Retail Succession Planning: Now and Then

Succession planning has always been an important discussion topic for every thoughtful or “planful” retail company. However, with the paradigm shift taking place in the industry, the importance of the process and of making it more than talk has become critical for several reasons. Not only is the current generation of retail leadership retiring in large numbers, the likelihood is that this attrition will continue well into the next two decades. Tie this basic reality to a noticeable lack of prepared talent to fill these critical vacancies, and the current retail business readjustment will continue on its own path with few to influence where that path leads. With the decline in executive training and professional development programs, as well as the changes in leadership profiles (from merchandising to marketing, from marketing to digital), the industry is sure to face continued drift and dislocation.

Once executive leadership in a company understands that a deliberate succession plan is a necessary part of the total strategic planning process, they will next face a process that’s much different from the succession planning processes to date. So what’s so different now?

Read the full article


Bruce Walton Featured Twice in Family Firm Institute (FFI) Practitioner

Bruce Walton, Boston Partner and Co-Head of the Family Business Practice, has contributed two short articles to the FFI Practitioner.

The first article, published 4/19, deals with the issue of “Fit, ” addressing the concepts of core family values, alignment and stewardship as well as clarifying issues of whether or not a candidate actually has demonstrated the key competencies necessary to do the job successfully.  Read the full article

The second article, published 6/7, deals with Long Term Incentive Programs (LTIPs), addressing issues of best practices for structuring LTIPs, the value of working with compensation consultants and ensuring that payouts are made only when new enterprise value is created. Read the full article


The Diversity Gap in the Nonprofit Sector

The lack of diversity at the highest levels of the country’s corporations has become a popular topic of debate, thanks in part to a number of high-profile stories focused on the technology industry.

If there has been less criticism of the nonprofit and foundation sectors, neither is exempt from the problem. Earlier this year, Battalia Winston analyzed the leadership teams of the largest foundations and nonprofits in the United States and found that they, too, suffer from homogeneity. We found, for instance, that while 42 percent of the organizations we surveyed are led by female executive directors, 87 percent of all executive directors or presidents were white, and that there was only minimal representation of African Americans (6 percent), Asian Americans (3 percent), and Hispanics (4 percent) in those positions.

Our findings, which we’ve published in a white paper, The State of Diversity in Nonprofit and Foundation Leadership, are similar to those presented in a number of recent studies. A 2015 study by Community Wealth Partners, for example, found that only 8 percent of nonprofit executive directors were people of color, while a 2013 study conducted by D5 found that 92 percent of foundation executive directors were white.

While one would think that nonprofits and foundations — particularly those that support underserved communities and minorities — would prioritize diversity within their leadership ranks, attracting and recruiting diverse talent is easier said than done, especially at the leadership level. If organizations want to create sustained diversity at the top, they need to continuously cultivate a talent pipeline of diverse high-potential candidates, both internally and externally.

For any number of reasons, building a pipeline of diverse talent can be particularly challenging for nonprofits and foundations. First, the talent pool of diverse candidates is still significantly smaller than the pool of white candidates. According to a 2016 study by Young Invincibles, racial disparities in rates of higher education attainment continue to widen: between 2007 and 2015, the gap between the share of white adults with postsecondary degrees and Latinos and African Americans with postsecondary degrees increased by 2.2 and 0.4 percentage points, respectively.

Second, while for-profit enterprises, especially those in the tech sector, are able to make large investments in diversity and inclusion initiatives and, of course, offer attractive salaries, nonprofits and foundations often lack the financial resources to do so. Without a concerted diversity and inclusion effort backed by a well-developed employer branding strategy, these organizations often struggle to attract and retain the diverse talent they need.

Fortunately, there are a number of best practices that nonprofits and foundations can implement that don’t require major financial investment and can help make them more attractive to diverse talent:

Prioritize diversity organization-wide. Nonprofits and foundations should aim to foster diversity across — and beyond — the organization, from staff, to vendors and suppliers, to the community organizations they partner with and support.

Create clear career paths. If an employee cannot see a clear career path within an organization or easily identify opportunities to advance, he or she is less likely to hang in for the long haul. Establishing professional development and inclusive leadership training programs can help diverse employees see an organization as a place to grow, not as a stepping-stone to something bigger and better.

It’s also important for organizations to create mentorship programs that proactively include diverse employees, who — especially in mostly white environments — are less likely to receive organic mentorship and networking opportunities than their white counterparts.

