Fascinating piece in the New York Times this morning that starts out this way:
"One of the hardest-to-find items in retail right now is a chief executive.
"A number of high-profile companies — including Gap, Diesel, and the parent of the North Face and Vans — are operating without a permanent chief executive officer. And thanks to a contraction of management training throughout the industry and the need for a rare combination of skills to navigate this tumultuous period, filling those leadership roles is perhaps more difficult than it has ever been.
"Given the rockiness that retail companies expect to face in the next few months because of slowing consumer spending, pricing challenges and a possible recession, that’s a problem."
The story notes that "the past few years have required chief executives to adapt to a retail landscape they weren’t trained for and learn a wider array of skills to help their organizations navigate the exhaustive list of disruptions brought on by the pandemic. For decades, retail executives have been expected to be expert sellers — knowing what people wanted, how much of it and how to get them to buy it. Now, top executives are also expected to understand how many resources should go to e-commerce operations compared with brick-and-mortar stores, how to troubleshoot issues in global supply chains and when to invest in emerging technologies like the metaverse."
Experts interviewed by the Times suggest that the decline in comprehensive management training programs has become a real problem:
"For decades, those who climbed the ranks at large retail organizations started in executive training programs run by department stores or big-box chains. Those programs provided both vast infrastructure and operational incentive for companies to bring in young, talented employees and allow them to burrow deep into all parts of its business. The programs would usually last a year to 18 months, and participants cycled through rotations in store operations, buying and product development … Beyond creative minds, these training programs also required participants to have strong math and communication skills. They focused on giving those who went through them the experiences needed to eventually run divisions within brick-and-mortar store operations."
And, from running divisions, these people would, and often would, end up running companies.
- KC's View:
A few thoughts here.
When companies started cutting back on management training programs, I have to imagine that the impetus was largely financial - they cost money, and CEOs generally are rewarded based on running a tight ship on which expenses are low and profits are high. So, it probably is fair to suggest that the current problem is self-inflicted … and a lesson in what happens when you put short-term efficiency ahead of long-term effectiveness.
The story makes the point that many retail CEOs came out of merchandising, and I think there's also been a more recent pattern of them coming out of finance. I've always thought that more CEOs ought to come out of marketing, which by its nature should be more strategic in orientation than the tactical roles often played by merchandisers and finance folks. (I'm sure I'm going to get a bunch of emails about that observation…)
Finally, because the skill set needed in a modern retail CEO is so different from what it was not that long ago, it is time to start going beyond the usual suspects when seeking c-level personnel. Not just for CEO jobs, but for the next layer of executives who can bring diverse skills and insights to these companies and can be trained for the demands of the big job.