For decades, the number of positions in the C-suite could be counted on one hand. The senior leadership team was anchored by the CEO, COO and CFO. At some banks and credit unions, there might have been a Chief Retail Officer, Chief Risk Officer, Chief Lending Officer, Chief Marketing Officer or (more recently) a Chief Compliance Officer.
These titles have been around long enough that most people understand what they are all about. But banking has grown more complex, and the C-suite along with it, forcing many banks and credit unions to conclude that traditional C-level roles no longer cut it.
Now C-suites around the world are introducing a whole new slate of positions, some with colorful titles like “Chief Happiness Officer”. Mirroring trends that started with tech companies and Silicon Valley startups, a wide range of C-level positions have sprouted up at banks and credit unions around the world. Among the 45,000 banks and credit unions that subscribe to The Financial Brand’s email newsletters, you can find the following positions:
- Chief Digital Officer
- Chief Experience Officer
- Chief Transformation Officer
- Chief Innovation Officer
- Chief Data Officer
- Chief Analytics Officer
- Chief Culture Officer
- Chief Strategy Officer
- Chief Engagement Officer
- Chief Technology Officer
- Chief Design Officer
- Chief Growth Officer
- Chief People Officer
- Chief Client Officer
- Chief Branding Officer
What’s behind this phenomenon? Where did all these new titles come from?
According to Steven McConnell, an expert in the recruiting industry, the 1950’s era corporate structure that worked well for so many years is now too rigid for today’s business world.
In the past, big-picture thinking was limited to the CEO, but McConnell says that isn’t the case anymore.
“For CFOs, gone are the days of number crunching to get ahead,” explains McConnell. “The majority of CEOs want CFOs that are true company strategists. Same for CMOs.”
Sally Drexler, a recruiter focused on finding digital leaders, says new C-suite titles are a way for companies to highlight strategic priorities. “Some of these titles emphasize the importance of a new company initiative or function, such as Chief Security Officer in light of recent data breaches,” Drexler says. “It shows whether it is seen as a high priority for the company and is strategically critical to its success.”
There are also elements of salesmanship and branding involved – you could call it “recruiting jujitsu”, both on the part of the employer and the job-seeker.
Erica Seidel, a recruiter who specializes in executive level positions, says she has noticed that if she shows a CEO two candidates – one a “Chief Growth Officer” and another a “Chief Marketing Officer” – the CEO invariably prefers the ‘growth’ person, even if everything else is equal.
Market forces are also at play. Seidel says the proliferation of such positions is a consequence of candidates having more clout than employers in a strong economy, and the fact that companies can use C-level title in lieu of compensation. Competition for talent may be stiff, but titles are free.
“It’s cheaper and easier to grant an important-sounding title than it is to give someone a fatter pay package,” notes Scott Scanlon, Chairman of Hunt Scanlon Media. “While the corporate ladder may no longer be so steep for some, many workers, according to a number of reports, still think they deserve a promotion – and this is leading companies to feel pressured to hand out ‘better’ titles to make up-and-coming staff feel more valued.”
From a compensation perspective, Drexler says that awarding employees C-suite titles is certainly a much less expensive way to attract and retain key talent than paying a huge salaries, but compensation still needs to reflect these C-level titles to some degree.
Will all these new titles endure?
McConnell thinks so. Although they may have less power and influence than the traditional C-level positions, and probably won’t report directly to the CEO, but McConnell says they will have tangible results-focused responsibilities and enjoy vital opportunities to create substantive positive change.
What Do They Do?
If all these new C-level titles are here to stay, then everyone needs to understand what the positions involve and how they should fit into an organization’s wider corporate strategy. Here is a quick assessment on some of the more common C-suite titles that have cropped up lately.
Chief Digital Officer. Sometimes also referred to as the “Chief Disruption Officer,” the CDO’s job is to be a leader of change. They are there to help the organization become a digital enterprise and push everyone into new digital frontiers. Consulting firm McKinsey says the CDO’s job is to be the “transformer in chief,” charged with coordinating and managing comprehensive changes that address everything from updating how a company works to building out entirely new businesses. And he or she must make progress quickly.
