A common question asked of many sr. level executives today is, “What keeps you up at night?” It evokes an image of a haggard executive bolting up in bed at night or a tortured manager haunted by a recurring, bad dream. So, given all the turmoil in the retail and consumer goods industry over the last couple of years, we wanted to understand the most common concern for executives and trusted advisers. We investigated answers to this question to see if we could identify a common theme (Part I) and then formulate a solution based on our experience (Part II).
Via our research, we came back with a common answer to the question: talent — and leadership –that can keep up with the pace of change.
Perhaps it should come as no surprise that “talent” or the “talent gap” is what keeps executives up at night given most companies tout some version of the statement that “people are our greatest asset.” However, one gets the sense that in a world with faster change – due to technology – the concern is magnified:
- “The thing that keeps me up right now is the amount of change that’s happening in our business and being able to continue to make the change that we need to have happen, to stay ahead of where the customer is taking us and be able to continue to execute at the level we’ve been executing at.” -Craig Menear, CEO of Home Depot (on NPR’s Marketplace)
- “I think [attracting great talent is] the biggest issue in corporate America. In the digital age, the team with the best players wins…Your ability to recruit the best and brightest is the game. Full stop.” – Scott Galloway, Founder and CEO of L2 (on NRF’s Retail Gets Real)
- “What drives the performance or what’s going to really be driving the companies, we think, over the next two to three years, above and beyond what they normally do? We’re saying that 2% of people are driving a lot of value. You’ve got to find those people, you’ve got to know who those people are and just make it a mission.” -Dominic Barton, Global Managing Partner of McKinsey & Co. (from Chief Executive)
The game has changed for legacy companies. Retailers and CPGs are now competing with technology companies such as Google and Facebook for the same talent. In many ways, this is the Moneyball movement for the sport of business. Companies like Google and Facebook figured out how to grow faster than the competition by attracting the top talent in the world to gain outsized results in a short period of time. As Scott Galloway muses, “Google has the greatest concentration of IQ on the planet.”
So, how does this play out in today’s market? Compensation is lacking and if you are not in the business of wealth creation for your employees, as Home Depot’s former CEO Frank Blake’s focused on, you won’t win.
In our research, we came across a talented individual who was offered a position on the Digital team of a well-known retailer at about 50% of his current salary (a demanding client services job). Despite the attractive role, brand, and team, the individual was not willing to take such a dramatic pay-cut to join the company. Bottom line: companies need to re-think their compensation structure, including stock options, and view technology and service companies as their benchmarks if they want to attract A players.
Attracting and then retaining elite talent is critical. In fact, a recent study by consulting firm Capgemini stated that “over half (54%) of organizations agreed that the digital talent gap is hampering their transformation programs and that their organization has lost competitive advantage because of a shortage of digital talent.” In an era where companies need to enhance the customer experience by identifying products and services beyond their core offerings, talent and leadership is what drives change beyond the existing business models.
Understanding that talent in a digital environment is critical to success, executives need to take an active role in bridging the talent gap to turn the tide at their companies. We identified three ways – to be outlined in Part II next week – to help executives start down the path:
- Assess current talent gaps
- Leverage tactics to attract (& retain A-players)
- Identify alternative talent models