Proactively identify high-potential talent. Nonprofits should also be aware that as boomers retire in ever-larger numbers, they have the opportunity to add diversity onto the tail end of the employee lifecycle. Leadership can use those transitions to engage in a succession-management process, asking soon-to-depart employees to sponsor and mentor potential leaders inside the organization, prepare them for promotion, and encourage diverse candidates to express their interest in moving up.

Foster a culture of inclusion. Organizations looking to attract and retain diverse talent need to create a culture that truly embraces diverse opinions, perspectives, and lifestyles. Fortunately, there are many ways to achieve that: creating diversity committees with representatives from all levels of the organization and making diversity goals a transparent part of an organization’s overall strategic plan are just two of them. Organizations can also offer flexible working schedules, make accommodations for religious holidays in different faith traditions, and adopt diversity-friendly dress codes.

Most for-profit companies have put out some type of diversity statement and have strategies in place to meet their goals. It’s time for nonprofits and foundations sectors to do the same and incorporate diversity into every aspect of their hiring practices, as opposed to just “talking” about it. Tiptoeing around the diversity conversation will never help your organization achieve its goals or keep it competitive in the twenty-first century economy.

Want to learn more? Download a copy of our white paper, The State of Diversity in Nonprofit and Foundation Leadership. And feel free to share your own tips and best practices in the comments section below.


Fit and Family-Owned Business

Bruce Walton, Partner in Battalia Winston’s Family-Owned Business Practice, contributed the following piece to The Practitioner, a publication from the Family Firm Institute. 

When I’m helping family-owned businesses find new executive leadership, I often hear the following: “We want to find someone who is the right fit.” This word—fit—is difficult to define, yet is always key to a successful hire. When assessing candidates for fit, it’s helpful to use the following questions as guiding principles:

1. Does the candidate’s leadership style align with company’s value systems?

Fit really means linking the value systems and leadership style of the executive candidate with those of the hiring company. In fact, “value systems linkage” is the best predictor of happiness, in all its dimensions, for any hire. Therefore, for a family-owned business, where hiring a non-family CEO can often feel like arranging a marriage, fit is particularly important.

Naturally, the starting point for the hiring process is understanding the Core Family Values that drive the business. Businesses that have survived across multiple generations have invested much thought in the development of family values. They are typically recorded somewhere, either in a corporate handbook, website, or other core material. If this is not the case, formalizing and recording corporate values is an important exercise to complete before starting a CEO or COO search. Since the family can never be separated from the business, these core values will drive decisions that otherwise would be hard for an outsider to understand.

2. Does the candidate possess the most important competencies for the position?

When a candidate clearly aligns with the family’s value system, it can be tempting to conclude that the candidate is automatically a great fit. However, it’s important to move the decision beyond “I like them.” This is why a position competency model, designed to measure the candidate’s specific skill set against the company’s business goals, is critical. The key is to build a competency model that helps separate and prioritize the must-haves from the nice-to-haves. Nobody will be a perfect match on every competency, but the best candidate will have successfully demonstrated the top three to five competencies in the recent past.

3. Will the candidate be a steward of the family’s success?

When I try to consolidate all of the aspects of fit for family businesses, the single word that comes to mind is “stewardship.” Good candidates understand and appreciate what the family has already built. The new CEO becomes a steward of that success, even when the mandate is to transform the company. Family members in the business, ownership or governance have their own self-images (both within the family and in the community or industry) so tightly connected to the business that outside leadership needs to account for it and factor it into the leadership process.

To be a successful steward for the company, the candidate must be a confident adult who is prepared to handle sensitive situations that will arise within family businesses. For example, a mature non-family CEO will be able to react appropriately when ownership wants to drill down into the details of the business, as they always do at some point. The mature steward will not be threatened by this, while an insecure autocrat will not react well.

Investor Relations (IR) also deserves some thought. Every CEO spends a significant amount of time caring for the company’s owners. In public or private equity owned companies, this is pretty clear. In a family-owned business IR involves multi-generational dynamics and strong emotions. It may involve dealing with a Family Council or helping educate a new generation to be successful future owners. So IR does not go away; it is just very different.

In summary, the “best fit” candidates will embrace the core family values and have the capacity and patience to deal with family dynamics without becoming embroiled in them. At the same time the non-family leader will have the right core competencies to lead the business to success, however it may be defined.


Timothy C. Luce Joins DAS Companies, Inc. as Head of Information Technology

DAS Companies, Inc. is a high growth, profitable, and privately held $350 million marketing and global supply chain portfolio company. The company has strategic goals of becoming a $1 billion organization and is in the process of implementing 21st Century leading edge technologies and streamlining supply chain cycle time. DAS designs, imports and distributes automotive accessories, travel merchandise, and mobile electronics that add safety, convenience, comfort and leisure for on-the-go consumers, through a series of channel partnerships including travel centers, heavy duty trucking centers, and electronics and specialty retailers. The successful candidate was identified in 9 days and the search was completed in 83 days by Terry Gallagher.

