CIO pay should be tethered to revenue generation

Should CIO pay---or even yours---be based on your company's revenue generation? Gartner makes the case.
Written by Larry Dignan, Contributor

For years information technology execs have struggled with that business alignment thing. Every year, we get this therapy session about business lingo, vision and returns for the business. One quick fix: Tether CIO pay to revenue generation. If a project grows revenue, the CIO gets a cut. If not, that CIO is screwed.

This no-so modest proposal was tossed out by Gartner analysts Ken McGee and Dale Kutnick at the research firm's annual powwow in Orlando. Very few CIOs make the top paid list of companies so it's not all that clear how these guys are paid or their stock packages. It's doubtful that paychecks are determined by returns on investment.

The argument for tethering CIO pay to revenue generation is clear. CIOs will want to be rewarded for boosting growth and profit. These IT execs can take on bigger career roles.

The argument against this pay model is that revenue generating projects shouldn't be the domain of IT. other executives will lobby that IT shouldn't get such big projects.

I'd say go for the revenue growth. For starters, enterprises would be forced to measure the business impact of projects. Meanwhile, there's nothing like money to dictate projects. The Gartner prediction that revenue by IT will determine most CIO paychecks by 2015 sounds a bit aggressive, but the overall idea isn't half bad.

The upshot is that projects like desktop upgrades and virtualization will just be the cost of admission. Projects that drive sales will get priority. As the IT industry stands today, most of the IT projects go to "after the sale" projects like supply chain, financials, planning and administration. Sales doesn't garner much attention. IT just loves the back office.

And what projects will drive revenue and performance? Gartner didn't break a lot of new ground here, but this chart gives you a starter set for ideas.

Should CIO pay---or even yours---be based on your company's revenue generation?

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