The Business CIO
But far and away the most valuable contribution offered by CIOs on boards of directors, say recruiters, directors and CEOs, is general business counsel. As CEO Eckert says, when the board starts a search for a new member, it first looks for the "best athlete," or all-around expert businessperson. "The lucky-strike extra" with White, he says, "is that she is uniquely qualified in an area where we're making strategic investments."
Recruiters repeatedly echo this sentiment. "People don't want just a CIO," says Andrea Redmond, co-head of the board practice at recruiter Russell Reynolds Associates in Chicago. "They want someone with broad-based business skills and leadership. It's no different than a CFO. If they're going to be on the board, they have to know more than finance."
All ten CIO board members interviewed for this story had such broad-based skills. (This is also true of most CIOs who join tech-company boards.) Spherion's Cinda Hallman, former CIO at DuPont, built a $1 billion service business inside her long-time employer in the 1990s. Hallman went on to serve on other boards, and has just joined the board of Toys "R" Us Inc. "It's extremely important that CIOs first aim to do something of substantial benefit to their own company," she says. "If they do not do that, I think they're going to have some difficulty getting on boards of other companies."
For Hallman and others, building broad-based management skills requires spending time outside the company, particularly serving on nonprofit boards. Hallman began doing that in the 1980s, and in 1996 she chaired Delaware's United Way campaign. In 1998, she joined the Christiana Health Care board and also co-chaired Delaware's IT Initiative.
Hallman says her biggest contribution on the Spherion board came in strategy making. At the time, the interim-staffing company was growing rapidly. It acquired 35 companies during the 1990s. At first, the board leaned on Hallman to vet two technology firms the company had bought. By 2000, she took an active role in the most important job directors handle: crafting a strategy to secure the future of the entire company.
In an unusual move, the Spherion board asked Hallman, rather than the CEO, to lead strategy development. At the time, Hallman believed that Spherion's business had lost focus. Its mission had blurred into what Hallman believed was an "everything to everybody" approach that was hampering company profitability and earnings predictability. So she scrapped it. Instead, she carved out three clear lines of business: administrative/professional staffing, technology staffing and outsourcing.
The board admired Hallman's efforts: It hired her as CEO in 2001. She is now try- ing to boost the profitability of an embattled $2.1 billion company, selling off units and rededicating the firm to a narrower mission.
But not all CIO board members get to influence strategy so greatly. In some cases, tactical know-how is the plus that a CIO can bring to the table. A good example comes from United Stationers Inc., the $3.7 billion distributor of office and janitorial supplies in Des Plaines, Ill. Chairman Fred Hegi had a unique vision: Recruit one director who was expert in big-company IT, and a second who was expert in startup IT. "We specifically went after two people," he says.
Max Hopper, legendary former chairman of the Sabre Group and CIO at AMR Corp., the parent company to American Airlines, filled the big-company director role. Hopper was familiar with the scale of United Stationers, which stocks 40,000 office and janitorial products for 15,000 resellers that have pre-sold the items, such as mops, desks and calculators, to their own customers. Hegi says Hopper contributed ample advice about the long-term management of an IT operation in a company whose whole being depends on IT. "Initially, I was asked to look at the existing technology and people and give some broad assessment" of how effectively the company was using information technology, recalls Hopper, who joined the board in 1998. For example, he urged the company to figure out how to increase revenues and earnings using software tools such as activity-based costing, which allocates costs based on actual work under way, and margin analysis, which examines ways to increase profit margins by using IT to help analyze costs, compile all cost-related information, and see how all cost data interacts.
Alex Zoghlin, CTO of Orbitz until April 2003 and founder of both Sportsgear.com and Neoglyphics Media Corp., a Web-development company, became United Stationers' "startup IT" director. Zoghlin was familiar with small-company culture and with hiring and motivating entrepreneurial IT workers. Hegi lauds Zoghlin for his experience in running his own company, attracting IT workers, and understanding the compensation and motivation schemes for making a strong IT organization. "We have a very strong camaraderie within our IT group, and Alex has been instrumental in creating it," says Hegi.
Zoghlin joined the United Stationers board in 2000 as the company was launching a semi-autonomous customer service subsidiary called The Order People, which offers third-party fulfillment services, mostly to dot-coms. "They didn't have a lot of people in the company familiar with the startup environment," says Zoghlin. So he advised the management team on hiring and compensation programs to attract high-tech workers and give employees deeper in the organization a sense of ownership. He also advised the IT team on how to integrate Siebel Systems software into internal distribution systems. Says Hegi: "His fingerprints were very much on that subsidiary."
For his part, Zoghlin says he advocated measuring perfomance with an ROI metric and paying bonuses in restricted stock instead of options. Through such moves, he says, "I think and hope the technology organization thinks it has an advocate on the board."