Timothy most recently was Director, Information Technology at New Penn Motor Express, a $250 million transportation company providing regional, next day ground services through a network spanning the Northeastern United States, Quebec, Canada and Puerto Rico. Timothy oversaw the day-to-day IT activities and an annual budget of $7 million. He overhauled the Information Technology environment, established an IT Steering Committee and developed and ratified a 4 year IT transformation plan.

Prior to New Penn Motor Express, he was Director, Information Technology at The Ames Companies. He managed all day-to-day IT activities, an annual budget of $7 million and spearheaded strategic development efforts on a global scale. He implemented new metrics and KPIs, cultivating a continuous improvement culture throughout the IT Department and promoted business growth by integrating the e-commerce platform to better capitalize on B2C, B2B, and B2B2C opportunities.

Earlier in his career, he was Director of IT for the North American Region at ESAB Welding & Cutting Products, a $1 billion global manufacturer of professional welding and cutting machinery and associated consumables, servicing customers via a multi-facility manufacturing and distribution system.

Timothy earned his M.S. in Management from Purdue University and his Bachelor of Science in MIS from Clarkson University and has completed Six Sigma Black Belt Training Programs.

 


Susan Oliver Joins Battalia Winston as Partner in the Life Sciences Practice

Battalia Winston International announced today that Susan Oliver has joined the firm as Partner in its Life Sciences Practice.

Susan has more than 20 years of experience conducting executive and board level searches for companies in the biotech, medical device, and pharmaceutical industries.

Drawing from her deep understanding of critical issues in the life sciences sector, including clinical and regulatory affairs, specialty pharmaceuticals, and drug/device combination therapies, she identifies high-performing executives who provide transformational results for her clients.

Susan began her recruiting career at Heidrick and Struggles and later joined Korn/Ferry International as a key member of the firm’s Consumer Products and Advanced Technology Practice. She co-founded Oliver John Partners, where she conducted executive searches for pharmaceutical, biotech, retail and consumer packaged goods firms. Before joining Battalia Winston, she served as Managing Partner of NGS Global’s Life Sciences Practice.

“My approach to executive search centers on two primary goals: delighting my clients and ensuring that my candidates feel appreciated for the time and effort they’re investing with me,” said Susan. “My success in search is largely due to my commitment to creating long-lasting relationships with my clients. Their success is my success.”

Susan’s executive search approach is also informed by her keen understanding of the most pressing issues in the life sciences industry.

“Both biotech and device companies continue to be under pressure to produce improved clinical outcomes in a challenging regulatory environment,” explained Susan. “As a result, our clients have to be better, smarter, and more efficient than their competitors. My job is to help them attract and retain the talent they need to do just that.”

Battalia Winston’s Life Sciences Practice specializes in recruiting executives and other senior-level leaders for a broad spectrum of companies, including clients in the pharmaceutical, biotechnology, medical devices and equipment, diagnostic and consumer health, and animal health industries.

“We’re thrilled to have Susan join our team,” said Dale Winston, CEO and Chairwoman at Battalia Winston. “Her long track record of success in the life sciences sector is a valuable addition to our practice.”


Fred Lamster Featured on HR.com

Fred Lamster recently contributed an article entitled, “Human Resources: Still at a Crossroads” to HR.com.

Stop talking about earning a seat and start proving that you’ve already earned it

I was on the phone with an HR colleague one morning talking about the “state of the function” and bemoaning the current crop of Human Resources bench talent. After all, it is the primary job of HR to build the talent base of an organization—shouldn’t that include the HR function as well?

My colleague is a well-respected CHRO in the energy sector, and I recently left HR after a number of years as a CHRO to go into executive search. We were coming at the issue from different perspectives, but we had no trouble aligning on the key question: Why do HR people boast about “earning a seat at the (proverbial) table” when any other function head on the leadership team – CFO, COO, CMO, CIO, CDO and any other “C” titles that exist based on the company or industry – just comes in and sits down? Why does Human Resources have to earn a seat when other functions simply assume their seat is already reserved? And why do HR people talk with so much pride about earning a seat that should be rightfully theirs?

“If HR needs to fight to be at the table, I would suggest you are working at the wrong company.” (Bill Higley, SVP Human Resources – Retail)

Continue reading on HR.com. 


