CIO Salaries SKYROCKET: 7% Increase in Just 1 Year and 20% Since 2019 - Is This the End of the Low Pay Era?

The state of CIO salaries is witnessing a significant shift, with a 7% increase in just one year and a whopping 20% increase since 2019. As technology leaders become an integral part of the C-suite, their salaries and compensation packages are now commensurate with their stature.

According to Martha Heller, CEO of Heller Search Associates, the primary driver behind this trend is the evolving reporting structure. Over half of CIOs now report directly to CEOs, a significant shift from five years ago when at least 60% reported to a lower executive level. This change in reporting structure has led to an increase in compensation for CIOs and CTOs, with growth evident in both base salaries and equity packages.

The COVID-19 pandemic was another catalyst for the increase in CIO salaries. It collapsed five-to-10-year salary timelines into just two years, leading to a significant surge in compensation for technology leaders. Craig Stephenson, managing director of the North America technology and digital officers practice at Korn Ferry, agrees that compensation is increasing and anticipates that these levels will continue to rise as CIOs take on more responsibilities.

CIO packages often include stock options, relocation expenses, and hiring bonuses. Victor Janulaitis, CEO of consulting firm Janco, notes that CIOs typically have 401ks and negotiate a lump sum to offset the cost of leaving their current job. The rise of retention awards is another factor contributing to the increase in compensation. With technology initiatives becoming critical to business success and board-level priorities, companies are offering substantial retention packages to tech leaders.

The push for AI initiatives is also driving up CIO salaries and compensation packages. The strategic importance of technology leadership has never been greater, especially as organizations attempt to tackle information security, artificial intelligence, cloud transformations, and more. CIO and CTO positions have become much more important as leadership looks at AI, but CIOs are also held responsible when AI initiatives don’t pan out.

When AI projects fail, frustration builds, and the CIO is often the fall guy. This is creating a need for more competitive compensation packages, with the pay increase varying depending on the size of the organization. CIO compensation increased 7.48% on average among large organizations and 9% among midsize firms in the past year.

The median pay for a CIO at a large enterprise is $196,000, and this figure is well over $250,000 at Fortune 50 companies. The median salary is about $176,000 for CIOs at midsize organizations. Traits that make CIOs more marketable include functional leadership, enterprise leadership, and transformational leadership. CIOs who can demonstrate these capabilities command top dollar.

The market for CIOs remains extremely active and competitive, with the barometer being busy with lots of private equity. However, there are two things happening - the pandemic was a jolt to business and economics, leading to hiring too many people, including tech people. Then there was the push to implement AI or generative AI, which will lead to a real lack of return on investment.

Politics is also impacting the market for CIO talent, with the uncertainty of the election and the whole AI distraction top of mind. This has created some hesitancy in companies to swap out their CIOs and hesitancy for CIOs to leave. Once there is clarity, CIOs will start to move on, and there will be heightened activity in job movement.

Toward the end of the year through at least the beginning of 2025, the executive job market will be just fine, but the CIO job market will be an okay market. There will be corporate bloat, but smart tech leaders are a must-have for businesses, not a nice to have.