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Theres opportunity to make top dollar in insurance as a CIO, but its up to you to turn that opportunity into reality. Whether negotiating for a new position or dealing with your current employer, we show you 10 ways to increase your worth.

By Michael Voelker

If youre not getting the compensation as CIO you think you deserve, its tempting to blame the shortcoming on any number of external factorslingering effects of a down economy, a tight job market for IT execs caused by consolidation and convergence in financial services, or the tribulations of the insurance industry in general.

Those factors do affect the compensation of the average insurance CIO (see sidebar), but blaming external factors for your subpar pay after salary review is a bit like blaming the officials after game day for your favorite teams substandard performance. The truth is, even in a difficult market, your careerand your compensationare very much within your control.

In short, if youre not getting what you deserve, its your fault.
If [CIOs] are not getting compensated well, it should be telling them something. Maybe theyre not contributing to the extent they thought, or maybe theyre not savvy about negotiating, says Eric Sigurdson, leading member of the information officers practice at Russell Reynolds Associates, a global executive recruitment and management assessment firm.

We sought out industry analysts, executive recruiters, and insurer CIOs to uncover the secrets to salary success. Our 10-step program can help you secure the best offer or increase your stock at your current company.

1. Be more than a technologist. This is the single most important factor affecting not only your compensation but also your career. If youre viewed as a necessary support functionsomeone less important than other C-level (chief) executivesyoull never get top dollar.

But before you complain about how misunderstood you are by the CEO or the board, take a good look in the mirror. Just as insurers demand business impact from their technology investments, they also demand it from their technology leadership. Youve got to be up to your elbows in the operational realities of the business, says Jim Lester, AFLACs CIO, who came to the insurer five years ago after running his own technology company. He became CIO in 2001.

CIOs need to demonstrate to the business units they can help improve profitability, explains Victor Janulaitis, CEO of Janco Associates management consulting firm. Get involved in the business and you will be viewed much more as part of the management unit than someone who says, We need to upgrade to the next version of Windows Office. You then can ask for and achieve greater compensation, and bonuses are easier to justify.

Sigurdson refers to such effectively engaged individuals as the triathlete CIOsomeone who has tech skills, business acumen, and leadership ability, he says. Theres a surplus of [CIO] talent, but theres still a drastic shortage of ones who have those abilities.

The PMA Insurance Groups CIO Jim Klotz adds, The real question is, are you a chief information officer or a chief technology officer? He came to the company in 1998 to fill what was then the newly created CIO position and believes the organizational structure at PMA Group has increased his visibility to and impact in the business over those years. Beyond overseeing PMAs IT department, Klotz also manages the carriers call center and central processing unit for claims, medical bills, and policy assembly. Its been an advantage, he says.

Conversely, a challenge CIOs face in becoming involved in business is not that carriers view the CIO as unimportant but, rather, too critical to be allowed to stray far from the server farm. Speaking of what he has seen in the industry, Celina Insurance Groups CIO Rob Shoenfelt says, [Because] people realize how important the role of technology is, theres the desire to keep the CIO in the technology role.

In his own experience as CIO at Celina, Shoenfelt reports his responsibilities have continued to evolve since he came on board five years ago when we didnt even have e-mail, he explains. For instance, whereas in his first year as CIO he didnt meet with the carriers agents, today he visits with them regularly regarding the Web-based capabilities Celina continues to roll out. If were doing our jobs right, were making their jobs easier, he says. My biggest fans actually are some of our agents.
He also routinely meets with Celinas board members to review IT projects and accomplishments. Their question always is, Thats nice, but what does it do for the bottom line? As they start to see reduced head count in services, faster turnaround time, that technology allowed us to do X or Y or Z, it has impacted positively the way the insurer views both IT and the CIO, he says. Today, he adds, Celinas business and IT units work closely together to design and plan systems, and a fundamental component of his role at the company is to lay out a vision that business and technology staff both share.

2. Show your successbut expect your claims to be vetted. Todays hiring decision-makers understand technology and will ask pointed questions as a result. Companies are not going to take a resume at face value, says Margaret Resce Milkint, partner of Jacobson Executive Search, which focuses exclusively on the insurance and financial services industries. They want to hear about how youve impacted direction and the bottom line. Theyre looking for a demonstrated record of success doing the kinds of things they need, whether its being an innovator or change agent or working without a road map.
Insurers are looking for a CIO candidate to show concrete examples of the ability to innovate, Sigurdson says, while still managing the bottom line. Getting the right projects in, in the most cost-effective manner, that have a direct ROI and short payback are success stories carriers expect, he says.
But while an interview is not the time to be humble, companies today all are putting candidates under a microscope, says Milkint. So take credit where credit is due, but dont embellish. And dont be surprised if a potential employer asks for a few years worth of W-2s to support your salary demands.

