The New Retail Challenge: Building Leadership Capabilities

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The New Retail Challenge: Building Leadership Capabilities Key Takeaways n

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Competency gaps exist today among retail executives against what CEOs say is important for future success. Keep the right competencies in focus for development.

Best-in-class retail executives share more leadership similarities with non-retail executives than differences.

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Supplement internal talent by external acquisition, including going outside the retail industry.

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Multi-country retailers need strategy and emotionally competent leaders who can operate in a complex and dynamic environment, more so than domestic retailers.

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All retailers can right-size their talent management solutions.

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The CEO should be the chief sponsor and champion for talent and leadership. The commitment of the CEO and senior executives is critical for success.

By Brigitte Morel-Curran, Tierney Remick and Pauline N. Johnson Many retailers, from global to local, from large to small, are awakening to what could be their most critical challenge in the years to come.

Caught by competitive pressures, pricing, and discriminating consumers, retailers have often had to focus on dealing with the immediate to survive. A new catalyst may be redefining their competitive space: talent shortage across the globe.

And it is a full-scale war with “winner takes all.� Demographic trends, educational shortages and global labor movements influence the availability of qualified individuals and retailers’ ability to develop and attract the talent they need to thrive. The impact is complex, having a more profound effect on company growth and profitability than cost controls or shifting consumer tastes. These trends will have such a profound effect on retailers that Korn/Ferry partnered with the World Retail Congress to conduct a retail leadership study in order to better understand the implications of these trends.

Retail CEOs worldwide have experienced difficulty in finding the right leadership they need to successfully achieve organizational growth.

The serious consequences of this pattern cannot be underestimated.

Studies show that the availability of the right talent is becoming the biggest issue affecting the ability of retailers to deliver their growth plans.

Infusing the organization with select, appropriate executive leadership is only part of the answer to drive organizational success and assure strong competitive positioning. Increasingly, retailers also need to accelerate development of up and coming talent to complement acquisition of external executives.

Significant Trends Complicate Recruitment and Retention There is evidence that after decades of suffering brain drain to other industries and competitors, the ranks of retail employees with executive/management potential are dangerously thin. The best and brightest minds have not been seeking retail careers as much as opportunities in other industries.

Mobility is on the rise. Loyalty, especially among younger generations, is to the self rather than to the organization and its mission. More than at any time in the past, individuals display openness to entertain other

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offers and move to new opportunities. With talent in such short supply, aggressive recruitment by competitors will continue to accelerate, with turnover having a greater impact than ever before.

“The retail industry is in trouble. Where is the talent?

Retail has been expanding but the talent pool has not. It’s like we’re swirling around in the same pool without direction.”*

With greater discernment and unwillingness to compromise than previous generations, Gen X, Gen Y and Millennials carefully evaluate potential employers: career paths and development programs are high on the list of these potential leaders who view talent management as a key competitive differentiator when deciding which organization they will join. Today’s professionals look for retailers with the most appealing employer brands, signaling these advanced talent practices that open up opportunities for them to grow.

In addition, the talent supply chain becomes more fragile: with fewer individuals in the development pipeline, companies often succumb to promoting people early to fill open positions. This practice often has dire consequences, putting the business at risk if employees are not developed to be successful in these stretch roles.

Perception trumps reality: The retail industry is viewed as a career pass-through rather than a career path by many potential employees and the public. A reputation for long hours, low entry-level pay and limited development support all come into play in this image. Unless retailers launch an aggressive campaign to combat this image, their ability to attract and retain qualified talent will be severely crippled.

Winning retailers, regardless of size, are adept at attracting, developing and leveraging talent. Dedication to development translates into retention of a strong bench of committed individuals with a stake in the organization’s success.

Korn/Ferry Retail Leadership Study To better understand the challenges faced by retailers, Korn/Ferry’s study addressed five specific questions:

* In February 2008, Korn/Ferry held in-depth conversations with the CEOs of 30 retail organizations based in 10 countries about their leadership and talent management. Their candid comments are woven anonymously throughout this paper.

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1. What are the qualities of a successful retail executive?

