Where are retail’s hottest new CEOs coming from? We talked with Hal Reiter, Chairman and CEO of Herbert Mines Associates and the go-to man for C-Suite executive searches. His answers may surprise you.

Our industry is in one of the most difficult – some say downright transformational – periods in its history. How is this manifesting itself as companies search for leadership?

Companies – particularly the publicly held ones – have a wish list. They want an incumbent CEO with prior experience in a publicly held firm. They’re set on hiring the Meryl Streep of retailing, the established star whose versatility, ability and performance are unquestioned. They want the whole package: Wall Street smarts, financial shrewdness, leadership acumen, expertise in the public arena and skill in investor relations as well as operational and merchandising savvy. Not always a realistic order.

WHY NOT?

The talent is out there; but the reality is that at any given time and for diverse reasons such as non-compete clauses and compensation, only a handful of sitting CEOs of publicly held companies are officially “in play.” We are increasingly exploring beyond the pool of known candidates to find the potential contenders who are off the radar, maybe even outside the industry.

ARE CLIENTS COMING AROUND TO THE NEW REALITY?

Many are. We just completed a research study that examined CEO turnover in public retail companies over the last five years. We found that while 58% of CEO hires were internal promotions, a growing number – 42% – were external hires. But the most startling finding was that a mere 7% of external hires were CEOs with prior public company experience. And a significant number are coming from outside retail – a potentially good trend, in my opinion.

HOW IS YOUR APPROACH TO THE EXECUTIVE SEARCH CHANGING, AND WHY?

We have a position spec, that’s our bible, and it tells us the type of candidate we need to identify and surface. If it’s a CEO search and it’s not confidential, we will interview people in the organization to gain insight into the Gestalt of the company, to learn about the firm’s culture. We then incorporate that knowledge, our expertise and intuitive understanding of the process  and other important ingredients into our spec, to generate our list of candidates.

HOW DO YOU IDENTIFY THE BEST CANDIDATES?

We’ve gotten increasingly creative, which is a really fun process. The key to a high-level search is unearthing the hidden gems, for example the undiscovered #2s who have the heart and the head AND the smarts and shrewdness to move into a CEO position. For example, when we were doing the Pier 1 Imports CEO search, we identified Alex Smith, one of several #2s at TJX. He possessed all the traits that Pier 1 required. He was — and is – creative and innovative, with a keen grasp of the financial world. And because he came out of the home business, he knew the product, the multi-store environment and the culture. And the timing was perfect; Alex was at the right tenure in his career to become a CEO. And he’s doing a great job: Pier 1’s stock price has more than doubled since he took the reins.

WHAT ABOUT PERSONALITY AND THE “HIP” FACTOR? WHAT “SOFT TRAITS” MAKE A GREAT CEO?

CEOs need to be good listeners and inspire and engender trust and resourcefulness. That means no micromanagers; the most successful CEOs give their people latitude, support and trust – as well as the tools and resources – to do their jobs. And  especially in this climate, CEOs need to have a sense of urgency and the ability to respond rapidly to changes in the  marketplace. And in the retail industry, they also need good taste and a sense of style.

HOW IMPORTANT IS ENGAGEMENT, EASE AND COMFORT WITH SOCIAL NETWORKING AND THE NEW TECHNOLOGY?

Especially in the retail business, the CEO has to be the face to the outside world, to represent the corporation across all social networking platforms. The CEO must understand the youth culture and grasp both today’s technology and the cadence of change. He or she has to expect that things are going to move faster than anticipated. You have to be flexible, adaptable, ready and able to embrace and exploit new business models. The bottom line: you can’t be mired down in traditional notions of how to do business.

Harold D. Reiter is the Chairman and CEO of Herbert Mines Associates, the leading executive search firm specializing in C-Suite, senior level and corporate board placement for fashion, retail, e-commerce, food, chain restaurant and consumer product companies. Hal and his colleagues at the firm have secured top-tier executives for an impressive roster of blue chip clients including Barneys New York, Wal-Mart, Avon, Macy’s, Starbucks, Rue-La-La, Chico’s and Pier 1.