Retail Practice Head Joins Leading CEOs on NRF Panel “Transformative Leadership”
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Leadership StrategiesTransformation InnovationConsumerBoard and CEO AdvisoryDevelopment and TransitionExecutive Search
Top Executives Share Strategies to Combat Leadership Challenges

The issue of corporate culture took center stage at the closing session of this year's National Retail Federation's Annual Convention and Expo, the organization's flagship event. The session, a panel discussion entitled “Retail Never Sleeps—Delivering Transformative Leadership,” was introduced by Brenda Malloy, Managing Director and Global Retail Practice Leader of Russell Reynolds Associates, and moderated by Stephen Sadove, Chairman and CEO of Saks, Inc. and Vice Chair of the NRF. Panelists included Angela Ahrendts, CEO of Burberry; Marty Albertson, Chairman of Guitar Center, Inc. and Brian Dpevine, Chairman of PETCO. 

Brenda Malloy opened the Super Session panel with findings from a recently released Russell Reynolds Associates study of the CEOs of large US-based retail companies. The study “A Perfect Storm: CEO Challenges in Retail” found that 59 percent of the companies studied had experienced a CEO change in the past five years, and that retail CEOs were 80 percent more likely to leave within the first two years on the job than companies in the Fortune 1000. Further, 89 percent of the CEOs appointed with in the last five years who were external hires came from direct competitors. “The data show a lack of stability and a lack of innovative capacity in the C-suite,” said Malloy. 

“The topics we're talking about today, like leadership philosophy and the culture of the organization, are the underpinnings of what drives results,” said Saks’ Stephen Sadove. In the conversation that followed, the discussion among the five leaders coalesced around various aspects of leadership and company culture. 

“Burberry has operations in 100 countries, and this made for a very disparate culture,” noted Angela Ahrendts, the company's CEO. “We had to do a lot to unite everyone around a single vision.” A key principle in her effort was that “people don't work for organizations, they work for people.” Establishing a culture of trust and shared vision required numerous initiatives, including expanding the company's bonus plan to include all employees and harnessing social and streaming media for internal communications so that employees are privy to new product launches, advertising campaigns and other developments before the general public. “We knew that connecting everyone around the brand was the greatest asset we had,” she said. 

“A lot of company culture revolves around the personality of the person in charge,” observed Marty Albertson, Chairman of Guitar Center. For Albertson, that has meant infusing Guitar Center with a strong spirit of competition, with ongoing contests between salespeople and between stores, and an annual retreat of morning-to-night competitive sports. “It develops a great sense of energy in the company, and every day people are ready to get up and complete. Business is highly competitive, and if you try to avoid that reality, you'll end up in a defensive position.” 

Talent development was also a focus of discussion. “There's no reason that young people cannot have significant positions within a company,” said Brian Devine, PETCO's Chairman. “If there isn't an open slot, you try to give them an opportunity to be a significant influencer.” AT PETCO, this has translated into a program that aggressively rotates promising leaders through leadership positions at different units within the company. 

“At the CEO level, it's generally a given that people have the technical skills and experience needed,” Brenda Malloy observed. “But cultural fit is the deciding factor.” Malloy described how engagements conducted by Russell Reynolds Associates often include a proprietary diagnostic analysis of company culture. “The results of this analysis often surprise the company's CEO,” she said. 

This year's convention—the 101st annual edition of what is known as “Retail's BIG Show” —was held from January 15 to 18 in New York's Jacob K. Javitz Convention Center. More than 22,000 industry professionals from 82 countries attended the event, which featured more than 500 exhibitors. 

Access the full report: A Perfect Storm: CEO Challenges in Retail