2. How do retail executives differ from executives in other industries?

3. Are there differences between multi-country versus domestic retailer executive teams?

4. Where and how does the retail industry develop their talent for the future?

5. What is the CEO’s role in winning the war for talent?

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Retail Leadership Methodology This comprehensive study used a three-pronged approach: Executive Leadership Profile. Using Korn/Ferry’s Decision Styles, leadership profiles of approximately 1,000 executives from a broad range of global retailers were collected and analyzed (see Figure 1).

Organizational Talent/Leadership Practices. CEOs of 30 retail organizations based in 10 countries were interviewed face-to-face about current talent management and leadership development practices.

Best-in-Class Leadership Research. Research from previous Korn/Ferry best-in-class leadership assessments examining executives from a wide variety of industries was used in the analysis.

Executive Leadership Profile: Qualities Common to Retail Executives Analysis of the leadership profile of approximately 1,000 executives revealed distinct behavioral characteristics of retail executives. Strengths centered on process management, operational skills, rapid decision making and flexibility. Retail executives get things done quickly, with a focus on productivity, efficiency and adaptability. Broad business perspectives and leadership abilities were lacking.

Figure 1

Retail Executive Assessment Demographics – Sample of 941 retail executives Participants represent a diverse population in terms of geography, employer type, and employer reach.

Regional vs.

Global

Global/ Multi-Country 34%

Regional/ National 66%

What type of retail company?

Catalog/Direct 7%

Dept.

Stores 13%

Mass/ Big Box/Food Specialty 29% 51%

Where are they from?

Asia Pacific 4%

N/A 13% Americas 58% Europe 25%

Source: The Korn/Ferry Institute, 2008

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They are proficient at managing people. Retail executives delegate well, direct others and measure the effectiveness and efficiency of work systems. This executive profile is also characterized by managerial courage, an ability to face up to problems and not to be afraid to take corrective actions that are required, even if they may be unpopular.

“Without a capability to develop creative business ideas, there will be no new sales.”

Inspirational leadership and emotional competencies were areas where retail executives displayed less capability. Research found they were least proficient in motivating others to perform at a higher level and embrace change. They did not excel in building high-performing teams or in managing vision and purpose.

The analysis also found that retail executives’ strategic skills are somewhat weaker than other skills. Strategic skills include understanding the business, making complex decisions, and creating the new and different – an ability to come up with the next great breakthrough, to bring exciting ideas to market and to envision multiple futures.

Organizational agility is another important competency where retail executives fell short: they are least proficient when it comes to knowledge concerning how organizations work, cultural sensitivity and how to accomplish things via formal and informal channels.

Skills Needed by Future Leadership When the 30 CEO’s interviewed were asked which skills would be most critical to future retail leadership, they cited four key competencies emerging above all others. We compared this to the assessment data providing qualities common to retail executives today. Our analysis shows that out of four characteristics, three are substantial competency gaps to which CEOs in retail should pay attention.

CEOs believe “Inspiring Others,” or motivational and inspirational leadership, to be the most critical characteristic. Future leadership must be more in touch with employees. Being able to galvanize the workforce and develop a shared mission and culture are essential to employee retention and organizational success. To succeed in a highly competitive environment, executives have to demonstrate interpersonal, communication, negotiation, and diplomatic abilities.

Second, CEOs pointed to “Creating the New and Different,” creative and visionary abilities. Rather than responsiveness to external pressures, CEOs believe future leaders will have to become wellrounded executives who examine issues from all possible perspectives.

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It is imperative that executives move the organization forward with innovative ideas combined with sound strategic thinking.

The third key characteristic is “Focusing on the Bottom Line,” the drive and energy to initiate action and focus on results. CEOs believe future executives must seize the day – they must have the confidence to evaluate information present and take action to capitalize on opportunities, even if all facts are not known and planning is not finalized. In a fast-paced global industry, passivity can be fatal. Future leaders must infuse the organization with their energy and passion to complete initiatives and attain goals.

