Fewer than 40 percent of CIOs come from in-house promotions due to the training and development needed to groom prospects for the role.
But where there is an in-house promotion to the top IT job, the retained intellectual property, understanding and knowledge of the specific environment delivers big benefits for the company.
Tony Davison, Elan recruitment director, said what organizations strive for today is to develop staff internally for a particular position; however, when it comes to the C-level, forget about "soft messages" - it is all about the business.
"A C-level role, be it CIO, CFO or CEO implies an individual who is a business person first and foremost and by this implies they will bring board-level business understanding to the table, and this will be coupled with experience in their technical field," Davison said.
CIOs come from a range of backgrounds - usually with postgraduate qualifications and generally will have worked in another business before returning to the IT fold as CIO with a broad business understanding, he said.
"As a result, their business skills - coupled with good technical IT experience - means they are able to work more effectively at the board level." Davison said that overall, Australian companies tend to hire for C-level roles externally, because of the challenges involved in developing people internally. However, Davison said there are huge benefits to be had by maintaining intellectual property through developing staff from within.
Robert Walters IT consultant Peter Bateson said the progression from an IT manager to CIO would appear to be the natural step to take; however, not all IT managers go on to become CIOs and not all CIOs have come from a management position.
"The difference between IT manager and CIO is that the CIO has a greater responsibility to the business as a whole and therefore is expected to have greater, all-round business skills, greater communication skills, greater strategy and planning skills and a greater appreciation of how IT can help the business to achieve its goals," Bateson said.
"A lot of CIOs come from business management-related roles and have had exposure to IT along the way."
Robert Walters director Bruce Henderson said organizations would rarely even consider hiring a CIO internally unless there is a considered and planned succession strategy, adding that hiring externally brings new skills and knowledge, which is critical in an innovation-focused role.
"An IT manager will only be offered a CIO role if there is already a serious plan in place to evolve into the role on a structured and timely basis, or if the IT manager is extremely talented," Henderson said.
Honda Australia assistant HR manager, Joanna Haddock, said when recruiting for senior positions the company uses a resourcing agency to provide them with a candidate shortlist. However, this doesn't rule out any internal candidates who may be identified as having potential to develop into a senior role.
"Our internal performance management system assists in highlighting high performers within the organization and [reveals] their career aspirations and developmental needs, while prominent head hunters can usually seek out star external candidates with a proven track record and excellent qualifications and capabilities," Haddock said.
Foodland Australia IT manager, Paul Trent, said in his experience, companies have either a strict succession-planning approach where they groom specific candidates for roles or the appointment of a CIO follows a recruitment policy that must be advertised both internally and externally.