Tells us why luxury seems to be in the midst of an executive hiring ‘boom’ and how mature executives have become better listeners.
“Our business of recruiting C-level executives across all types of retail companies was up 47% this year,” says Hal Reiter, who counts Neiman Marcus, Betsey Johnson and Rue La La among clients for whom he has recently headhunted top talent.
As CEO and chairman of one of the leading US-based executive search firms, Herbert Mines Associates, Reiter is certainly in a position to take the temperature of the upmarket retail and fashion sectors. He also happens to have at least one very high profile appointment to brandish as a recent coup.
In August, after Barneys New York spent more than two years wavering over the right chief executive to steer it through some of the most trying economic times in living memory, Reiter managed to secure Gucci’s former CEO Mark Lee, to lead the luxury department store chain. Some analysts have since pointed to the appointment as a tentative sign that the luxury industry is finally investing again.
As early as six months ago, when Luxury Society surveyed executive search firms for our report on human resources, The Talent Agenda, the tone among many of Reiter’s peers was still cautious. Hiring had only just begun to pick up following two years during which luxury firms had dramatically curtailed spending on recruitment.
“Essentially, companies at all levels including luxury decided that it was easier to cut back on a variety of consultant fees than to layoff that extra two or three folks,” says Reiter, who began his career as a corporate lawyer before entering the search business in 1986 at Korn/Ferry International and later joining Herbert Mines Associates in 1993 as president with a five year transition to CEO.
Reiter’s Herbert Mines Associates appointed Mark Lee CEO of Barneys in August
Now, however, after a lull which affected virtually all the major players in executive search for luxury goods brands, the recruitment market is showing palpable signs of recovery.
But while Reiter agrees that there is definitely reason to be smiling again, he suggests that it could be misguided to automatically view the current upsurge in activity as a bellwether for the health of the wider luxury industry.
“The boom that we see is largely caused by the pent-up demand from the slowdown in 2009 and the explosive growth in the digital space,” he explains.
Nevertheless, for the short to medium term at least, as companies’ digital operations continue to expand, recruitment in this area will grow accordingly. Echoing one of our predictions in The Talent Agenda, Reiter says that he has noticed a trend for luxury brands to not only increase digital personnel but also to assign more senior positions to their digital divisions.
“We are finding more and more companies are naming Executive Vice Presidents, which is certainly a C-level, in charge of all things digital. For example, the title for Polo.com’s executive has always been President.”
“ We are finding more and more companies are naming Executive Vice Presidents in charge of all things digital ”
Another change that the increased reliance on digital business has prompted is enhanced communication between C-suite executives and the younger generation working under them.
“We have found in our digital and e-commerce practice that mature executives are listening more to the younger, digitally savvy executives than ever before,” he says. “While an experienced and tenured executive may not have a firm grasp and affinity for digital communication and commerce, they certainly know how to recruit and retain talent that has that expertise.”
Reiter is also optimistic about the continued cross-pollination of non-luxury executives that Web 2.0 has been feeding into the luxury industry.
“We believe that the talent for all things digital doesn’t necessarily need to come from the sector into which the people are moving, but rather the principal talent is being able to understand how to connect with this new customer,” he says, pointing out that this has been going on since the earliest days of luxury e-commerce.
“We started working in the digital world in about 2000, and in fact, recruited the first head of the internet/e-commerce group for Polo Ralph Lauren Corporation. Her background included Gap and Victoria’s Secret, so she certainly did not have a luxury heritage.”
But beyond growth in the digital realm, which is indicative of an evolution in the way of doing business, perhaps the most encouraging among Reiter’s observations is the type of executive which he currently ranks as the highest in demand in the luxury sector.
“Product, product, product,” he says, referring to product executives, merchants and designers. “These executives are sometimes the stickiest, as well as the most fussy, about moving. Each recruit presents its own particular challenges, relocation, non-compete agreements, and so on.”
Still, a lack of mobility can only go so far in explaining why these executives are so desirable. After all, if the people in charge of making and selling luxury goods are indeed more in demand than before, then it’s probably not too big a leap to suggest that more of their products must be in demand too. Surely, this must bode well for the sector as a whole.