3. Put your performance where their money is. Although bonuses have been down over the past years, they should rebound in 2004. The range of bonuses is widefrom 20 percent of base salary at the low end to 100 percent at the top. In insurance, 40 percent is a common figure.

However, insurers are increasingly disinterested in guaranteeing bonuses, and demanding one can be a turnoff. Its all about risk, and if candidates dont understand that, companies wont hire them, says Beverly Lieberman, president of Halbrecht Lieberman Associates, an executive search firm.
Therefore, be willing to tie bonuses to performance objectives. If there is room for bargaining, it is on the bonus piece, says Milkint, adding, We are definitely seeing a trend toward bonus pay being tied to results. That has permeated the insurance arena, and that is something thats here to stay.

4. Push for a signing bonus. Its the sign-on bonus the candidate has the most impact over, because if you jack up the base salary, that has ramifications for everything the incentive compensation is tied to, Lieberman says. In particular, a sign-on bonus is most likely to be considered to offset a salary bonus candidates will be forgoing at their current employer.
Even so, know the limitations in todays market. Its tougher for candidates to command a huge sign-on bonusanything greater than $100,000. The big inducements to a candidate have taken the greatest hit, says Lieberman.

5. Report to the top. Make sure a CIO position you accept reports to the CEO, and if your current organizational chart doesnt have a line from you leading to the top, it may be time to consider a change.

In fact, Milkint says, some of the key factors that lure a CIO from one company to another are the individual doesnt have a true seat at the leadership table, isnt privy to strategic decisions, and really is viewed as a transactional and operational component to the organization. If the CIO is just given a to-do list, thats a warning sign.

Klotz explains even though he came into a newly created CIO position when he first joined the PMA Group, reporting to the companys president immediately put him on equal organizational footing with other C-level executives. However, he stresses true power is earned, not given. You dont get that unless you do certain things: demonstrate leadership qualities, talk about how technology can be used differently, talk about it at the senior table. So the power of the assignment of the position is very temporary unless you can demonstrate the skills that allow you to keep the job.

6. Dont jump ship If its time for a change, find a new job and make sure it is secure, including passing any final preemployment physicals and tests, before you give notice. If youre out of a job, it will be difficult to find one, Janulaitis says.
And when it comes to securing the most favorable compensation, being currently employed is particularly important in todays tight job market for CIOs. Being employed is still an insurance policy you can leverage and is important to getting the compensation you want, Lieberman says.

7. but leave your office. Get out of the ivory tower, Janulaitis adds. This means more than management by walking around. It means personally engaging both IT and business staffdown to the individual levelto make sure technology is meeting their needs and expectations.

In Lesters own experience, getting out and actually sitting in cubicles and doing billing transactions all day long, doing claims, and [other] tasks like that have given me an appreciation for the needs of the business, he says. It also has helped him make better decisions. You can be in error about the efficiency or efficacy of a technology without adequate business knowledge, he maintains, and end up advancing a project that fails as a result.

One of the significant ways Klotzs role has changed is today he spends real face time with people, he says. Technologies are maturing to where we see real convergence, and [business and IT are] working more and more together, not as islands.
Supplement your out-of-office experience with continued education in business programs, including earning an MBA if you dont already have one. Its something tangible you can point to in an interview or performance review, Sigurdson says. Ask your employer to pay for your degree by laying out a case for business benefit.

An MBA is definitely important, Milkint agrees. Also, a candidate who has done industry coursework is highly desirable. [Insurers] want a CIO who knows the business and who can have as much of a seamless transfer of knowledge as possible.

8. Dont be complacent when youre doing well. The time to engage yourself in the business is before problems arise. The time to test the job market is before your company is looking to replace you. The time to get involved in professional organizations is when youre content and project the most confidence.

If CIOs are focused internally within their organization, they will have a difficult time finding [better opportunities], Janulaitis says. A lot of CIOs will get involved in outside organizations only when theyre looking for a job. If you are doing well and are very happy with your job, opportunities will crop up at a time when youre interested but not looking, and youll be in a better position to negotiate.

9. Relinquish control to gain control. Hire the best people and then trust them, because you cant get out of your office if you cant delegate. The worlds best CIOs spend 80 percent of their time on managing business and 20 percent on technology, Janulaitis says.

I have to rely on my staff a lot more, Shoenfelt says, due to the increased demands and evolving role of his position. PMA Group also is in the process of creating a Project Office to involve multiple business units directly in the decision-making process regarding IT investments.

AFLACs Lester has seen the hands-on work of researching and prototyping technologies he did five years ago pass to AFLACs IT staff while his own role has changed to business strategist. We have an advanced group within IT [including] PhDs and some outstanding technologists, he says.

Be willing to relinquish control of technology as well in your quest for better alignment with the business. Are CIOs ultimately responsible for a carriers technology? Yes. But perhaps, paradoxically, they cant be seen as the owner of that technology.

