. This is, in effect, the primary quality that differentiates leaders from managers. Leaders understand instinctively the "big picture" and are effective in clearing the decks and mobilizing the resources necessary to enable that image to emerge. Leaders know what to do; managers fulfill tasks established by leaders. And while a good leader may also be a good manager, the reverse is not necessarily true.

Leaders are principled. Leadership without principles is a recipe for disaster. History is filled with examples of effective leaders who lacked moral principles, and many dictators--present and past--fill that category.

In a business context, leadership emanates from someone who can communicate the values of the organization and who uses these values to drive specific initiatives forward, using principles as the basis for action; ideally, principles that have been agreed to by the entire organization. Leaders and values are inextricably linked. Where leaders embrace universally held values they will optimize the opportunity for others to "buy into" their vision and message. This includes truth and trust, as well as an emphasis on collaboration and open communications.

Adhering to these values can be difficult, however, and may in some instances initially lead to a suboptimization of the task at hand. For example, insisting on truth from subordinates may mean that projects may become delayed in cases where employees feel free to openly critique specific situations or progress. Good leaders know that this is the price for integrity and credibility. Their reward for enabling such behavior is the commitment of their subordinates to projects and the leader's vision for where the organization needs to go.

As CIOs evaluate staff with the greatest potential for success, it is important to note the distinction between leaders and managers.

Developing a Leadership Program

Success with developing leaders will require a top-down approach. Awareness of the importance of leadership development is only a first step. It should be followed by CIOs starting with business-based results to define the leadership attributes of those employees most likely to succeed as a CIO. The elements of the program should include:

* Announcement of an executive commitment to leadership development.

* Counseling and provision of mentoring and leadership training for prime candidates.

* Building of employee scorecards to measure performance.

* Linking of competencies to results.

* Adopting innovative learning methodologies (computer-based training, distance learning).

* Creating and assigning accountability.

* Transforming management development into a definable process.

Succession Pool

Most organizations would like to fill their CIO positions with internal candidates, but cannot and do not because the supply (and more importantly, grooming) of internal qualified and trained managers is lacking. Many middle managers simply have not been developed or prepared to assume leadership roles and lack the requisite competencies, skills, and experience.

Traditional succession-management and planning systems fail because CIOs spend an inordinate amount of time considering and naming potential replacements. Their approach focuses very little effort for and commitment to skill development (core competencies) and providing practical experience. CIOs should identify and adopt a succession planning "pool" model as a vehicle for developing CIO-level executive talent (see sidebar, this page).

The market forces of globalization and externalization will result in significant IT organization upheaval over the next three years. In many cases, CIOs have been lacking the requisite leadership to adopt the principle of "promote your people, promote yourself" to position themselves to assume more senior positions, such as COO or CEO of their company. To achieve this goal, CIOs must show leadership, plan accordingly (develop succession plans), and begin (or contract for) organizational development expertise, while focusing on actionable plans for developing IT leaders.

This will be a difficult exercise in light of the current (and projected) shortage of qualified IT leaders, which will continue to hamper the CIO's efforts to grow a business-oriented, efficient, and effective IT organization. This type of organizational growth will be mandatory, however, to provide a pool of qualified candidates groomed for the CIO position.

CIOs should work closely with human resources and strategic business unit executive staff to identify individuals with the aptitude, enthusiasm (passion), desire, and aspiration to become a CIO. This will require those currently in the job to undertake a commitment to coach, counsel, and prepare those individuals with the requisite skills and experience necessary to succeed as a CIO, ultimately making this a key training ground for other senior management roles.

Maria Schafer is program director, Executive Services, for META Group Inc., Stamford, Conn. Schafer has researched IT human capital management, staffing, and compensation strategies for nearly 20 years. She has extensive experience in IT recruitment and HR management at many companies, including International Thomson Publishing, NYNEX, and CBS Publishing.

                            Kairos Vs. Chronos
CIO Leader                               IT Manager
* Establishes direction                  Emphasizes:
* Defines initiatives                    * Planning
* Aligns people/skills to projects       * Budgeting
* Motivates and inspires staff           * Controlling
* Collaborates with strategic            * Organizing
business unit peers                      * Problem solving
Good relationship manager who            Little delegation of authority
delegates authority and responsibility.  or responsibility.
Innovator: Initiates change,             Predictable and orderly, tends
originality, thinks "out of the box."    to rely on tried and true.
Global thinker, big picture orientation, Localized and short-term
long-range strategic visionary.          view (here and now).
Asks "what" and "why."                   Asks "how" and "when."
Challenges status quo;                   Accepts status quo.
risk/reward motivation.

Succession Planning: Developing CIO Talent

IDENTIFICATION AND ADOPTION of a succession planning "pool" will provide a vehicle for CIOs to develop CIO-level executive talent. Rather than target one or two key people for succession as a CIO, CIOs should broaden the pool to include a larger, more diversified group of high-potential candidates for senior managers or IT leaders. The CIO should evaluate job performance, conduct personal interviews, and review HR assessment data.

CIOs should assign management development mentors based on an individual's specific executive development needs. The succession pool is formed around the performance characteristics of potential top managers and falls into one of three categories:

* Competencies

* Job challenges

* Organizational knowledge

Succession pool candidates should be developed through a combination of:

* Short, high-impact, targeted training programs.

* Short-term learning experiences such as attending management development conferences.

* Meaningful, measurable job assignments with increasing responsibilities, risks, and rewards as well as personal achievement visibility.

Source: META Group

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