How To Hire a CTO

CTO with tech team

The Chief Technology Officer (CTO) is the most costly hire in modern tech companies.  Competition is fierce, and world-class CTOs know it.  This makes getting a great CTO extremely difficult.  In a tech company, your business’s success depends on them and their success in the role.  Given this, I have created this guide offering my best tips on how to hire a CTO.

In a tech start-up, getting the project off the ground with a CTO or lead developer with experience on your pitch deck is nearly impossible.  As VCs, banks, and investors know that that person will make the CEO’s vision a reality.  So for most tech businesses, the CTO is fundamental to the business’s success.  First, let’s explore the role of a CTO in companies big and small and how CTOs should be compensated before we learn how to hire a CTO.

What is a Chief Technology Officer?

The Chief Technology Officer (CTO) is the leader of a company’s IT department and all technical operations.  A great CTO needs to have a good understanding of business, technology, development methodologies, and data security & compliance.

As technology is continuously developing,  it is important that the CTO has a dedication to continuous learning and observing the evolving tech space to see how they can optimize your business—keeping it on the cutting edge and secure.

Many large tech firms have separate C-level roles for more specific tech and tech security tasks, such as:

But nearly all businesses start with just a CTO and take on these additional roles as the company grows.  This illustrates how multi-talented a CTO has to be in a smaller business.

What is the Responsible for?

A CTO is responsible for overseeing the development and adoption of technologies by external customers, vendors, and other clients, to help improve the service and increase business.  Many companies, generally smaller ones, are also responsible for internal tools and IT operations.  In larger companies, this responsibility would be of the CIO.

Who Does the CTO Report to?

CTOs commonly report to CIOs.  However, it is common for them to report to the CEO if there is no CIO in place.

The 4 Types of CTO

Depending on your business structure, your CTO will need to operate differently.  The most common ones seen in practice are:

  • Visionary (Innovator) – The visionary CTO will help develop the business model using their industry knowledge and experience.  They are up to date on cutting-edge technology and the competition.  Due to this, they generally have a close relationship with the CEO and senior management.
  • Strategist (Enabler) – The enabler CTO keeps their primary focus internal, developing the technology strategy that enables the business to succeed per the CEO’s vision.
  • Infrastructure Lead (COO of IT) – The COO of IT CTO focuses heavily internally on streamlining processes, automation, and cost-effectiveness.  They generally focus on using data, security, and maintenance better to ensure the business’s technology is robust, cost-effective, and utilized.
  • Customer Liaison (Business Leader) – The business leader CTO, Uses their knowledge and experience to interact with the customer on behalf of the business.  They use their interactions in a business development style role to develop products for which there is a market.

How to Compensate a CTO

Depending on the stage of your business, the compensation will vary greatly.  A start-up will often offer up to 30% equity, as they require that CTO be truly invested in the outcome.  But when more equity is provided, the salary is often below market averages.

Additionally, the CTO’s experience, skills, and name will also play a big part in what they are offered.

In the USA the base salaries for CTOs are as follows (per percentile):

  • 10% – $177,099
  • 25% – $214,700
  • 50%(median) – $256,000
  • 75% – $299,400
  • 90% – $338,913

With the median Salary + bonuses + benefits = $390,591

Looking at angellist.co, you can see many start-ups offer far below many of these going from $80,000 – $130,000. But offering very high levels of equity, at 10-30%.

hand shake confirming a hire

Best practices on how to hire a CTO

Convincing a world Class CTO to join your business is challenging.  Competition is high, and so is the compensation.  Understanding the type of CTO you need and the job you need to carry out is critical.  This will ensure you approach the right people and correctly sell your business to that type of CTO.  Here are my top tips on how to hire a CTO for your business.

Be present in the industry

People like to work with companies they recognize. Brand power is as important in recruiting as it is in any part of your business. Have leaders present and participate at conferences, in media, and on social media. Showing your industry leadership, expertise, and knowledge. Simply put, world-class talent wants to work with world-class talent.

This makes it easier for candidates to learn about your company, understand its vision, and see your accomplishments.  It makes it easier for candidates to know about you and envision being a part of your business.

Develop a Search Team

You can hire a CTO alone, but it is not advised to do so.  In a small or large business, no matter your position, you will not understand in depth the needs of the company requirements of the CTO you are trying to hire.  As the title suggests, this is a highly technical role.  Without expertise, you can easily fall victim during interviews to jargon and complicated answers

When hiring a CMO, the search team typically includes the CIO and CHRO at a minimum.  If other key stakeholders have extensive technical knowledge on your executive team, you can consider including them.  If your company does not have a CIO, the CEO will usually participate in the search process. Many companies choose to work with specialist CTO executive search firms, to lead and expedite this process.

Define Your Needs

Get clarity on what you are looking for in your next CTO.  What has been working well for the company, and what needs focus and improvement?  Establish what you perceive as the role of the CTO you are hiring.  What technology changes is your company facing?  How do you hire to meet your current and future needs?

These conversations within your company will help you align your needs.  What experience do you require and want, and what things may you want to avoid?  Must candidates be from your industry, or could you broaden the target list?  The more effort you put into getting an accurate picture of what you want will help you identify quality candidates sooner.

Create a Compelling Job Description

As you define your needs, the pieces required to create a solid job description will emerge.  Let’s explore some of the attributes many companies are looking for in a CTO:

  • Developing the strategy for the use of  technology
  • Ensuring efficient use of technologies in a profitable and secure manner
  • Evaluating and implementing systems and infrastructure technology
  • Oversee system infrastructure to guarantee functionality and effectiveness
  • Develop technical aspects for the defined strategy ensuring alignment with the business goals
  • Assist the various department leaders in using technology within their domains profitably
  • Determine what new technologies will yield a competitive advantage and implement
  • Create QA and data protection procedures
  • Oversee KPIs and budgets to determine the ROI on technology performance

Taking the time to analyze the job market and write a compelling job description can cut down the work of hiring a top-class CTO significantly. Additionally, it helps executive recruiters target their search better while also being able to sell your business better too.

Analyzing the current job market and writing a compelling job description can significantly cut down the work required to recruit a top-class CTO.  Additionally, it helps executive recruiters target the search while being able to sell your business more effectively.

Work With Executive Search Firms

Due to the intense competition for recruiting CTOs, working with an executive search firm can give you a real competitive advantage.  They know how to hire a CTO and will take the lead, proactively approaching top talent across your target region.  You will get better options faster while dramatically reducing your search team’s workload.  Their expertise and experience will help you make better decisions more quickly, ensuring you get the candidate you want.

Please contact me if you have any questions about the executive search or need help conducting a CTO search locally or abroad.  I can even help you leverage the intellectual capital from Boyden’s global Technology practice as we look for your CTO.    I have 25+ yrs of experience working with Boyden as a Managing Partner.  We have executive search specialists with expertise in every industry in 43 countries across the globe.

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