In reality, there really isn’t much difference between a CDO and a Chief Transformation Officer, although there is an enduring quality to “Chief Digital Officer” whereas a “Chief Transformation Officer” tends to connote a finite end point. Considering how critical digital transformation is – and how far behind most banks and credit unions are with the process – many financial institutions should be looking at adding a CDO. But do you really need a Chief Information Officer, a Chief Technology Officer and a Chief Digital Officer? Probably not.
Chief Experience Officer. Consumer expectations have changed drastically in the last 10 years. Thanks to tech giants like Apple, Amazon and Google, people demand a combination of speed, simplicity and convenience that few banks and credit unions deliver. More and more financial institutions are waking up to the reality that “experience design” is how service-oriented industries like banking will define their competitive advantage. Therefore, the CXO is charged with leveraging best practices in design and user experience to eliminate friction and simplify processes Just don’t make the mistake of equating the “experience” only with digital; there is still a significant role for both branches and the contact center (among other touchpoints), and these need to offer an experience that has been thoughtfully crafted. (Similar to a Chief Engagement Officer and a Chief Design Officer.)
Chief Analytics Officer. How can a financial institution be expected to formulate a “holistic view of the customer” or calculate “next best products – much less wrangle something as massive and abstract as “big data” – when they can barely tell you how many customers they have? Enter the Chief Analytics Officer, whose job is to lead data analytics strategy, drive data-related business changes and transform their organization into one truly driven by analytics. This is critical because we live in an “algorithm economy,” where only two factors matter: the data sets you work with, and what you do them. Banks and credit unions hoping to find success in the future must leverage the mountains of data they generate – in every department.
And to find success in the Digital Age, marketing and IT teams will have to work together more closely than ever before, and the Chief Analytics Officer can facilitate those synergies. While the role of Chief Analytics Officer is often viewed as interchangeable with that of Chief Data Officer or the more common Chief Information Officer, but these titles focus on the input – data or information – not the outcomes: actionable insights. However you slice it, those financial institutions who have the best data sets (their input) and the best algorithms (their output) will win.
Chief Innovation Officer. Let’s be honest. Most financial institutions aren’t very innovative. They seldom come up with new products, new tools or just about any new ideas of any kind. Why? Because their business models hinge on minimizing risk – something that runs counter to the entrepreneurial spirit fueling more innovative companies. According to the Harvard Business Review, a Chief Innovation Officer should be promoting open innovation, and introducing group tools and processes that encourage creative thinking. Their job is to help people throughout the organization generate ideas – setting up and running ideation platforms like jam sessions, hackathons, and internal or external crowdsourcing programs.
The Chief Innovation Officer should analyze trends and market disruptions, searching for emerging new market opportunities, then provide shelter for promising projects. Their job is to make sure potentially disruptive innovations move forward without getting killed by managers invested in the status quo.
Chief Growth Officer. This isn’t so much a new role as it is a new title for an existing one. Smart CMOs will ditch their old title and embrace the role of Chief Growth Officer going forward. Why? Because most financial institutions struggle with marketing. CEOs and CFOs have historically taken a skeptical position towards marketing, viewing it as a cost center with no definitive ROI. In fact, four out of five CEOs either don’t trust- or are unimpressed with their CMO, according to the Harvard Business Review (only 10% of CEOs feel that same way about their CFOs and CIOs).
The shift from CMO to Chief Growth Officer is about more than just optics. Is the job simply about managing marketing and allocating resources? Or should it be about achieving real, meaningful outcomes, as others in the C-suite expect? While a CMO might think about their role purely through the lens of “brand awareness” and “demand creation,” a Chief Growth Officer thinks about the entire customer journey wherever buyers may be in the purchasing cycle. Their job is to align business development, sales, marketing, operations, and information technology by focusing on market dynamics, customer needs and preferences, and buyer behavior.