The fourth critical characteristic is “Getting Work Done Through Others,” the only one of the four critical factors that is a current strength of retail executives. The manner in which delegation, communication, developing others and managing work is delivered will continue to be a critical leadership requirement for retailers. Successful retail executives are intensely involved with their teams, display greater passion for the business and engage individuals in activities.

CEO Interview analysis: four priority leadership characteristics

“There is a real lack of financial astuteness in retail due to high creativity. We don’t teach financial disciplines to the merchants and other creatives within the organization. I find that conclusions are drawn or decisions made without a true understanding of the financial impact of that decision.”

n Motivational and inspirational leadership: Gap against current n Creative and visionary abilities to take the business forward: Gap against current n The drive and energy to initiate action and focus on the bottom line: Gap against current n T he ability to get things done through others: Current strength

Does Retail Have Best-in-Class Leadership?

To answer this question, we looked at Korn/Ferry existing best-in-class leadership research (see Figure 2) that identifies through individual assessment the decision styles of executives across all industry sectors.

We then compared this assessment data to the data collected among retail executives.

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Leadership Style of Most vs. Least Succe

Leadership Style of Most vs.

Figure 2

Korn/Ferry best-in-class assessment research methodology Korn/Ferry gathered information on 500,000 executives across industries, 20% Top Performers functions and levels. After scrubbing the data, the population was reduced to 120,000 individuals.

From this pool, the top 20 percent of performers were identified using a variety of criteria including career progression, speed Task-Focused of advancement and compensation. From Social this, behavioral profiles were developed, revealing characteristics andIntellectual competencies Participative common to these best-in-class individuals.

These profiles were validated according to Supervisor Manager Director industry, function and level.

Korn/Ferry leadership research – best-in-class decision styles, All executives’ assessment data 20% Top Performers

Task-Focused Social Intellectual Vice President Executive Participative

Leadership Styles/Attributes Supervisor Manager Evolution characterizes the leadership styles of best-in-class executives. As they figure 2 progress through a variety of positions, the The headersmost of theeffective two graphics are missing – headers executives change in relation should be inside graphics, above the lines: to thethe scope of responsibility and demands figure” 2their leadership Top box should read “20% topThey performers of the position. evolve Theperformers” headers of the two graphics are missing – headers Bottom boxstyles. should read “20% bottom

Director

Vice President Executive

20% Bottom Performers

20% Bottom Perf

should be inside the graphics, above the lines: Top box should read “20% top performers” The most effective executives develop Bottom box should strong social and participative skills as read “20% bottom performers”

they climb up the career ladder. At senior levels, they possess the ability to combine strategic visioning with financial acumen.

Strong emotional competencies are their hallmark. Expectedly, they are less taskfocused, delegate more and use their time to deal with broad business issues and goal attainment.

Source: The Korn/Ferry Institute, 2008

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Task-Focused Social Intellectual Participative Supervisor

Manager

Director

Vice President

Supervisor

Task-

Executive

Manager

Director

Int Part

Vice Presid

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When comparing best-in-class retail executives with peers in non-retail environment we made a striking discovery: by and large they possess very similar attributes and tend to behave in a comparable manner as shown in Figure 3. Concerning leadership competencies, i.e., their public style, retail executives mirror their non-retail peers in task-focused, social and intellectual abilities, with retail executives scoring slightly lower in the participative style. Evaluation of the groups’ emotional competencies showed little fundamental difference.

The only area where the two groups differ significantly is in their approach to problem solving and decision making, their thinking style: Retail executives exercise greater flexibility in thinking. The fastpaced nature of the business demands that these leaders have a shorter-term focus, make decisions quickly, and readily shift gears in response to change.

“…we need a shared culture in the organization, fostered from the top but including everyone, right down to the doorman at the store. We must ALL live the culture and attract others to it.”

Leadership Styles by Retail Industry Segments As shown in Figure 4, a comparison of executives within the retail industry showed the influence of the size and scope of their organization on best-in-class talent: Executives working for domestic retailers possess an adaptive, operational style. However, best-in-class counterparts in multi-country organizations have a distinctly different behavioral profile.

