Getting the Pay You Deserve

By Jodi Mardesich

CIOs are gaining both clout and responsibility as more of them play an ever-larger role in transforming their businesses. In a recent study by the Meta Group, more than 40 percent of CIO respondents said their jobs now include a range of other business functions, from human resources to facilities. The percentage of CIOs who described their role as "traditional CIO" decreased to 58 percent, the lowest in the past two years.

Despite the additional responsibility -- not to mention the Herculean task of staving off seemingly endless cyber attacks -- CIO salaries are barely inching up. CIO and vice president of IT salaries increased just 2.1 percent from 2003 to 2004, according to Computerworld's 18th Annual Salary Survey. Overall IT worker pay improved slightly more, at 3 percent, up from 2.8 percent in 2003. Those figures are lower than the national average of 4 percent, reported by the U.S. Bureau of Labor Statistics. According to the same Computerworld survey, most IT workers received raises in the past year, but a little more than a third of respondents reported their salaries either did not change or decreased.

When it comes time to negotiating a raise, CIOs should educate themselves about the state of the market. Pay varies widely. According to the Computerworld survey, the average CIO salary is about $128,000. Including an average bonus of about $25,000, total average compensation for CIOs tops out around $151,000. The Gartner Group, however, puts the median salary of CIOs at $236,000; with bonuses, total compensation reaches almost $300,000.

A few fortunate CIOs earn millions of dollars in compensation. Baseline Magazine compiles an annual report of CIOs at public companies who, because they rank among the five highest paid in their company, must divulge their compensation to the Securities and Exchange Commission. For example, the top tech executive at AT&T earned more than $4 million in 2003. (To be fair, he played multiple roles; besides CIO, he was chief technology officer and vice president of global network technology services.) The ten highest paid CIOs each made more than $1.5 million, according to Baseline. The CIOs who reached that level focus on delivering shareholder value by interweaving business processes with IT infrastructure.

At the same time, given the still-lumbering economy, many CIOs feel fortunate just to have a job. A recent CIO Strategy Center story, "The Evolving Role of the CIO," reported that some CIO jobs could disappear altogether as other C-level executives start taking responsibility for strategic IT assets. Gartner Inc. predicts that a third of all CIO roles will change or even disappear by 2007. It behooves CIOs to prove their value in order to reap the financial benefits of their position.

How to increase CIO compensation

• Do the homework Free and low-cost salary surveys are available online that can help gauge what your peers are making. Show such surveys to the CEO and those responsible for awarding a raise. Some areas of specialization pay higher. Chief information security officers' pay rose the highest-6 percent, according to Computerworld.
  
  
• Prove IT's worth If surveys don't work, generate some ROI metrics to show the benefits of initiatives you've created-how much money they've saved, or how they've increased productivity. If such metrics aren't available, make it a policy to regularly audit the IT department's labors to quantify their worth. And don't wait until review time to share the results. Instead, the CEO and boardroom peers should be regularly updated on IT initiatives, project performance, and benefits.
  
  
• Be more than the CIO In some cases, this involves filling more than one role, as the CIO of AT&T does. It can also mean working closely with other C-level executives, aligning IT with business strategies, and using IT to improve the profitability of the company. "If IT drives the business, the CIO can demand a higher salary," says Diane Berry, managing vice president of People3/Gartner Inc. "CIOs have to position themselves to be more strategic and a driver of the business to get a raise."
  
  
• Report to the CEO Ideally, you should answer to the CEO. In this way, the CIO role is viewed as strategic, rather than as a cost center to be controlled.
  
  
• Negotiate a bigger bonus Almost a third of CIOs' total compensation takes the form of bonuses; according to a survey from executive search firm Spencer Stuart. The Computerworld survey found that bonuses went up 1 percent on average last year.
  
  
• Get another offer If a company values its CIO, it will match or beat any offer. For this strategy to work, however, you must be willing to walk. Sometimes it's time to move on. Doing so can lead to gaining new skill sets and experience.

Jodi Mardesich writes about business and is a former staff writer for Fortune.