You might think Peter Solvik has his hands full serving as CIO and senior vice-president at Cisco Systems Inc., one of the world’s largest and most successful technology companies. But no. In addition to his in-house duties at the networking equipment maker, Solvik serves on four different external boards of directors of internet start-up companies.
Why would he agree to serve on these boards, stretching his already-packed
schedule to the limit?
Serving on outside boards expands Solvik’s management skills. He has learned about reviewing and approving overall corporate strategy and creating financial plans and has beefed up on financing, recruiting and compensation issues. “These are things for which only a CEO and a board are usually accountable,” Solvik said. “By having those experiences at a smaller company, I’m broadening my executive capabilities so that I can move toward general management.”
In fact, it was Cisco president and CEO John T. Chambers who recommended that Solvik serve on the boards in the first place. “[Chambers] wanted to provide me the opportunity to broaden my general management skills, to vary the kinds of experience I was getting,” Solvik said.
Being on the board of start-up companies gives Solvik exposure to new technologies ahead of the pack. And he also brings back to Cisco a diverse range of e-commerce insights about what’s happening in the market. “I’m learning what technology [internet start-ups] are buying and what they’re using it for.” Solvik filters this information (without any identifying details) back to his role at Cisco.
Solvik isn’t the only one to take on board membership in addition to his highly demanding day job. “Just about every CIO I know is on a board,” he said. For instance, Dawn LePore, vice-chairman and CIO at Charles Schwab & Co., serves on Times Mirror’s board. And David Starr, CIO and head of e-commerce at 3Com Corp., sits on the board of Best Buy.
Indeed, companies of all sizes are increasingly courting CIOs to be on their boards, according to Phil Schneidermeyer, leader of the technology officer practice at Korn/Ferry International, a Stamford, Conn.-based executive recruiter. “Companies are looking to external thought leaders as to how they can leverage technology to improve customer service, speed time to market and increase market share,” said Schneidermeyer, who recruits technology executives for corporate boards. Requests for CIOs are outpacing any other functional areas, he said.
The trend can be traced back to roughly five years ago when boards of large companies felt inadequate to handle the Y2K problem and began to seek the advice of senior technology executives, according to David R. Dukes, veteran board member and former co-chair of technology distributor Ingram Micro, in Newport Beach, Calif. “The interaction started with Y2K, giving CIOs visibility and a voice they had not previously had,” said Dukes, who still sits on various boards and now recruits CIOs to be board members. “CEOs got very comfortable with talking to the CIO,” he said. For the companies Dukes works with, CIOs are the third-most-in-demand board member, after CEO and CFO.
CIOs considering board service should keep in mind downsides such as personal legal liability, potential conflicts of interest and – not least of all – the time commitment. (Solvik works more than full-time hours for Cisco, making up on nights and weekends the time he takes out for board meetings.)
But there’s no denying the perks. The emphasis these days is not so much limousines and golf outings as cold, hard cash. According to a 1999 Korn/Ferry survey of 1,000 board members, external board members receive average annual compensation of just over US$30,000 plus about US$1,000 per meeting (with all meeting expenses paid) along with stock options.
Start-up internet companies are much more likely to offer only stock options as compensation, thereby linking pay to company performance. Some lucky CIOs have even become rich thanks to their extracurricular activities.
GETTING ON BOARD
The first factor to consider is whether you can afford to commit the time. Is this something you will end up resenting rather than enjoying?
Board service for a publicly-traded company involves an average of 160 to 200 hours per year, according to Ed Merino, CEO of The Office of the Chairman, a corporate board consulting firm in Irvine, Calif. Patricia M. Wallington warns that CIOs must take the time to investigate the firm’s business climate. If the company is involved in a shareholder suit or is ripe for a merger or acquisition, that will signal a heavy time commitment – several extra days per month of meetings would be a common requirement for a board member of a company in the midst of a major transition. “People often forget the time commitment,” said Wallington, former CIO of Xerox, now president of CIO Associates, a consulting firm in University Park, Fla. Wallington currently sits on the board of Comerica, a multistate financial services provider.
Dukes cautions that CIOs in due diligence mode get to know at least the chairman of the board. You should try to establish that you like and respect the chairperson, and – ideally – a few other board members. If not, board service will seem more like a chore than a calling.