Inside 1to1:Privacy

How to Measure a CPO's Value

October 1, 2007

By Don Peppers and Martha Rogers, Ph.D.

A chief marketing officer is measured by the success with which he or she completes a host of sales and marketing goals. A chief financial officer is measured by how well he or she keeps a company's financial shop in order. Yet no such broadly accepted measurement framework exists for the Chief Privacy Officer (CPO) position.

And to hear CPOs and assorted pundits tell it, they are apt to say there is no way to develop such a framework. Unlike other C-level execs, CPOs boast a wide disparity in job requirements. Some CPOs, for instance, also hold the post of general counsel, while others oversee government or regulatory affairs. That said, as Fred Cate, a Professor at the Indiana University School of Law-Bloomington and Director of the Indiana University Center for Applied Cybersecurity Research, puts it: "There's no such thing as a job in which you can't measure performance."

One thing that everyone seems to agree on is that a CPO should be judged on whether his or her company complies with any privacy assertions it makes, in its privacy policy or elsewhere. Independent audits can easily verify how well the CPO is performing in this regard.

Beyond that, however, experts are split on what measures are most effective -- and, just as importantly, most feasible. Most frown on the idea of assessing a CPO's performance based on the number of privacy and security breaches. A CPO, after all, can do just about everything within his or her power to guarantee the sanctity of information and still be waylaid if a single careless employee allows a laptop to be stolen.

"There is no such thing as perfect security and the bad guys are getting more and more sophisticated every day," said Lisa Sotto, a Partner and head of the Privacy and Information practice at Hunton & Williams. Added Jennifer Barrett, Global Privacy Leader at Axciom Corp. "A data breach could stem from a security issue that might fall under a (Chief Security Officer's) purview."

On the other hand, Cate wonders why CPOs should automatically be let off the hook for a large-scale breach, pointing to the buck-stops-here nature of the privacy/security mandate. "If I pay [the CPO] a couple hundred thousand dollars, I'd expect that he would keep me off the front page of the papers."

Cate and others agree that a CPO should be judged on whether his or her company's practices build a sense of engagement and/or trust in its customers, clients and even employees. The problem, of course, is measuring something so intangible.

Carol DiBattiste, ChoicePoint's General Counsel and CPO suggested that "you'd have to go out with surveys to do that. You can't just take a few peoples' word for it." Sotto added, "The ability to build trust, or to prevent existing consumer trust from vanishing as a result of a privacy event, is a terrific measure. But it is very difficult to measure this in an objective fashion."

In essence, what they're all trying to say is that companies are still feeling their way around measuring CPO performance. So it is instructive to take a look at what two firms that pride themselves on their privacy practices, ChoicePoint and Axciom, have asked of their CPOs.

When DiBattiste arrived at ChoicePoint in April 2005 shortly after the company's security breach became public, she implemented a comprehensive set of metrics designed to measure her performance. On a general level, ChoicePoint judges DiBattiste by taking deep looks -- which include independent audits -- at both internal performance and external perception.

Among the considerations for the former: whether she has implemented policies and conducted thorough training within the organization, plus whether the company has seen a drop in the number of privacy/security-related employee investigations and complaints to the employee-whistleblower and fraud hotlines. To measure external perception of ChoicePoint's privacy and security measures, the company assesses the number of outreach events DiBattiste participates in and audits consumers and clients, among other things.

"I have monthly and annual goals," she said. "Some of what we look at is anecdotal, some of it is measured statistically. You have to do both."

Axciom CPO Barrett is judged only slightly less thoroughly. She has budget- and staff-management responsibilities that must be met, plus she sets privacy-policy and compliance goals on a regular basis.

She warns that CPO performance shouldn't be assessed without a similarly meticulous measurement framework in place. "It's fair to measure CPO performance once you realize there shouldn't be an expectation of perfection -- that holds true across all C-level positions," she said. "Ensuring privacy is a tremendous challenge and seamless collaboration is key. The human element is just as important as any written plan."

You can reach Don Peppers and Martha Rogers at dpeppers@1to1.com or rogers@1to1.com.