If all the people in the organization want to get Blackberries, and if you say they have to have Pilots without finding out why, youre viewed as an inhibitor or gatekeeper, and thats bad, Janulaitis says.

CIOs should be evangelists of certain types of technologies, but it cant be a one-man show, Lester says. You cant go in and say, This is what you need. I know whats best for you, Im going to take all the responsibility for this technology and make it work, and youll see. The business people know a lot more about their business and how it runs than you do.

10. Distance yourself from the dollar. Being too focused on compensation either pre- or post-employment can convey the impression that your sole motivator is money. In negotiations with prospective employers, establish the salary you expect early and then move on. Demands for perks can be particularly touchy, so consider stating that, as a valued member of the executive management team, you would anticipate being treated accordingly.

If you are approached by a recruiter, expect to use that person as a mediator. In fact, Lieberman goes so far as to say, it is never advisable for a person to do his or her own compensation plan. It can get heated. It can look as if one person is taking advantage of another. Having a middle person is crucial in helping negotiate a win.

But how can you assess whether the mediatorhired by the potential employerhas your interests at heart also? The proof is in the offer, Lieberman says.

More Than Money

After all this talk of salary, however, CIOs ultimately tend to moveor notfrom one job to another because of nonfinancial motivators. The reporting structure, the quality of the company, and the challenge involved are the three most important factors for why a CIO will consider [an offer], Lieberman says.
CIOs are asking for the intangibles, according to Milkint. They want a challenge. They want the right culture fit, a learning environment, flexibility in how and where they work, and integration of IT into the business. They dont want to be in the back office. You cant put a dollar value on that.

Great Expectations

As 2004 continues to unfold, it is likely to present yet again a mixed bag of opportunities for insurance CIOs. On one hand, economic recovery and an increased willingness at insurance companies to spend on IT are working together to push the demand for IT execs (and other IT staff) upward. But on the other, continued consolidation and convergence in financial services have left CIOs out of work, putting comparatively greater downward pressure on demand.

Regarding compensation, the financial services sector continues to lead other industries in CIO salaries. Financial services will pay 15 percent to 20 percent more for a CIO than other industries, reports Eric Sigurdson at Russell Reynolds Associates. However, within financial services, insurance remains on the low end of the spectrum and ranks below the national average of all industries.

Insurer CIO salaries tend to be less than for other financial services not because of differences in skill sets or responsibilities but due to a greater variety and number of incentives and bonuses that noninsurers offer, explains Maria Schafer, author of META Groups annual IT Staffing and Compensation Guide. Its really much more of a national skill marketplace and a consistent [base] salary marketplace across all industries than people might think, she says.

Compensation packages for insurer CIOs will remain relatively flat in 2004 from 2003, Schafer reports, with a median salary of about $185,000 plus a bonus of $80,000, for $265,000 total cash compensation. In METAs analysis, that would put the insurance industry below a national, all-industry median of about $300,000.
In a study released by Janco Associates, that figure of $265,000 total compensation would put insurers well below Jancos benchmark compensation, which the company defines as the compensation level required for organizations to remain competitive and minimize the risk of losing employees to other organizations. In its 2004 Information Technology Compensation Study, which polled more than 500 companies across industries in the U.S. and Canada, Janco calculated a benchmark total compensation (including bonuses) for CIOs in large enterprises (revenues greater than $500 million) of $385,991, and at midsized enterprises (revenues less than $500 million) of $376,082.

The Janco study did, however, report a much lower median total salary than META$167,508 for large-company CIOs and $176,357 for midsized. The study also found CIO compensation across all industries had decreased from 2001 through 2003, but heading into 2004, average compensation experienced a small increase (1.32 percent for large and 2.66 percent for midsized companies).

Executive search firm Spencer Stuart, which compiled a salary report for 2003, expects CIO compensation to remain relatively unchanged this year, with the exception of bonuses. Bonuses were down in 2002 and 2003 vs. 1999, but this year they are going to be up, says Carl Gilchrist, co-leader of the groups North American CIO practice. If youre in an environment where youre not getting paid a significant bonus [in 2004], you may be in the wrong place.

Sigurdson reports seeing top-tier insurers offering maximum bonuses equal to base salary plus stock (if applicable) and a cadre of perks such as financial planning, club memberships, cars, and other top-tier trappings. Mid-tier carriers tend to offer up to a 50 percent of base salary bonus plus stock options, he reports.

Margaret Resce Milkint, partner of Jacobson Executive Search, maintains, however, CIOs should not be surprised to find carriers hesitant to offer more than whats recorded on their biweekly pay stub and annual bonus check. [Insurers] are watching those perks, she says. Sarbanes-Oxley has put a different light on them. The days of stock options, country clubs, and cars are becoming more a thing of the past.