Executive Talent Recruitment in the Grocery Industry: Why Breaking Industry Barriers Has Become a New Trend

This article is the first in a four-part series exploring labor issues in the grocery retail industry.

The grocery industry is not short of executives who rose through the ranks from the checkout counter. For example, Kroger CEO Rodney McMullen started as a warehouse stocker in 1978 while attending the University of Kentucky; Joe Sheridan of Wakefern was initially hired by the company's warehouse in Elizabeth, New Jersey, in 1976; five years later, Randy Edeker took a part-time job at a Hy-Vee store in Chariton, Iowa, eventually rising to the CEO position.

Beyond the boardroom, senior positions are also often held by long-term employees. Jeff Chamberlain, Publix's senior vice president of real estate and facilities, recently announced his retirement after 47 years as a clerk.

Such examples are numerous. The complexity of handling fresh products and the intricacies of product display have long favored talent cultivated deep within the industry. However, as digital disruption, rapidly changing consumer preferences, and a growing number of competitors continually challenge the established order, industry tenure may no longer be as important as it once was.

Dr. John Stanton, a professor of food marketing at Saint Joseph's University, says the way grocers identify, onboard, and train executive leadership needs to adapt to these forces.

"Overall, the existing process is quite internal, meaning promoting from within or bringing in talent from other food retailers, often with a paternalistic style," Stanton told Grocery Dive. "But the most valuable traits of executive leadership are changing, and while we know no one likes change, the supermarket industry may be one of the most resistant to it."

Fresh thinking in data and technology

Leslie Sarasin, president and CEO of the Food Marketing Institute (FMI), estimates that at least half of the industry's current executives started in entry-level positions and worked their way up. During her 11 years at FMI, she has observed a growing trend of grocery retailers seeking leadership talent from other industries.

Chief among these are grocers' digital divisions. With the widespread adoption of smartphone apps, data analytics, online grocery, and other technological upgrades, companies are increasingly turning to external talent—especially industry veterans who have spent years navigating digital disruption.

Last year, H-E-B appointed Jag Bath, CEO of its recently acquired on-demand delivery company Favor, to the newly created role of chief digital officer. In 2017, Albertsons hired Disney veteran Narayan Iyengar to lead digital marketing and e-commerce, while California grocer Raley's recruited Mike Molitor from PetSmart to head its e-commerce and loyalty business.

For an industry that until recently was shielded from rapid technological change, deciding which innovations to adopt and which to skip is a formidable challenge. Stanton says retailers may not have the time to build internal R&D departments or cultivate more technology-focused leadership from their existing talent pool.

He notes that changes in technology leadership show that executives across departments need to keep pace with the latest innovations. Grocers are also prioritizing leaders who can collect and process valuable customer data.

"Slowly, those on the promotion track are becoming more analytical not only in a data sense, but also when viewing the business from a digital perspective," Stanton said. "And in my view, they will get younger because the younger generation is driving this analytical approach."

Stanton says retailers can also benefit from fresh ideas outside of technology. In 2014, Greg Foran was appointed president and CEO of Walmart U.S. after spending most of his career at the Woolworths retail chain in Australia and New Zealand. His appointment was surprising at the time, especially at a company known for cultivating talent internally, but he is now widely credited with revitalizing Walmart's grocery business, focusing on fresh food and rapid e-commerce expansion.

Foran announced last week he would leave Walmart to become CEO of Air New Zealand. John Furner, former head of Sam's Club, will succeed Foran.

There have also been several recent examples of executives moving across the food, grocery, and restaurant industries. Albertsons earlier this year named PepsiCo veteran Vivek Sankaran as CEO, while Starbucks in 2017 hired former Sam's Club CEO Rosalind Brewer as chief operating officer.

No research currently measures the difference in effectiveness between internally cultivated and externally hired executives in the grocery industry. Research from The Conference Board shows that most companies appoint CEOs from within, but the proportion of top companies hiring external CEOs has nearly tripled over the past 40 years. According to a study of the hospital industry published last year in the Harvard Business Review, externally recruited CEOs improved overall organizational productivity over the long term.

"We found that any type of leadership change adversely affects a company's operational efficiency in the short term, but external CEOs have a clear advantage in productivity improvement," HBR wrote in its summary.

"Slowly, those on the promotion track are becoming more analytical not only in a data sense, but also when viewing the business from a digital perspective. And in my view, they will get younger because the younger generation is driving this analytical approach."

— John Stanton, professor of food marketing at Saint Joseph's University

The 'nuances' of grocery retail

Despite the growing interest in external talent, Sarasin says traditional leadership skills such as strong communication and the ability to connect with people on a personal level will remain valuable. Additionally, the institutional knowledge gained from starting in the grocery business and working one's way up is not something new executives from other retail channels can acquire overnight.

"Technology talent will be a hot commodity, but it's not the only skill set successful people need," Sarasin said. "The challenge for outsiders is to ensure they understand the nuances of grocery retail. When considering new hires, we must be careful not to be dazzled by their technical experience and excellent technical skills while overlooking their ability to meet customer needs."

Jose Tamez, managing partner of executive search firm Austin-Michael, says external hires can also pose cultural challenges for retailers.

"Not all retailers share the same culture as grocery stores. It's a very institutional culture, and a large part of it is embedded in the operational side of the business," he told Grocery Dive. Tamez says the industry has traditional processes and customs embedded in management, which can make the transition for external executives tricky.

Corporate history is replete with examples of executives struggling to adapt to industry and corporate culture. Former Apple executive Ron Johnson, who revolutionized Apple's retail stores, took the helm at J.C. Penney in 2011. Just two years later, he was fired after attempts to reduce discounts and transform stores into a higher-end experience failed.

Tamez says identifying unsuitable candidates can be unpredictable during the initial recruitment phase, when many companies tend to be infatuated with someone's potential. To address subsequent cultural integration issues, he encourages companies to focus less on hiring the right professional and more on hiring the right person.

"People are hired for what they know and what they do, but they fail or are fired for who they are," he said. "The appeal of a potential new hire is almost like a silver bullet for a company, but it's important to consider who they are. Are they flexible, can they work cross-functionally? Can they communicate and cultivate relationships that can be leveraged?"

Grocery retailers focused on attracting talent from other sectors should also be prepared to step up their recruiting efforts. Tamez says retail executives outside of grocery often view the industry as a less glamorous type of retail.

"The grocery industry needs to do a better job of actually recruiting," Tamez said. "They haven't been doing it because they've never really had to compete for talent outside their own channel, but when you venture outside, you really have to go after talent."

Stanton says large chains are constantly adjusting their reporting structures and talent promotion processes. But retailers should also reassess how they measure talent, he added. Opening doors to younger employees who may have technical and innovative thinking capabilities is one step.

Meanwhile, smaller chains and independent grocers face the challenge of competing with larger rivals for top talent. Many respond by building strong workplace cultures and promoting from within, but Laura Strange, a spokesperson for the National Grocers Association, told Grocery Dive that independent grocers are beginning to embrace external perspectives.

"I think what you're going to see is the independent grocery industry encouraging gaining different types of experience, not necessarily just grocery experience," she said. "I think we certainly have a lot of next-generation people who grew up in the grocery industry and are very passionate, especially in the independent supermarket sector."

Whether selecting executive leadership from within or seeking new talent externally, Tamez says grocers should remain open-minded and proceed with caution.

"At the end of the day, recruiting is really an exercise in risk management," he said. "If you don't have some form of risk management in your hiring and talent acquisition, you're missing a key component that could impact your success."