Four out of ten retail CEOs wouldn’t be qualified for the job if they were to reapply, according to a report by recruitment consultancy Green Park and the World Retail Congress.
THE FAST pace of customer-driven change within retailing along with the digital agenda are leaving retail CEOs behind in the skill set that’s required for the job, according to analysis of survey responses and interviews with over 100 Chairs, CEOs and senior retail executives. Some 37% are not fit for purpose when it comes to the advancing technologies that retail now encompasses and many will not have the technical skills required of a CEO by 2020. ‘The DNA of the Future Retail CEO’ report, authored by recruitment consultancy Green Park and the World Retail Congress, maps out the necessary transition from today’s skill sets among senior retailers to those required by the year 2020.
The report also assesses the major challenges facing the retail sector today, benchmarks the suitability of current and future CEOs to meet these challenges and concludes by prioritising, measuring and assessing what ambitious retailers and their boards need to do next to make sure that CEOs will be fit for the future.
Fronting the report, Sir Ian Cheshire, Chairman of Debenhams comments: “The two main findings from the research could make for uncomfortable reading for many. Firstly, it is clear from the research that, in the eyes of our global panel, many incumbent CEOs simply don’t match up to their job description. It is clear that many retail CEOs are not seen as fit-for-purpose, particularly when it comes to their lack of mastery of digital and data-driven skills. This skills deficit – and question marks over the willingness of today’s CEOs to adapt – is a major concern for the sector. This is a serious worldwide challenge for current leaders.”
He continues: “The obvious follow up question therefore is will the new generation be better suited to the role by 2020, than their predecessors? The second finding of this report therefore is that, as things stand, aspiring retail CEOs will still face a substantial deficit of online, digital and data skills by 2020, as well as requiring a far stronger understanding of customer behaviour than had been previously envisaged.”
So, what are the skill sets deficient in today’s CEO and what are the requirements by 2020? The report authors asked a global panel which key skills were needed if they were to choose a new CEO today. The requirements of the role emerged as a change agent with a clear vision, customer-led and a collaborative approach to leadership. Product knowledge, store operations and digital and data were also listed.
The report also looked at technical skills currently held by CEOs and those that would be necessary by 2020. Comparing the background of the CEOs of the UK’s 32 largest retailers against the key skills outlined by the global panel, there was a clear gap.
But, are those aspiring to be CEOs in 2020 shaping up any better? The report authors identified 58 aspiring CEOs, currently at or one level below the operating board within one of the UK’s largest retailers, and compared their background to the sample of current CEOs. While the percentage of aspiring CEOs who have predominantly store experience has fallen to 21%, down from 31%, only 7% have extensive digital experience. They may have broader experience than today’s CEO, but it’s still not seen as broad enough by the global panel which believes that having a limited set of experiences will not make for effective change agents.
Echoing the thoughts of many, Justin Maltz, former Director of a leading UK private equity firm says, “A lot of current CEOs are from the shop floor but their potential successors need to be more rounded in [order to succeed]. They will need to get experience in different parts of the business; you have to be prepared to move them around”.
So, what is the DNA of the perfect CEO for retail in 2020? According to the panel, the dominant leadership qualities remain as change agent, customer led and collaborative leadership with emotional intelligence ranked fourth.
Highlighting the central position of the customer in dictating the nature of change, the importance of the customer-led approach to retail leadership increases sharply; 42% of respondents ranked it as the most important 2020 trait, compared with only 20% for a 2016 CEO.
Looking closer at the top three attributes, the change agent’s challenges will be in recognising that leading and developing people within current organisational structures may not be enough. The operating structure of retailing businesses must also change. To be a customer champion, CEOs must increase their understanding of the customer in 2020 and undertake a bottom-up approach to finding out what the customer wants. The customer champion CEO for the year 2020 must be prepared to triangulate information from multiple streams, including a mandatory personal engagement with both one’s own retail proposition and those of competitors, across channels.
When it comes to collaborative leadership does the change mean the end of the merchant prince? The global panel reinforced the strong showing for a more collaborative approach among retail CEOs in 2020, with nearly seven in 10 (69%) believing a collaborative style of leadership will be a necessity for a fit-for-purpose CEO in 2020. Appointments will increasingly reflect a shift to a far broader set of skills among retail leadership teams and it will be virtually impossible for any single leader to have command over all the knowledge necessary to run a retail business in the future.
What is clear from the technical skills necessary for a CEO in 2020 is that they look radically different. Future skills called for include being highly digital with an understanding of omnichannel commerce. This was placed well ahead of any other skill, being ranked first by seven out of ten respondents and in the top three by nine out of ten. Future CEOs also need to be “data driven in the extreme,” because the 2020 CEO will need to derive far greater insight from data than ever before. Even more remarkable is that the CEO experience of store operations, near the top of the priority list for current CEOs, becomes the lowest priority of the seven technical skills required of the perfect 2020 CEO.
So, are retailing’s aspiring CEOs ready for the 2020 leadership challenge? Green Park believes that they are not. Benchmarking the aspiring CEOs against the 8 identified building blocks and its ‘Leadership Index’, Green Park found that the current leadership pool lacks the skills required for the 2020 CEO vision. Even though the CEOs of tomorrow have broader skill sets, they still lack some vital skills. Therefore, a far greater focus on leadership development and succession planning is now required across the industry.