The size and complexity of issues of multi-country organizations drives more strategic difficulty in resolving problems and more challenges in dealing with multi-cultural issues. Expectedly, their executives’ approach to business is markedly strategic. They must evaluate a greater multitude of data points and the impact of decisions on all parts of the business. They are less likely to be reactive and focus on the short-term, and more inclined to step back and think through the complexities and implications of their decisions.

Responsibilities for dealing with different cultures, languages, and greater ambiguities also shape the profile of these multicountry organization executives. This group scores higher in most measurements of emotional competencies than their regional/ domestic peers. These executives are found to manage themselves effectively, show resilience in the face of adversity and are comfortable with uncertainty and ambiguity. They take a more effective approach to managing social nuances and tend to have a more participative leadership style.

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Figure 3

Retail executives’ assessment data compared to All executives’ assessment data 7 6

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Leadership Style

6 5

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4

4

4

2 1

Creative

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5 3

cutive [BiC] cutive [BiC]

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Thinking Style

7 Task-Focused

Social

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Retail Executive [BiC] Other Executive [BiC]

6 Intellectual

2 1

Participative

5

7 ActionFocused

Retail Executive [BiC] Other Executive [BiC]

6 Complex

Flexible

Creative

3 2 1

Leadership Styles – 4 Style used when people are watching themselves 3 Task- Clear, concise, directive, terse 2 Focused 1 Social Open, outgoing, informal,Actioninclusive, humorous Focused

Thinking Styles – Operational style when focusing 4on a task or situation 3 Executive [BiC] productive, orderly Action- Retail Fast, efficient, Other Executive [BiC] 2 Focused 1

Fast, Creative adaptive, changeable, intuitive Social FlexibleFlexible Complex Task-Focused 7 Complex Thorough, quality minded, data driven, Intellectual Logical, serious, relies on knowledge long-term 6 thinker to assert views Creative Exploratory, 5 creative, patient, logical Participative Collaborative, inquisitive, 4 seeks alternate viewpoints 3 Retail Executive [BiC]

Other Executive [BiC] Emotional Competencies – Interacting with others and dealing with Empathy Energy Humility Confidence situations emotionally-charged

Ambiguity Comfortable with uncertainty and Tolerance diversity, thrives on change Composure Calm, cool under pressure, emotionally steady, not frustrated easily Empathy Sizes up self and others accurately, appreciates people’s feelings

2 Emotional Competencies 1 6 Ambiguity Composure Empathy Energy Tolerance 5 7

4 3

Retail Executive [BiC] Other Executive [BiC]

2 1

Ambiguity Composure Empathy Tolerance

Energy

Energy Mental energy and stamina, capacity to sustain analytic thinking Humility Willingness to adapt to different situations, lack of personal ego investment Confidence Self assurance, ambition, willingness to tackle risks, conflict and challenges Source: The Korn/Ferry Institute, 2008

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Task-Focus

5

Humility Confidence

Ret Oth

Intellectu

Retail Execu Other Execu

Humility C

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Figure 4

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Retail executives’ assessment 6 data – comparing best-in-class executives with multi-country scope vs. domestic scope 5 4

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Global Retail Executive [BiC] Global Retail Executive [BiC] Regional Retail Executive [BiC] Regional Retail Executive [BiC]

ActionActionFocused Focused

Flexible Flexible

Complex Complex

n “Global” retail executives are more strategic, dealing with greater complexity, and larger stakeholder groups 7

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n They operate in a multicultural 6 6 environment that calls for a more leadership style and 5 participative 5 more pronounced emotional 4 4 competencies.