Mix and a-Mingle: Executive Search Firm Battalia Winston’s Annual Survey Finds Corporate Holiday Parties Are on the Rise

Companies are getting into the festive spirit this year as the trend of having corporate holiday parties continues to grow, according to the 28th annual survey of corporate America’s firms conducted by leading global executive search firm Battalia Winston.

This year, 89 percent of the companies polled will have holiday parties – a continual uptick from 85 percent in 2015 and 78 percent in 2014. The survey has historically served as a means of gauging corporate confidence in the economy. The increase in the number of parties planned generally reflects that people are feeling positive about the economy.

Holiday parties were held by 95 percent of companies in 1988, the first year of the survey, and hit an all-time high of 97 percent 1996 and in 1997 – all years when the economy was robust. The parties then hit a record low of 81 percent in 2008, and as the nation continued to react to the “Great Recession,” holiday parties spiraled to a new record low of 74 percent just five years ago.

percentage-total-2006-2016

This year’s results show a much merrier turn of events, as the survey reveals even more positive data from the companies.

“Despite the uncertainty of the election, we are seeing that companies are showing continual growth and that they are wanting to celebrate that growth with their employees,” said Dale Winston, Battalia Winston’s Chairwoman and CEO.

2016 Survey Findings:

  • Seeing green in 2017: As companies make plans for next year, more than half (64 percent) of respondents say they’re on track to “grow and hire” next year – up from 52 percent in 2015. Less than a quarter (20 percent) expect their growth to stay the same.

  • What’s the reason for the party this season? 50 percent of the respondents said that the purpose of the party was to boost employee morale – up from 47 percent last year. Another 30 percent said it was to celebrate a successful 2016.

  • Why no celebration? Half of the respondents who reported that their companies are not having a holiday party this year say they have never had such a celebration. Only 27 percent of those not having parties say a holiday party just didn’t make it into the budget this year.

  • party-sizeAbout that Budget… An astounding 93 percent of respondents said that regardless of company revenue, their company’s holiday party would be the same as – or even better than – the previous year’s. That trend is holding strong: it was also at 92 percent last year and just one point lower in 2014. What might be most telling about the employers is that this 93 percent includes the 18 percent of respondents who said their company either had no growth or had some type of consolidation and yet they still planned to have a holiday party at least as good as last year’s.

  • Who’s invited? Employees, of course! However, this year 30 percent of respondents say spouses, partners, dates, or other family members will be passing the eggnog.

  • Deck the Break Room: Most respondents say their parties will be held in the evening (35 percent) and at a restaurant (40 percent), but a sizeable portion (30 percent) of this year’s parties will be held at the office. Of the 18 percent having multiple parties, the majority are doing so because the company is too large for a single party or because of a dispersed workforce.

  • Bring on the Booze! Drinks will still be served at most (65 percent) of this year’s parties, but that’s the lowest percentage ever recorded. Thirty-five percent of party-goers will have to bring their own cheer this year.

  • What election? It seems this year’s presidential election has already been forgotten – at least when it comes to celebrating the holidays. Ninety-eight percent of respondents said that campaigning and elections had absolutely no effect on their party-planning process or budget. In fact, the majority respondents said the uncertainty surrounding the elections had no effect on their company’s future whatsoever.

  • charitable-giving‘Tis the season to give back (but just a little bit): 2016 marks one of the lowest for companies officially giving back to charity during the holiday season since 2010, when the recession caused charitable giving to drop to 47 percent. This year, 67 percent of the companies surveyed will be volunteering or collecting donations this year, up slightly from 66 percent last year, but down sharply from 75 percent in 2014. Also on a downward spike is the number of employers giving their employees a holiday gift. This year only 32 percent of respondents said their companies planned on giving out holiday gifts to their staff this year, down sharply from 45 percent just last year.

So, are corporate holiday parties here to stay?

“It is absolutely looking like the holiday party is here for good,” said Winston. “Employers enjoy giving their employees something to look forward to every year and a holiday party can do that every time.”

The 2016 Battalia Winston nationwide survey was conducted among a cross-section of 200 companies.

Click on the images below for full-size, downloadable graphs.

About Battalia Winston:

Battalia Winston has been successfully meeting client needs in executive recruitment for 53 years and is currently ranked as one of the nation’s 20 largest retained executive search firms, as well as one of the world’s largest woman-owned search firms. Headquartered in New York City, the firm also has offices in New Jersey, Boston, Washington, D.C., and Chicago. Battalia Winston is an agile and uniquely flexible firm and their culture is focused on providing highly personalized, responsive client service.


