Spreading IT Expertise Throughout the Company
These days, information technology touches just about every important business decision. Yet most IT professionals remain stuck in an IT backwater, out of the loop for most corporate issues. Ask yourself, How many IT professionals do you know who successfully made the leap to line management?
If you worked at Canada's Clarica Life Insurance Co., the answer would be “lots.” Clarica's roster of key business officers is peppered with former IT folk. The vice presidents of group administration, human resources and marketing, as well as the director of quality business all began their careers as IT professionals. Six of Clarica's 16-person top-management team have IT backgrounds.
Clarica's success incorporating IT pros into business management is the subject of a February 2001 white paper, “Creating Advantage With Information Technology.” The authors are Blaize Horner Reich, professor of information technology at Simon Fraser University in Vancouver, British Columbia, and Michelle Lynn Kaarst-Brown of the E. Claiborne Robins School of Business at the University of Richmond in Virginia. Reich says the advantages of Clarica's approach include “faster innovation, faster deployment of new technologies, better utilization of existing technologies, and staff retention. They quickly see opportunities to solve business problems with workable IT solutions that others simply don't.”
The company's commitment to IT has paid off: Clarica was the first of Canada's life insurers to demutualize, doubling its IPO share price in 18 months. Since becoming a public company in 1999, Clarica has consistently surpassed key growth targets. For example, year 2000 earnings jumped 22% over 1999 earnings.
According to Clarica CIO Brian Gill, much of the company's business is technology-intensive, so it is critical that IT initiatives succeed. The firm's policy of transferring IT people into line management, he says, means that “even the very large initiatives that we undertake have a very, very high success rate. We never face a problem of educating senior management. We have the right sponsorship and leadership from the business area. It works.”
Those results are encouraging, but not necessarily extendable to companies without a heavy reliance on IT. It's also possible that spreading IT people throughout the company may encourage a bias toward technology-based solutions.
The bigger question, though, is how to make it work. “Clarica management has always promoted from within, encouraged cross-departmental transfers and committed to developing the individual,” answers Reich. He adds that the approach was extended to the IT group starting in the early 1980s, in response to new challenges in automation. Since then, more than 70 IT professionals have moved into non-IT jobs — either pulled in to new positions by senior executives or drawn in by greater career opportunities.
Tom Kiely, former leader for digital-management perspectives at Boston-based Viant Corp., says the Clarica story proves that “it is possible for companies to have technology-savvy general managers — that IT knowledge need not reside solely in the IT group. The challenge is to be creative about how each company goes about it.”
According to the white paper, Clarica does it by adhering to four key mandates:
- Hire liberal arts graduates. The company hires people with a liberal arts background into the IT role at the entry level, trading high early training costs for long-term growth potential. The study found that 50% of Clarica's people who moved beyond IT held degrees outside of computer science.
- Build business knowledge. Clarica regularly exposes IT people to business professionals and projects. “There are lots of little ways to do this,” says Reich. “Put them on non-IT related committees, give them short-term rotations, let them find their affinities.” Then Clarica selects the ones who evidence the most business acumen and enthusiasm.
- Commit to transfers. IT people worry about losing their core technology skills. IT managers worry about losing good people. “Don't let either of these concerns get in the way,” says Reich. “The reality is that both of those things will happen, and it is all for the good.”
- Ignore conventional HR practices. The study found that Clarica does not block transfers simply because the person being transferred makes more money than the new position typically pays. If both the company and the employee would benefit from having the individual spend time in a job tied to a lower salary, Clarica makes up the difference.
In addition to overall corporate benefits, the transfer policies also provide much higher-than-normal retention of IT personnel: Clarica faced only a 10% turnover in IT professionals last year. That's about half what might be expected for similar groups, observes David Hofferberth of the Boston-based Aberdeen Group.
“Do the math,” says Reich. “If you apply the same metrics to retaining employees as to retaining customers, you'll quickly see that giving smart IT people the chance to succeed in the general business is a no-brainer.”