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3

Source: 2 2 The Korn/Ferry Institute, 2008

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ActionFocused 3

Creative Creative 7

2 1

6 5 4

Leadership Styles

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Global Retail Executive [BiC] Regional Retail Executive [BiC]

Flexible

Complex

Creative

Glob Regio

2 1

Task-Focused

3 Global Retail Executive [BiC] Global Retail Executive [BiC] Regional Retail Executive [BiC] Regional Retail Executive [BiC]

2 1

Task-Focused Task-Focused Social Social Intellectual IntellectualParticipative Participative

Emotional Competencies

6 5 4 3 Global Retail Executive [BiC] Regional Retail Executive [BiC]

2 1

Ambiguity Composure Empathy Tolerance

Global Retail Executive [BiC] Global Retail Executive [BiC] Regional Retail Executive [BiC] Regional Retail Executive [BiC]

Energy

Humility

Confidence

Regional N=143; Global N=77

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Ambiguity Composure Empathy Confidence Ambiguity Composure Empathy EnergyHumility Humility Confidence Implications of Assessment andEnergy Tolerance Tolerance Competency Findings for Talent Acquisition Regional N=143; Global N=77 Regional N=143; Global N=77 The gaps between needed competencies versus the strengths of the existing talent pool are sobering, and retailers need to put in action the two levers that can mitigate competency gaps: recruitment and development.The 30 CEOs interviewed for this study lead organizations with varying sales volumes, lines of business, and markets, as shown in Figure 5.

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Social

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Figure 5

Retail CEO Interviews demographics – sample of 30 CEO’s

By Sales VolumeBy

Sales Volume

$100m - $1b 31% $1b - $10b 42%

By Retail

By Retail Store Type

Specialty 58%

Store Type

Big Box 23%

Regional vs. Regional Global

vs. Global

Global/ Regional/ Multi-Country National 34% 66% Other 8%

Over $10b 27%

Dept. Stores 12%

Source: The Korn/Ferry Institute, 2008

As it relates to talent acquisition, six major implications were drawn from analysis of this data.

1. Retailers can broaden acquisition strategies to include non-retail executives. As one CEO study participant observed, “Leaders can be taught skills, but it’s harder to teach skilled people leader behaviors.”

Careful assessment of non-retail executives’ behavioral profiles and indepth, open discussions about the unique aspects of the retail business will help retailers recruit non-retail executives who can invigorate organizations and provide new business leadership.

2. Creativity is important but strategic agility has an even greater impact. Retailers need to incorporate greater strategic focus. Leaders possessing strategic agility can plan for the longer term and drive the organization to reach goals while retaining flexibility to adjust to constituencies’ desires and reactions. They will be able to embrace creativity and innovation as an integral aspect of strategy.

3. Retailers need to seek fast-paced executives with flexible decisionmaking styles when recruiting outside of retail. The one area where retailers need to look for a different profile is in flexibility and speed of decision making. Customer sophistication and the proliferation of retail outlets have accelerated immediate feedback. Retail executives need to be comfortable working in an environment with fast pace and

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instantaneous reactions. Individuals must make decisions quickly and be confident in moving forward.

4. Retailers with a global scope need to focus on strategic skills and emotional competencies of executives recruited. Multi-country retail executives must deal with a variety of cultures, employees, and customer practices and needs. These retailers need to recruit talent with highly developed emotional competencies to inspire and motivate a diverse workforce. Superior strategic abilities and broad business perspectives are integral to managing and growing global retail organizations.

5. Cultural fit does matter and needs to be assessed. Retail is a very fast-paced environment with a unique culture marrying business with creativity. It is imperative that retailers assess cultural fit, the determining factor in executive success, especially when recruiting non-retail executives to an organization. Systematic onboarding process and attention to the integration of new executives are critical to secure the return on investment when acquiring external talent.

Systematic onboarding process and attention to the integration of new executives are critical to secure the return on investment when acquiring external talent. Interestingly, retailers in Europe and Asia tend to be most successful in onboarding non-retail high-quality executives, while North American retailers seem to be more challenged with culture integration and long-term retention of senior-level hires.

“Accountability is critical.

There must be a way to quantify and measure your accomplishments. This can pose a challenge in retail because the very nature of the business is creative and creativity is often hard to quantify.�

6. The retail industry may benefit from attracting young talent, especially MBAs. Acquisition strategies should also focus on fueling the talent pipeline, and retailers would benefit from an aggressive program to attract younger talent such as MBAs. To do so, retailers will have to alter the negative perception of the industry, making it a rewarding, exhilarating career path for talented, strategic business people who love speed, challenges, and being at the forefront of new trends. Currently, retailers attract fewer than four percent of MBA graduates, the lowest recruitment percentage of any industry.