Family-Owned Businesses and Long Term Incentive Programs (LTIPs)

by Bruce H. Walton, Partner at Battalia Winston

When a family-owned business needs to recruit a non-family CEO or COO, a well-structured Long Term Incentive Program (LTIP) is essential in attracting an outstanding candidate. However, LTIPs can make some family business owners uncomfortable. Few families want to give up true ownership, even when they realize that an agreement is important for the health of the business. Naturally, the non-family CEO will want to share in the value they create through an incentive program that enables them to feel, act and think like an owner.

Fortunately, there are ways to structure an LTIP that preserve ownership and make the program a win-win situation for both owners and newly hired executives. The dominant LTIP vehicle among private firms is a cash-based performance incentive which contributes the earned award to a deferred pay account with vesting conditions.

Here are a few guidelines that we have found useful in recruiting.

Work with Experts

Creating an LTIP is not something that should be handled in-house. It takes a professional compensation consultant to translate the family’s value system and objectives into an appropriate LTIP architecture, and then to fit the program to the requirements of the finalist candidate. There is always a bit of negotiating that goes on, first within the board and family, then with the finalist candidate. The process usually requires several steps/iterations over a couple of months and needs to be memorialized by a lawyer. The whole process might cost $12-15,000.

Because the process can take some time, we strongly encourage clients to start developing the LTIP at the beginning of the CEO or COO search. It is too late to start the process once the final candidate has been identified. If there is an LTIP already in place, it may need to be refreshed to match the current marketplace. Again, this process should be started early, since even minor modifications can take a couple of months.

Start with the Premise that the Program Should Pay Out Only When Value is Created

The architecture of the LTIP should be based on sharing in the value that the CEO helps create. Frequently, the way to measure that value is EBIT or EBITDA, starting with a reference value before the new CEO joins, and allocating a percentage of the value created to a pool that is shared by the top three to five members of the management team. This incents the CEO and provides some tools to attract and retain top talent.

In some programs, a third party assesses the company’s value each year, providing an independent view of the payout, but this method has a yearly expense attached to it. One recent client simply assigned a percentage of the EBITDA growth over time to a pool.

Keep it Simple

Some of my clients have tried to incent behavior with overly complex metrics, to the point that one candidate likened the proposed LTIP to the tax code. He asked, “What are you really trying to get me to do?” The company did not have a good answer. Also, it was very hard for the candidate to assess what was achievable before he moved under the tent with access to all the needed information. Ultimately, the company decided to simply base the incentive on company value growth based on their formal company annual valuation program.

LTIP payouts should be made in a reasonable timeframe, balancing the needs of the candidate with the need to protect the company from a large cash flow demand. Remember, if the CEO makes a lot of money, the family has made even more!

Of course, the value of the LTIP should be subject to a vesting schedule of a reasonable timeframe, perhaps three to five years. I had one client that wanted the monies held within the company until the CEO turned 65. That was unacceptable to the 43-year-old finalist candidate. He proved he was the right candidate by saying, “I want to be able to take some of my (earned) money out on a regular vesting schedule, invest it and then lose it, just like everyone else.” He turned the company profitable within nine months and doubled the value of their minority ESOP within three years.

While a recruiter can provide a sense of whether a program is comparable with others in the market, it takes a compensation consultant who deals with private companies to “turn the dials” and match a program to a specific situation. Recruiters familiar with family-owned businesses are accustomed to collaborating in this way and working with various other consultancies supporting the family-owned business community.


Fred Lamster featured in Chief Executive Magazine

Fred Lamster recently contributed an article entitle, “Why CHROs Should Get a Seat at the Board Table” to Chief Executive Magazine.

Why do HR leaders boast about “earning a seat at the board table” when any other function head on the leadership team—CFO, COO, CMO, CIO, CDO—just comes in and sits down?

CHROs and emerging HR executives must be included along with that of their C-level counterparts to make others see them as equal. First, by adopting HR best practices and then by proactively asserting expertise in business-critical processes, your CHRO will be welcomed at the leadership table. Here are 3 strategies you can direct your CHRO to follow to help make that happen.

Best Practice 1: Understand the key elements of the overall business. C-level executives (often with the exception of HR) are generally fully informed and aware of the financial health of the company, potential areas for growth and experimentation, competition and overall industry challenges. Most CXOs possess extensive knowledge of the products or services the company offers. A successful CHRO will be both knowledgeable and conversant in all of these same areas. He or she should know the key elements of each of the other executives’ areas, know what they mean and how they are measured and, most importantly, understand how human capital challenges impact each of these areas and be able to discuss these challenges and potential solutions from a functional and business perspective.

Continue reading on ChiefExec.