The National Bureau of Economic Research (NBER) has declared that the recession is officially over. For retailers, the question is how robust will the economy be in the next couple of years. Most economists and Mr. Ben Bernanke, Chairman – Federal Reserve, are forecasting a slow recovery. Why? The economy still needs to work through consumer debt and the consumer needs to find ways to increase their income so that they can spend again. In the recent past, consumers spent wealth gained through the inflated housing market. Unemployment is still high and will take time to recover. And, the baby boom generation is moving into retirement which means that this big population bubble will be spending less.
So, why is now the best time to bring on strategic hires? First, let’s define strategic hires as executives who can do significantly more than the incumbent. More importantly, let us define a strategic hire as someone who will help change the course of your business. This will be someone who is more strategically oriented to:
• Analyze the customer base to refine the definition of the targeted customer and then develop marketing programs to communicate with the newly targeted customer to increase traffic, sales, and margins;
• Create a store environment which matches/exceeds the targeted customer’s expectations and allows you to build a brand through the retail experience;
• Seek ways to find basis point improvements in operations efficiencies while also improving customer service;
• Build a culture which meets/exceeds customer expectations and recruit and develop exceptional talent;
• Build a merchandising program which excels at providing the merchandise expected by the targeted customer, which constantly reviews new products and categories while rationalizing existing sku’s, which excels at making money through effective merchandising and consistently finds margin basis point improvements, and which creates excitement for the merchandising program throughout the company;
• Lead a finance team which is more than a recorder of numbers to one dedicated to helping the organization by providing the analytics and instructions for the merchants to understand the financial impact of their decision making and for the other functional areas to understand the best return on investment strategies. This is a Value Creator!;
• Build a supply chain program which results in reduced inventories with the same or better levels of customer service while also reducing logistical expenses;
• Build systems to support the operational, marketing, and merchandising program enhancements; and
• Develop strategies to expand the company in new markets internationally.
In these times when the nation is still ‘over stored’ and, with so many competitors offering the same or similar goods, those retailers who will excel in the next few years will be those who have some advantage, whether it be perceived value by the consumer or operational, marketing, financial, and/or human resources strengths. It will be up to the retailers who want to excel to find a way to create this differentiation in the market place and this is best done by hiring strategic executives who can create and maintain the differentiation.
How do you find these strategic hires? Strategic hires require a major investment. In this market it can cost $100,000 to $150,000 or more to relocate an executive. In addition, you have costs related to the time it takes the executive to learn the company and become comfortable in the new role. These costs represent an investment you cannot take lightly and you definitely cannot afford to make a mistake. This means the process for identifying and recruiting candidates must not be taken lightly and also requires an investment.
Yes, in this employment market there are many executives who are desperate for employment and who are available on job boards. Although these may be top caliber executives, the important questions are: (1.) Are they the right executives for your strategic role? and, (2.) Do they have the best skills and experience as well as possess the strategic mind set? Your organization can interview dozens of these looking for the right individual. The important question is whether you are interviewing from dozens to hope for the right person or are you interviewing and selecting from a slate which has several candidates with the most appropriate skills, experiences, and personal characteristics to make sure you are getting the best strategic player for your team.
It may seem self-serving, but I strongly believe the best return on your recruiting investment for a strategic player is accomplished by engaging a search firm which specializes in serving the retail industry and which has a track record of recruiting strategic players which have proven to make a difference over both the short- and the longer-term. When you consider the cost of making a mistake, this approach is your best investment.
How do you select the right executive search firm? Based upon my years of experience in the recruitment of senior retail executives, I strongly recommend you take careful time and put in significant energy to choose a retainer based search firm to manage the recruitment of strategic hires. I recommend you interview at least four firms before you make your choice. Questions you should ask include:
-Does the search firm and the consultant who will work with you on your assignment truly understand the definition of a strategic executive and know how to determine if candidates have the experience that you require? Keep in mind, you are not asking who the search consultant knows, but, instead, what companies should be targets and why executives in those companies have the specific experience required. You are looking to guarantee a strong slate of candidates from which to select. Feel free to ask the search firm to provide you with a list of targeted organizations (along with reasons why) with their proposal to conduct the search assignment;
-Does the consultant know how to select a strategic versus a tactical executive? I recommend you have the search firm as part of its proposal prepare a position specification fully describing the position and the candidate. Instead of providing the search firm with the details of the position and the candidate, I suggest you have the search firm do it so you can assess their understanding of the position and your needs.
-Does the search firm have the resources to invest into the search assignment to determine all possible talent pools to find the best candidates? In my opinion, it is not in your best interest to have the search firm only identify the most obvious and visible executives. You require a firm which has a research group and which has databases available to identify all appropriate talent banks.
-Does the search firm have relationships with the obvious target companies to prevent them from contacting potential candidates in those target organizations? Why should you engage the search firm which recruits for the targeted organization as this means the search firm will be barred from recruiting executives from this organization to yours; and,
-Will the consultants working on your assignment have the time available to do the work? If the lead consultant is handling too many assignments at a time, it is likely he/she will not have the time to do your assignment justice.
First and foremost, you are in charge of your company’s future. You are not lucky to have a particular search firm working for you. Instead, you are smart to choose the right firm to do this strategic assignment. In my opinion, by following this process you should be able to build a team which will make a difference.