They must develop their employer brand and implement ongoing development programs to shift perception and recruit the young talent they need.

Development of Talent Two decades of cost cutting that directly impacted development programs may have been a short-term solution to resource allocation

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issues. However, the consequences have had a devastating effect on retailers. Many organizations just do not have the talent pool from which to develop the broad base of leadership they need to fuel their growth.

“Working in retail is not always seen as a serious, long-term career option, so we mostly compete with other sectors.”

While talent management practices in the retail industry range from highly sophisticated to non-existent, this study found that company size correlates with distinct attitudes and approaches influencing the development of talent and leadership.

Large Retailers Tend to Promote Talent Development Practices

In the largest organizations studied, we found an array of advanced programs to identify talent early, accelerate development and match executive abilities with senior leadership roles.

More than 70 percent of $10 billion+ organizations have formal processes in place to identify and develop high potential candidates.

In these large organizations, size and scale provide the resources and opportunities for more meaningful programs. Greater dedication of resources, mentoring, and rotational opportunities for highpotential managers in turn fuel the talent pipeline, and the ability to grow size and scale. Senior leaders are also actively involved in talent development. They devote significant time and energy to growing talent, providing appropriate opportunities and mentoring.

Involvement of executive management signals a positive attitude regarding the value of development. This strong message from the top shapes the culture, communicating that talent is a strategic advantage and considered a key driver in the ultimate success of the organization.

Most of these retailers are progressive when it comes to deciding where talent development resides on the balance sheet and in the priorities of the company. In the largest retailers, talent and leadership programs are regarded as an investment rather than a cost.

Talent Development is not Formalized Among Smaller Retailers

At the opposite end of the spectrum, few retailers with sales of less than $1 billion have formal talent development programs. Where they do exist, processes are termed “weak.” Programs are usually restricted to members of the vice president and above levels.

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As to why this function is given low prioritization, CEOs and senior managers point to lack of time as a primary issue impeding talent development in their organizations. In addition, financial pressures prohibit allocation of necessary budget funding. Organizational size reduces the availability of growth opportunities for high potentials and expectedly, rotational assignments are less readily available and rarely used in developing high-potential leaders.

Most telling, the majority of CEOs leading these companies do not view talent development as critical to the future growth and stability of their organization. More often than not, there is no strong message from the top around the importance of talent and leadership, and other priorities tend to use up time and financial resources. This translates to a culture of churning resources rather than growing people.

Right-Size Talent Management Practices Talent practices in the medium-sized retailers that participated in the study revealed two distinct worlds, largely driven by the attitude and actions of the CEO. When the CEO shows commitment to leadership development, many high quality programs are found even in smallsized businesses. Not surprisingly, this gets reflected in the caliber of talent present in the organization and its ability to deliver against aggressive business goals.

Leadership involvement influences the content of the programs.

Successful programs are developed to be appropriate for the size and scope of the business. These are viewed as investments in the future, and optimize cost and benefit while accelerating development of qualified people.

In these retailers, the culture embraces talent development as critical to organizational success. Every member of the management team is expected and motivated to identify and develop individuals with high potential. Appropriate assignments are given to these leaders in the making to develop leadership abilities and greater business understanding. Talent management is supported by a high-quality talent organization, technology enablers and measuring systems.

When the talent function is “right-sized,� meaning initiatives and processes are commensurate in terms of complexity and scope with the size of the organization, programs show substantial return on investment and produce a strong leadership bench.

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What can CEOs do to win the war for talent in retail?

Talent Management Best Practices n Hire the best possible talent at entry levels. n Supplement entry hiring with experienced hiring, supported by careful onboarding. n Assess high potential individuals early and often. n Combine assignments, mentoring and formal learning to accelerate development. n Do not lose focus as to the contribution and motivation of High Performers who are not assessed as High Potentials. n Strategically deploy “A” players in “A” positions. n Nurture an employer brand. n Make senior leaders accountable for talent management and leadership development. n Allocate enough time, resources and expertise.

