MIS Personnel
References Training & Skills Case (First Item)
September 5, 1994
It takes a gambler to stay on top of the information systems profession these days.
A case in point: Perlin Associates, a management consulting firm in New York that has performed chief information officer compensation surveys for 15 years, recently published its 1994 survey. It showed, for the first time, top-level IS executives bringing in more than $1 million in cash compensation in base salary and bonuses alone.
Then consider Deloitte & Touche's Sixth Annual Survey of North American CIOs released earlier this year. That survey showed turnover was up again— 18.8% in 1993 compared with 17.5% in 1992. In the last three years, about one-third of the predecessors of CIOs surveyed were either dismissed or demoted, Deloitte & Touche reported.
So while the winnings can be sweet,the risk of losing it all increases every year.
The CI0 slot "isn't a dead-end street like it used to be," said DuWayne Peterson, an independent consultant and former CIO at Merrill Lynch & Co. His annual compensation once topped $1 million at the brokerage firm. "I was not overpaid on the scale of Merrill Lynch . . . but I am seeing the whole salary level going up in retail, construction and so on."
But the issue is not just getting those attractive compensation packages, it is hanging on to them. Several industry observers said a key factor in the trend toward better compensation is the high turnover rate.
"In the world in general, the risk is proportional to the gain," said Warren Harkness, director of total quality at Bose Corp. in Framingham, Mass., and president of the Society for Information Management. "To some extent, some of it might be labeled as danger pay."
With the risks so high, IS executives are seeking better compensation packages, and companies are often willing to fork over the dollars to get a high quality CIO.
"If someone was recruiting me, I would demand a pretty strong contract because of the risk factor," said on CIO at a manufacturing company who requested anonymity. "It's a highly sensitive and political job."
One notable case that illustrates the risk factor was that of Michael Simmons, former top IS executive at Bank of Boston. Simmons got caught in a management shake-up earlier this year and was fired.
His 1992 total package--the last published compensation figures for Simmons was $703,084.
While he would not comment on the Bank of Boston situation, Simmons said last week, "Any job with the responsibilities of a chief information officer for a company that relies on technology for a keypart of its business strategy is a high-risk job."
Industry observers said the biggest paychecks are handed out at Wall Street brokerage houses because IS has such a direct impact on business, and salary levels are generally higher there anyway. Some Wall Street firms, incuding Merrill Lynch and Salomon Brothers, Inc., declined to comment for this article.
"Entry-level for a Wall Street CIO is about $700,000 cash compensation," said Jay Gaines, president of Jay Gaines & Co., a New York executive recruitment firm. "If you look at the risk levels and the lack of longevity, there is a risk premium that comes with an opportunity on Wall Street."