Retail's Future … It’s All About the Talent, But More About the Talent Planning
It's intriguing to read articles that focus on the current challenges of retail businesses and the “imminent death” of the industry. The same is true of articles that focus on the challenges around developing talent pipelines and finding the retail talent of the future. It's particularly interesting to read articles with lengthy citations from senior search firm leaders who echo these thoughts and share these concerns. It's worth noting the irony of the fact that these firms are tasked with finding next-generation retail leaders yet are struggling to do so. In fact, they're often turning to nonretail sources more than recognizing where the problem stems from and advising their clients accordingly.
What does it say about experienced search firms that are tasked with and paid for finding next-generation talent yet are struggling to find that talent in the industry they study and advise. They aggressively seek out business with the guarantee that they can continue to feed the pipeline while sensing a diminished flow within that pipeline? There's an irony here that needs some exploration. As a colleague of ours has pointed out, the problem hasn't changed but the playbook has and continues to quickly evolve.
Looking at the retail map, it's easy to see that there's a leadership development issue that exists for a host of reasons. Research indicates that the need for investment in career development is growing more central, especially as the lack of defined career paths and talent planning in the industry has depleted the flow of talent so needed during these times of disruption and “redefinition.” The basic brick-and-mortar retail model that was in place for well over a century has been impeded by the growth and development of alternative channels of business as well as by the resulting need for retailers to differentiate themselves by more than product and price. From high-profile bankruptcies to pandemic-led disruptions, retailers have had to quickly navigate a rapidly evolving customer landscape that demands constant agility and innovation.
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When I read an article in a major industry journal that was sent by one my colleagues that addressed this issue in an appropriately stern and woeful tone, we figured it was time for a, hopefully, thoughtful and more deliberate response to a complex and critical issue. We agree that there's a leadership “sourcing” problem; however, the problem is broader than the fact that merchants are less and less the major source of CEO-level leaders. There may be other sources that need to be tested that may bear riper fruit. To focus on building a great bench of talent, a CEO must directly manage the career development process in an organization and not delegate the task or assume development is happening though current experience.
How do we offer developmental opportunities in key functions (e.g., merchandising, marketing, digital) to a talented merchant without losing that merchant’s product focus and involvement in product and sales? Today’s playbook calls for a better balance of long- and short-term planning, something that has always been a problem in a notoriously short-term thinking industry.
In essence, the problem hasn't changed; however, developing a playbook for a solution has. And presenting a one-sided argument to the issue will do no more than presenting no argument at all.
What does some simple research tell us? It points out that few, if any retailers, have defined rotational development processes (as they did in the 1980s and 1990s) nor formal development programs. These processes addressed the critical need for developing pools of talent to feed the flow of future leaders.
Let’s start by asking a few questions and offering some thoughts:
- There's still a need for some form of career development process within the retail industry. Remember long-term people investments through executive training programs and the development of retail “universities” built in collaboration with serious academic institutions? Remember flexible, cross-functional career paths? It' not that these stopped working so much as they were abandoned by the very retailers they were meant to service. These very same companies need to identify critical success factors, figure out the gaps of those seen as future leaders, and invest in critical development opportunities.
- Where is the risk-taking and experimentation that has always defined the industry? Who has an environment that supports making mistakes and learning from failures and successes? Where are the leaders empowered to step outside of their “comfort zone” and take calculated risks that may (or may not) pay off? How do leaders seek out innovation in an environment of confusion?
- Career development as a concept needs to be expanded to focus on and consider the key functions a future CEO must manage as well as those core functions that are basic to any retail CEO. Considering that expanded view, how do you offer a developmental opportunity that may or may not pay off in the marketing, digital or tech worlds to a talented merchant? Further, how do you do so without losing that individual’s merchant eye and the need to keep that individual involved in that process? How do you keep the talent engaged and progressing while supporting the immediate business needs?
- Part of this career path must include recruitment of key talent from smaller and more agile retail organizations that have no choice but to have talent to manage multiple areas. Many leaders who come out of more innovative startup businesses understand the need to be agile and have successfully managed across multiple business functions. Accessing this pool of talent means finding one or more partners who keep a close watch on this sector and develop relationships far in advance of any need. This is about proactive recruitment through funding a “star search” partnership with a more creative external recruitment firm. Therefore, recruitment firms need to change their game to include more research and outreach, as well as more opportunistic recruitment for companies with a broader definition of talent. Costly? Yes. Necessary? Absolutely.
