Can you imagine a sports team that didn’t have a deep bench? Or worse, a team that has no developmental system to identify new talent and help them grow. You might say that these teams would be hard-pressed to win. The same applies to business and retail is no exception. Turns out, this is not a hypothetical question for retailers, it is a very real one. The retail talent pipeline is broken.
A barrier to talent development is the silo mentality of retail management. Different functions in retail often work on different (and often, divergent) goals. So, what’s the future of emerging talent if they don’t move across functions to gain a broader perspective of the business?
Downward Mobility
The Business of Fashion recently published an article discussing the “sales floor to C-suite” pipeline in retail. This pipeline is drying up because employees no longer see a viable, upward path. This isn’t breaking news given that Fortune, The New York Times and Forbes published articles in early 2023 about the problem.
Retail finds itself in a bind. Brands lack a pipeline of internal talent that could be elevated to the C-suite and, as a result, seek suitable outside candidates to fill the CEO role. This is in direct contrast to a previous era where future retail leaders were trained and groomed at companies like Lord & Taylor, Abraham & Strauss, and Macy’s. Long gone are the days when high-potential employees had the opportunity to be trained in various roles to learn different areas of the business and work their way up.
Outside In
With a shortage of inside candidates, some brands look outside the industry for leadership. Think Express CEO Stewart Glendinning from Tyson Foods. Or in more unfortunate circumstances, Stephaine Linnartz, formerly of Marriott International was brought in to take the lead at Under Armour. Her tenure was quickly cut short, and she was punted out the door to make way for Under Armour Founder, Kevin Plank.
Some would say that retail is in a CEO crisis because of the current inside talent shortage. We call that nonsense; it’s better described as a self-inflicted wound.
Next Gen Shifts
Today, retailers are lucky if they have any momentum built in their talent pipeline. In an informal survey of retail executives, we found that more than half cite their greatest source of employee attrition to be at the entry-level. Further, 55 percent of those surveyed said that they are seeing the overall tenure of employees decreasing over time. We know today’s young workforce lacks loyalty and is on a self-perceived fast track to success. Just a focus on sales associates reflects their work is often unfulfilling, especially when dealing with loss prevention and rude customers. And without a training program and development, there’s no hope for moving from the sales floor to the C-suite.
Another barrier to talent development is the silo mentality of retail management. Different functions in retail often work on different (and often divergent) goals. So, what’s the future of emerging talent if they don’t move across functions to gain a broader perspective of the business?
Lessons Learned
In contrast, retail should pay close attention to what is happening at Pepsico. The company fully understands the value of proactively identifying and developing talent. In fact, retail CEOs of many Fortune 500 companies are alumni of Pepsico, including Brian Cornell of Target, Lauren Hobart of Dick’s Sporting Goods, Vivek Sankaran of Albertsons, and Mary Dillon of Foot Locker.
What exactly is Pepsico doing right? According to Fortune, Pepsico cranks out rockstar talent with its intense focus on identifying and developing high performers. The process is deliberate and systematic. The company identifies their high-potential talent and throws them in the deep end; talent is challenged, mentored, and given room to fail. And these high-performing future leaders have equal opportunity to succeed from the corporate office to fleet truck drivers. Finally, Pepsico expects executives to understand the overall business by training them to have a holistic view of both strategy and operations.
Retail Talent Success Stories
There are some bright spots with current retail CEOs rising through the ranks to lead their brands.
- Aritzia CEO Jennifer Wong started on the shop floor in a part-time role while she was an undergrad in 1987. At the time the company was only three years old. In a recent podcast interview, Jennifer states that a big reason she has stayed with the company for so long is because she never felt the need to go anywhere else to find an opportunity.
- Costco CEO Craig Jelinek joined the company in 1984 as a warehouse manager. He became EVP of Merchandising in 2010 and then CEO in 2012. But it doesn’t stop there, Jelinek is stepping down to hand the reins over to Ron Vacharis. Guess where he spent his career? At Costco for over 40 years, starting out by driving a forklift in the warehouse.
- Walmart CEO Doug McMillon started out by unloading trucks at a Walmart distribution center to pay for college. He came back to the retailer during his MBA, progressed rapidly, and now leads this behemoth retail brand.
Rebuilding the Pipeline
So, what should retailers be doing to rebuild their talent pipeline? First, understand that identifying and developing talent is a proactive and intentional process. If you are complaining about a lack of talent, then you are not doing enough to seek it out and develop it. Also, this is not a process restricted solely to HR. All members and levels of leadership play a role in developing the talent bench.
Next, executives must spend time on the frontlines: whether it be the shop floor, warehouses … wherever the frontline is. This is a reality check to see how strategy is being executed, where there are gaps, and to talk to frontline workers and customers. Observing employees in action can help identify high-potential talent.
Finally, smash holes in the silos. Team members across different areas of the organization rarely meet one another even though the actions of one function can absolutely impact another. The often-fragmented relationship between merchandising and marketing is one example. Employees can’t see the bigger picture within the organization unless they spend time with different departments.
High-Performance Recruiting
Retailers should take a page from the late Jerry West’s playbook. Arguably the greatest NBA executive ever, West was known for his eye for talent. He was successful in recruiting top-tier players either as free agents or through the draft. Champions James Worthy, Kobe Bryant, Klay Thompson and Shaquille O’Neal were all recruited by West. He was a fierce competitor at heart and aggressive in getting the best players that he wanted. It’s no coincidence that West won seven championships.