Return on Investment Tremendous financial pressures, accelerated business cycles, and a reactive short-term focus have diverted retailers’ attention from talent development.

While talent management made progress in retail throughout the 1990s, since the turn of the millenium the prevalence of development programs has declined significantly. Many organizations rationalized that smaller margins and increased competition commanded funding of other business projects. Yet, retailers that continued to invest in talent development are those that survived and prospered.

However, the quality of talent management correlates with bottomline results. Since the 1980s, numerous surveys have demonstrated the extent to which quality development programs strengthen the market value of a company as well as the organizational culture, brand, and capabilities – while reducing a drag on the bottom line. Decline in turnover is a welcome by-product, conserving firm resources and strengthening the bench.

Unquestionably, talent management produces a positive return on investment. To realize this positive return on investment, CEOs and senior teams of many retail organizations will have to institute a drastic culture change. Talent development will have to become an

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expected part of the organizational experience. Those determining its existence must regard development as a strategic investment in the future.

Previously, only Fortune 200 organizations could afford many of the more sophisticated talent management solutions available. Investment in quality talent management programs is much easier now than a decade ago.

A wide variety of tools and solutions are now available, including turnkey systems and proven models that are appropriate for any size organization.

Retailers need to avail themselves of these solutions to right-size their programs and set themselves up for success.

Conclusion This study’s thorough examination of the existing state of talent and leadership in retail highlighted these key findings: n Talent shortages across the globe are redefining the competitive space for retailers. The availability of the right talent is becoming the biggest issue affecting the ability of retailers to deliver their growth plans. n Our research showed that retail executives possess strong process and operational skills, are proficient at managing people and demonstrate managerial courage. n Conversely, key competency gaps revolve around motivational and inspirational leadership; creative and visionary abilities; and the drive and energy to focus on the bottom line. n An unexpected research finding is that best-in-class retail executives possess very similar attributes and tend to behave in a similar manner when compared to their non-retail peers. n To bridge the competency gap, retailers globally need to broaden acquisition strategies to include non-retail executives, seek fast-paced executives with flexible decision making styles, attract young talent, assess culture fit and carefully on-board new hires. n They also need to “right-size” their talent management initiatives and processes in line with their size and scope. n The role of the retail CEO as the chief sponsor and champion for talent and leadership in his or her organization is the #1 critical success factor for winning this war for talent.

“Retail doesn’t have the infrastructure in place and doesn’t spend the money on attracting, training, and developing its future leaders. Not like Pepsi. If we are going to win in the marketplace, we need to focus on this.”

Retail organizations that are serious about attaining profitability and competitive dominance will have to relentlessly focus on attracting and growing the talent needed to win in the marketplace.

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Brigitte Morel-Curran is a Senior Client Partner in Korn/Ferry International’s Leadership Development Solutions group, based in Chicago.

Tierney Remick is Managing Director of Korn/Ferry International’s Global Consumer Market, based in Chicago.

Pauline N. Johnson is a Consultant for Decision Dynamics, LLC and Korn/Ferry International, based in Los Angeles.

The authors wish to thank all the members of the Korn/Ferry Retail & Apparel Sector, whose significant efforts made this study possible. Members of Korn/Ferry’s Retail & Apparel Sector conducted face-to-face interviews with 30 retail CEOs from around the world, and ensured that many senior retail executives completed the Decision Styles assessment – both key elements in this important study of retail executives.

About The Korn/Ferry Institute The Korn/Ferry Institute was founded to serve as a premier global voice on a range of talent management and leadership issues. The Institute commissions, originates and publishes groundbreaking research utilizing Korn/Ferry’s unparalleled expertise in executive recruitment and talent development combined with its preeminent behavioral research library. The Institute is dedicated to improving the state of global human capital for businesses of all sizes around the world.

About Korn/Ferry International Korn/Ferry International, with 89 offices in 38 countries, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to identify, deploy, develop, retain and reward their talent.

For more information on the Korn/Ferry International family of companies, visit www.kornferry.com.

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