- Bigger and more established retailers need to study the practices of smaller firms and learn from them. Just as Walmart bought developing brands such as Bonobos or ELOQUII, larger retail firms need to study what may not have previously been considered competition, but which do disrupt a category or market.
We've watched larger and more established retailers hire nonretail executives for their “new” thinking and perspective. We've all seen these individuals fail at a cost too high to accept. Look at JC Penney and there are numerous others to note.
In an article referenced earlier, statements were quoted to a leader at Alix Partners and of other merchant leaders who stated that disruption in retail is the new normal. The retail CEO position is tougher than it has ever been. Market and supply chain challenges make the design, development and marketing of products more difficult than ever. It will always be about ensuring robust leadership and developing a team of talented individuals; however, the leader of such a team has to know more and think much differently.
So what does this mean?
For every Winne Park (CEO, Forever 21) who comes out of McKinsey and every Michelle Gass (president, Levi Strauss) who has background from Starbucks, and every Bill Brand (ex-CEO, rue21) who has background at Carnival, there needs to be someone who develops agility at a smaller retailer and is career-pathed to a larger entity. Look at Laura Alber at Williams-Sonoma, who started at RH in marketing and merchandising and then moved successfully to a larger scope opportunity. The same is true of Jennifer Foyle at AE/Aerie. And look at Janet Hayes at Crate and Barrel. Each has a more creative, less linear career path, starting at a smaller retailer and moving into a larger one. Someone “discovered” these individuals and took a risk. What's missing today is the courage to take risk, whether calculated or planned risk.
Where is the retail industry going? What kind of leaders will be needed? How do we plan for it now so we're ready tomorrow? It’s not about finding a talent to fill a job. It's about developing a broader thinking process, experimenting and taking risks. Isn’t this the basis of retail in any case? It's a complex challenge; taking risks always is. That being said, the long-term gains are worth consideration.
It's an interesting challenge. Let’s see who takes the risk and who doesn’t and what happens. In any case, it's now about long-term thinking in a notoriously short-term business.
Frederick Lamster is the managing director at ZRG Partners, a progressive midsized global executive search firm that uses a proven, data-driven approach. Sue Hardek is a managing director at ZRG Partners. Brett Bolt is an associate at ZRG Partners.
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Frederick Lamster is the Managing Director at ZRG Partners, a progressive mid-sized global executive search firm that uses a proven, data-driven approach.
Sue Hardek joined ZRG as a Managing Director in 2022. Sue has spent the past 25 years identifying and recruiting talent to fuel business growth in the digital industry.
Early in her blossoming career, she led the Technology practice for a regional executive search firm as the first female Managing Director responsible for 60% ($2.4MM) of revenues. That was followed by her first Founder / Partner position in a start-up Executive Recruiting firm in the first dot.com boom, which led to bigger and better things at Capgemini, where she built an internal Executive Search organization.
Sue was later recruited by the global digital agency, Digitas where Sue rose to VP/Group Director of Human Resources in Chicago, the fastest-growing office in the Digitas global network. There she led all talent strategy and recruitment for all practice areas of the agency. She then moved on to become Chief Talent Officer at Manifest Digital, a digital experience design firm where she built the talent organization from the ground up and drove all Executive level searches across all practice areas (Marketing, Digital Strategy, Technology, Creative, UX, and Media).
Immediately before joining Talentfoot, Sue led her own boutique firm specializing in Talent Acquisition and HR consulting for Digital Marketing, Media, Technology, and Experience Design roles working with clients like Digitas, Accenture, Constellation Brands, Jack Morton, and Sears to name few. In addition to Executive Search, she also served as an HR advisor and coach to Executive-level clients helping with organizational design and HR best practices.
Brett Bolt is a search consultant at ZRG Partners, a leading global talent advisory firm. Graduated from the Hankamer School of Business at Baylor University with a degree in Human Resource Management.