GROOMING THE NEXT GENERATION
Byline: Valerie Seckler
NEW YORK — If mass merchants expect to thrive in the 21st century, they should start spending more time and money on developing executives who are poised to build on their companies’ blueprints for long-term growth.
“Every company needs to create a succession plan that is linked to its growth strategy,” asserted Don Soderquist, vice chairman and chief operating officer of Wal-Mart Stores Inc., in a speech at the International Mass Retail Association’s convention in Dallas last month.
“In today’s fast-paced world, tactical moves aren’t enough,” Soderquist told 200 retailers and vendors. “Succession planning is critical.”
During a session entitled “Leadership in the 21st Century,” Soderquist and Mackey J. McDonald, president and chief executive officer of VF Corp.; Robert L. Tillman, chairman, president and ceo of Lowe’s Cos. Inc., and John J. McDonough, vice chairman and ceo of Newell Co., all underscored the need for more than one potential successor waiting in the wings for each key management post.
“Not everyone who’s a successful number two executive can become a successful number one,” Soderquist observed. “This is why it is important to have more than one candidate per important post.”
The group emphasized that developing bench strength helps insure continuity in the execution of strategic plans, as well as steady increases in profits.
Other goals, the executives counseled, should include:
Hiring executives skilled in strategic thinking and competent in global finance and distribution and technology — not simply operations and merchandising.
Creating a comprehensive plan to develop each key manager with off-site programs that augment retail’s traditional on-the-job training.
Engaging a management consulting firm to assess and help develop individuals who have high potential to advance in an organization.
“We’ve probably become a bit complacent with our own succession planning because we’ve had continuity of senior leadership over the years,” admitted Soderquist, who joined Wal-Mart a dozen years ago from the former Ben Franklin chain.
“We don’t want to be inbred to the point where we never go outside for key executives,” the Wal-Mart executive added. “We try to sprinkle people in from the outside at various levels, and then promote from within.”
In April, for example, Wal-Mart named an outsider, Carlos Criado-Perez, as chief operating officer of its $7.5 billion international division. Prior to joining Wal-Mart, Criado-Perez was executive vice president of SHV Makro, a wholesale club based in The Netherlands. He reports to Bob L. Martin, president of Wal-Mart’s international division, who rose through the company’s ranks after joining its information systems department, a unit he subsequently headed.
“Outsiders appointed to key positions need support from senior management over a period of time,” Soderquist advised. “No matter how talented those outsiders are, there are always going to be insiders in every group who think they should have gotten it.”
Whether they are hired from outside or homegrown, Soderquist contended, senior executives increasingly will need off-site schooling and will need to participate in special projects that will “enhance their value while giving their companies new ways to evaluate their talent.”
The executives who addressed the IMRA session said they are scouting chiefly for young executive talent with strong backgrounds in the liberal arts, particularly people who can reason and communicate clearly.
“Too often, college students specialize too early, becoming great engineers or information systems people without the broad exposure to liberal arts that is necessary to succeed in today’s global economy,” remarked VF’s McDonald. “Improving one’s ability to learn and reason is critical at the college level.”
When VF courts college graduates, McDonald said, it looks to recruit those who “are confident, independent and can challenge the company line; are able to think strategically and execute, and most important, possess the integrity necessary to inspire trust, especially in tough times.”
McDonald and Soderquist each noted that various skills in merchandising, operations and technology can be learned through experience, and sometimes by transferring talent to different parts of a business.
At Wal-Mart, said Soderquist, “we believe in the transferability of management talent, and we promote people across divisions.”
Lee Scott, president of the Wal-Mart Stores division, for instance, began in its trucking department, eventually took over its distribution operation and later became chief merchant of the core Wal-Mart chain, Soderquist recounted. And Thomas M. Coughlin, chief operating officer of the Wal-Mart Stores division, has had a series of assignments in the retailer’s loss prevention department, personnel division and its Sam’s Club membership warehouse chain.
“Retailers must develop executives with broader backgrounds, whether or not they plan to expand globally,” Soderquist said. “I expect to see more European and Asian companies buying American retailers in the future, and that will require a wider range of skills.”