Lions don't hunt chipmunks. They focus on larger prey. This piece of advice, which sits on a banner every time Hospira Chief Executive Officer Mike Ball takes stage, is a tip well passed down any organization's hierarchy.
For retail and CPG chief executive officers, appropriately appointing and efficiently managing a company's most important executives–the so-called c-suite–should mean setting the big picture instead of micromanaging. "It comes down to the company's mission, vision [and] value proposition," says Tony Frey, senior vice president, services division, at Carlisle, Pa.-based executive search firm The Carlisle Group.
It represents a change in philosophy from the command-and-control approach to leadership, where the CEO barked orders and even high-level executives were expected to do as the top executive wished. To take the company into the future, however, CEOs today need to consider more ideas than their own to keep up with competitors. As a result, many are letting go of some of the reins and encouraging c-level executives to step up with new solutions.
"When we look for candidates for our clients, one of the more important things is to ensure that the person understands not only what the organization needs in the immediate term, but also in three to five years," Frey says.
Candidates fit for the top of the house need to have strategic insight and conceptual ability, says Christine Rivers, vice president who leads Philadelphia-based Hay Group's leadership and talent practice for the retail sector. "The right c-level executive will have the ability to know where the company is headed instead of where it's been," Rivers says.
CEOs can keep c-level executives motivated by involving them in decision-making. They should have an open dialogue about what the company needs to do to bring the strategy to fruition. "If the planning process is kept too constrained to too few people, the execution is not going to be very successful," says Kathy Gersch, executive vice president at strategy firm Kotter International.
Yum! Brands CEO David Novak is known for his people-centric approach, where decision-making was not a one-man process. "Recognize that nothing big gets done by you alone," Novak told Chief Executive reporters this year. "You need to know who's on your team the same way a marketer knows its target audience. Know your people cold. What's in their heads? What are they thinking? And then you've got to say, 'OK, to take them with me to achieve this strategy, what perceptions or beliefs do I have to build, change or reinforce to get them to come along?'"
CEOs tend to be self-motivated people capable of working alone, so they must be deliberate about involving and welcoming divergent opinions. "There has to be an environment – and it has to start with the CEO – where it is OK to disagree, and opposing views are rewarded, not shut down," says Beth Taska, vice president of human resources at Gap Inc. Often even senior executives will tell the CEO how great his or her idea is, but the chief executive needs to welcome candid, negative feedback. "Even if it bruises the ego of the CEO, a healthy debate and disagreement has to be rewarded," Taska says.
An open discussion is imperative for retailers in this economy, which is forcing organizations to alter goals and business strategies and think out of the box. Mike Menard, the president of The GenSight Group, who spent years at Johnson & Johnson and has worked with companies like Nestlé, Coca-Cola and Glaxo, urges executives to act now. Senior executives "often tell me they are waiting until things get back on track. You have to understand that the reality is there are no more tracks," Menard said.
For high-level executives in the retail industry, this means thinking strategically, says Thom Blischok, chief retail strategist with management and strategy consulting firm Booz & Co.'s retail practice in San Francisco. "Out of the box for retail is asking specific questions: What would we do if we had to re-create the customer experience? How are we going to change around our cost structures? How do we make product innovation and in-store experience much more unique and exciting? How do we get cash registers on a mobile device?"
In the fast-paced retail environment, even the best in the field often see poor store sales one day and strong sales the next. Executives need to be able to lead in a world where growth is challenged and where they will have to accept frequent small failures, Blischok says. "The 21st century retail leader will have to have skills centered on relevant analysis, the ability to sort through and develop shopper-centric strategies, to think about where to invest, where not to invest and how to get differentiators honed by the organization and accepted by the shoppers," Blischok says.
Hiring top-level executives for retail has its own set of challenges. "The dynamics of managing in retail are different because you interact with the consumers directly," Frey says. "It's all about the customer, it's all about service, and it's all about making the cash registers ring."
Whether to recruit c-level executives from the outside or promote from within an organization is often debated. "Today, a lot of very good people change jobs [every] two to four years, which makes succession planning extremely difficult," says Bill Nanovsky, a founding partner at SCA Group, a strategic corporate consulting firm.
Be upfront about what you are looking for. "If you're going both internal and external, tell your internal people that you may be looking for someone who has a different point of view, someone who can help you diversify and bring in fresh ideas," Frey says. Every worker in the company should have the ability to ask their supervisor, "What do I need to do to get to that next step?" Key performance indicators must be more quantitative than qualitative. "If your supervisor says 'We need you to be a little more experienced,' it could mean anything," Frey says. The CEO must explain what executives need to achieve to be considered for a promotion, Frey says.
Finance and More
The chief financial officer position in retail companies has changed over the years. "The old view of the CFO is that of pure governance," says Menard. "However, the new CFO takes leadership in the deployment of resources to generate capital and ensure profitable growth. But don't hire a Dr. No who simply wants to stop spending. When they start saying no to everything, they're shutting the organization down."
The GenSight Group
Deploying resources may entail treading into nonfinancial areas of the business, such as providing real-time operational and financial analyses and growth initiatives like international expansion, according to a Harvard Business Review report on c-suite management.
The chief executive should encourage the finance head to take on more responsibility, Nanovsky says. "A good chief executive will make sure that the CFO has the capabilities, tools, knowledge and training to take that next step," he says. A subordinate won't grow without a senior letting it happen, Nanovsky adds.
The rapid pace of developments in technology require an executive who understands what customers are using and how the retailer can make the most of new technology to better serve shoppers. "It used to be an operating sort of role," Blischok says of the chief technology officer's position. "You had to ensure that the merchandising and logistics were working efficiently. Today, the CTO role has much more of a customer face. It's about how we are building our applications, how're we integrating our website with the smartphone face."
Walmart recognizes this trend shift and has set up an e-commerce research arm in WalmartLabs. "We believe the retailer that will win in the future will connect brick and mortar, e-commerce, mobile and social in a seamless way that makes it easy for customers to shop when, where and how they want," Jeremy King, WalmartLabs CTO, wrote on CIOReview.com.
Elevating Human Resources
The role of the chief director of human resources also has broadened in recent years. Taska, a human resources specialist who worked with Sears Holdings for eight years prior to her current position at Gap Inc., recommends CEOs look for candidates who can be internal advisers, who have a solid grip on the company's work culture and who can work with other business heads.
"The best HR people are those who absolutely understand the business and are helping manage it," Taska says. "It's a person who has great business acumen, who helps an organization run smoother – not just in terms of internal law, compliance and payroll, but also in how business is conducted effectively."
In retail, Taska says, customer service is directly related to employee engagement.
In the end, an effective chief executive will realize that the perfect c-level executives, whatever the formal job description, won't accept being managed in the conventional, top-down way. "The profile of c-level is one of confidence, pride and, many times, unhealthy ego," Menard says. You don't manage a c-level executive. You define success and then you watch them run with it.