C-suite exits are increasing in frequency.
The average C-suite tenure shrank from 5.3 years in 2016 to 4.9 in 2019, according to a Korn Ferry analysis of the top 1,000 U.S. companies by revenue. But tech executives, who hold roles like chief technology officer (CTO) and chief information officer (CIO), are outpacing their peers in switching companies.
Fifty-six percent of technology executives changed employers in 2021, according to a new survey from leadership advisory firm Russell Reynolds Associates. There’s Twitter’s chief information security officer, Nordstrom’s chief technology officer, Facebook’s chief technology officer, Bed Bath & Beyond’s chief customer and technology officer, and even the Air Force’s chief software officer—all of whom have announced their resignations since mid-2021. This year might see additional departures. Half of surveyed technology executives say they are willing to change employers for the right opportunity. By contrast, just 40% of chief financial officers and 21% of chief human resources officers report the same.
There are many reasons for this game of executive musical chairs, one of which is that the prevalence of remote work has removed the relocation burden.
“In my 28 years of doing search work, relocation has been the single most challenging component of getting executives to move from one company to another,” Eric Sigurdson, head of Russell Reynolds’ chief information officer practice and the study’s coauthor, tells Fortune. “When COVID came in and said, ‘Hey, you don’t have to move all of a sudden; now the world’s your oyster, you can live and work anywhere,’ it freed up our ability to approach people we’ve never been able to approach before.”
Tech executives also cite burnout and a desire to take on more responsibilities for their interest in switching roles. Nearly 40% of CIOs and CTOs reported experiencing burnout and a lack of resources to do their job effectively, a 2022 survey of 450 tech executives found. Eighty-nine percent noted that a global shortage of software developers had impacted their productivity and ability to implement key technology initiatives, like digitization, promptly. Similarly, 86% of executives Russell Reynolds surveyed reported an increase in employee turnover over the past year.
Alongside these constraints is a strong desire (89%) to elevate their impact and take on profit and loss management over the next two to three years. Yet only 59% of executives see a clear path to assuming such responsibilities.
Tech executives likely have the largest budget outside of people and real estate, says Craig Stephenson, senior client partner and managing director at Korn Ferry’s North America CIO/CTO practice. They are essential in keeping organizations updated on technology and information security risks. Without them, companies leave themselves open to cybersecurity attacks and lag behind peers on technological innovation. Talent retention of this cohort is critical and requires that CEOs engage them as strategic business drivers.
“Their reporting line needs to be to the CEO, and they need to have board exposure on a quarterly basis,” says Stephenson. “CIOs and CTOs will want to see strong endorsement from key stakeholders to make sure they’ve got the alignment to drive the priorities of the technology agenda.”
And because these executives are moving into revenue-generating roles, they’re also setting their sights higher, eyeing CEO, president, or second-in-command roles. Stephenson recounts a recent conversation in which a CIO said as much. “The candidate specifically asked, ‘What do you see as the succession path?…I’ve got greater aspirations.’”
However, Stephenson notes that companies are also looking for candidates with the right blend of expertise—engineering, software development, cloud components, and modernization, along with data and security—who can align their work with the company’s diversity talent pipeline goals. “When you start looking at exposure and experience across those domains, there are only so many [candidates],” Stephenson says. As a result, it may take time to find the right fit.
“My perception here is that talent is so scarce in those areas,” says Nelson Repenning, associate dean for leadership and special projects at MIT Sloan. He points to recent graduates of the school’s computer science program. Even early on, “it’s amazing the salaries they’re getting, and the number of job offers they’re getting. In some ways, I suspect it’s as much a human capital problem as anything in getting good people right now.”
Successfully retaining tech leaders is a business imperative and requires that companies offer them a seat at the executive table. Today’s engineering leaders want to understand an organization’s full tech strategy, and not just how it will develop products but also “how it will market that product, how it will look to the consumer, and how that consumer might change,” says Sam Smith, a Russell Reynolds consultant who leads the firm’s software engineering practice.
Compensation matters, of course, though tech heads say it’s not as important a factor. Just 27% cite better pay as the most important factor, compared to new responsibilities (39%) or physical and emotional well-being (30%).
“[Compensation] is a top-five consideration,” Stephenson says, but candidates also look at who they’ll report to, their budget, location, and the organization’s mission.
Still, pay holds some importance, and employers have more control over it than other CTO wants and needs.
“There’s an expression in this business: Money can kill a deal, but it can rarely make a deal. People don’t ultimately move for money, but it needs to be sufficient,” Sigurdson says. But he adds, “If you work for somebody who has your back and really trusts you, empowers you, and makes your job and environment pleasant to work in, you’ll stay and take a pass on larger compensation packages.”
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