Reflections from the Corner Office from Herbert Mines Associates
Herbert Mines Associates recently conducted a leadership survey of 135 retail Presidents and CEO s about critical issues facing the industry. Hal Reiter, Chairman and CEO of Herbert Mines Associates, tells us that there were a number of intriguing findings including the challenge of retailers needing to tap young talent to bring in the most innovative minds for the future growth of the industry.
Q. One of the findings was that 74% of the presidents and CEOs surveyed said they will search for talent from outside the industry to fill leadership positions in the next five years. Did this answer surprise you?
A. Retail leaders are some of the most creative, innovative, and colorful leaders in business today. But the industry hasn’t had a lot of success in bringing in outsiders to lead companies primarily because of the complexity of the retail business and the importance of understanding how critical the understanding of product merchandising and marketing is to success. For top leaders, there is a greater likelihood of success if their roots are in retail, but there are some areas like finance and human resources where professionals can more easily transition from outside industry. We need to figure out what characteristics make the best retail leaders and determine where we can find people with these characteristics. As an industry, we must groom, nurture and retain these professionals effectively so that when the top positions become available, they are ready to step up to the plate.
A. Without a doubt, it’s the care and feeding, if you will, of young talent. Retailers need to be constantly recruiting talented young people who are plugged in and able to keep up with the ever-changing digital world that is moving at warp speed. An overwhelming number of the survey respondents (90%) said that they believe the industry is not attracting the best and brightest from college campuses. The senior retail leaders need to identify, recruit, hire and retain this younger talent. It will take skill to find them and keep them. They need to change the perception that a retail career is folding sweaters at the Gap and capitalize on the exciting convergence of social media and retailing and the emergence of mobile commerce that is just beginning.
Q. Understanding new ways to connect with and market to consumers was seen as one of the biggest challenges facing the retail industry in developing leaders. What are the ways that retail leaders are addressing this challenge?
A. The major focus for retailers right now is figuring out how to give consumers exactly what they want through customization. And if you look at examples of great retailers, they have the know-how to attract and entertain the elusive customer. Williams-Sonoma was one of the first retailers to make big changes. Enthralled by the store layout, display, and cooking demonstrations, consumers responded and sales went through the roof.
Q. What is the biggest conundrum that retailers face in retaining talent in the coming years?
A. The gold standard for career development continues to be the executive training programs. However, these programs have a high attrition rate, so retail companies need to create a more effective work environment in which employees can achieve, be promoted and feel worthwhile. It is very expensive to lose recruits, and hire talent. The survey found that the number one retention tool for top talent was career development and advancement programs. In other words, it isn’t about the money or stock options. The key to grooming and growing internal talent is the exact same thing as retaining top talent—nurturing employees all the way through careers and not just at the very beginning.
Q. The survey revealed that 73% of the respondents don’t have a formal CEO succession plan in place. Why is that?
A. Retailers aren’t enormous companies like GE or Pepsi with three or four candidates in different geographic regions running a line of business with an independent P&L. Retail leaders work down the hall from one another, and it isn’t great for the company culture to have colleagues vying against each other for the corner office. Also, a CEO is typically resistant because he or she doesn’t want a potential successor hovering, waiting in the wings. It is a Catch-22, where the board wants a succession plan, but the CEO usually doesn’t. It is an industry-wide problem that hasn’t been addressed yet, but one that really needs focus and attention.