The Succession Conundrum
Amid a decline in CMO tenure, companies weigh promoting from within or hiring from outside the organization
By David Ward
A classic case of the cobbler's kids having no shoes? While companies scramble to build brands, engage consumers, and drive sales, they may be neglecting cultivating senior marketing employees who can take charge or step into the lead marketer role if there's a sudden departure of the CMO, a recent report finds.
According to "Marketing Moves: Q1–Q2 2019," released late last year by Russell Reynolds Associates, more than 80 percent of publicly reported CMO appointments in the first half of 2019 were external hires, a stat that's remained consistent since the start of 2017.
The report's latest numbers imply that the next generation of CMOs will likely need to change employers to reach the top marketing position. The reason? VP-level marketers are often so specialized in areas such as customer relationship management and data analytics that many of these mid-level marketing leaders lack a deep understanding of the full spectrum of marketing that is demanded of a CMO these days.
Carl Loredo, who was promoted internally to CMO at Wendy's in June 2019 after serving as the VP of brand marketing for three years, says brands need to ensure employees are extremely knowledgeable about — and subscribe to — the company's core principles. "Doing so not only strengthens the pool for CMO candidates, but succession planning at all levels," he says. "It helps ensure that everyone is working toward the same goal, each and every day. It is also crucial that there is a deep understanding of collaboration between different areas of business."
This approach helps internal CMO candidates understand how their work engaging their target audience fits into the company's strategic goals and objectives, Loredo says. He adds that strong brands do not stem from effective ads alone, but from having a solid foundation both operationally and financially. "The more well-versed a leader is in building all the components of a powerful brand, the better," he says.
Loredo adds that brands can develop an environment of innovation internally without having to rely on outside hires: "They simply need to be open to challenging and pushing the teams they already have and be willing to look beyond what has become systematic."
The Case for (and Against) Promoting Internally
There are built-in advantages to looking for the next CMO among candidates already familiar with the company culture and branding goals, says Eric Leininger, a clinical professor at Northwestern University's Kellogg School of Management, where he's also executive director of the Kellogg Chief Marketing Officer Program.
"A promotion-from-within candidate should have the advantage of building internal alignment more quickly than an external candidate, and they should be able to take action more quickly, especially if they have demonstrated success in driving change in prior roles," Leininger says. "However, internal candidates often represent the status quo and may not take advantage of their ability to make the necessary change as quickly as they should."
While an outside perspective can be helpful, fresh ideas readily exist within an organization, and need to be sought out, says Jessica Daughetee, CMO at Avnet, who was promoted to the C-suite in 2019 after three years serving as VP of global content marketing and media for the technology company.
"To alleviate the concern that fresh perspectives can only come from the outside, organizations need to allow existing team members to challenge the status quo and express themselves freely," Daughetee says. "These employees are often the first to see the need for change. Most of the time you have very passionate employees who want to see the business succeed. It's important for the existing leadership to get exposure to and hear ideas from the layer of employees below them — the potential bench for promotions — not just hear from their peers."
Bradley Franc, a Pittsburgh-based attorney and author of The Succession Solution: The Strategic Guide to Business Transition, says companies often go outside the organization for their next CMO when they simply don't believe that their internal candidates have or can develop the skill sets necessary to lead the company's marketing efforts.
At the same time, he says, hiring an external candidate adds up to 25 percent to the cost of filling the position, with no guarantee that that person is the right fit long-term. "I think there's a greater risk if you default into 'Let's go find someone externally to get fresh perspective,'" Franc says. He notes that internal CMO candidates often have a better understanding of potential pain points as well as the company's overall strengths and weaknesses.
There can be instances when an external CMO is just what a brand needs. Before he joined the faculty at the Kellogg School of Management, Leininger served as an SVP at McDonald's and witnessed first-hand how an outside hire, consultant Larry Light, was able to revive the fast-food brand as global CMO nearly two decades ago. (Light is currently CEO of marketing consultancy Arcature.)
"When a business is in crisis, an external hire may be able to administer the medicine more quickly and more objectively," Leininger says. "But 80 percent of businesses are not in crisis, so we need to seek another answer as to why 80 percent of CMO jobs need to be filled externally."
Cultivating Talent Internally
Proper CMO succession, of course, is a function of tenure, which continues to decline. A 2019 study from executive search firm Spencer Stuart found that while the average CMO tenure in 2018 was 43 months, the median tenure was only 27.5 months, down from 31 months in 2017.
That rate of churn can leave current CMOs suspicious of plans to groom internal candidates as their successor. "There is a genuine fear, when a company develops a succession plan, that the current CMO may view that as a method of easing them out the door," Franc says.
Nevertheless, CMOs must instead view internal talent development and succession planning as part of their responsibilities, and realize that CMO openings can sometimes occur as a result of the CMO being promoted from within.
Loredo, from Wendy's, emphasizes the benefits of working closely over the years with Kurt Kane, who was Wendy's chief concept and marketing officer before being promoted to EVP in 2018, and then president, U.S. and chief commercial officer last year. "Kurt was — and has been — an incredible guide and leader to me in so many ways," Loredo says. "He's an extremely talented marketer and a great coach who is clear in his approach. Plus, he's always worked across departments and functional areas to arrive at the best solutions, which is core to my approach as well."
Daughetee, from Avnet, says its crucial to keep the C-suite close to the rest of the organization so potential internal candidates can be mentored on their way up the corporate ladder. "Give them exposure to senior executives so these leaders can feel confident in their abilities when an opportunity arises," she says. "In my own experience, I had the opportunity to bring in new and innovative ideas and present them in front of executives right from the start."
Franc recommends that companies develop two or three people within the marketing department as potential candidates if the CMO position opens up. But he concedes that candidates who get passed over for the top spot might then decide that it's time to move on.
He and others also point out that not every internal executive applying for a vacant CMO slot appreciates the immense responsibilities that come with the territory. "Sometimes people feel that they have to put their name in the hat for CMO, because if they don't, they may not be viewed as career driven," Franc says. "But in fact, they may not want the position."
If someone in the marketing department does aspire to be promoted internally to CMO the onus is on that person, in concert with upper management, to ensure that he or she is well-prepared should the opportunity present itself.
Daughetee is another advocate of internal candidates showing the C-suite that they've put in the work and can do the job of CMO well if called upon. "Staying close to the business is the most efficient way to prove that you understand the business and can be counted on as a trusted adviser," she says. "Keep your head down and work really hard to deliver great work. It's not about the title or the politics. Let your grit, tenacity, and results speak for themselves. I also can't emphasize enough how important it is to build credibility with leadership. You can do this by being visible, transparent, and trustworthy. And remember, great work stands on its own."
Lack of Alignment
In its report, Russell Reynolds characterizes the influx of outsiders taking over the CMO position as a crisis, but experts on succession planning suggest it may simply reflect the reality of how modern companies now view the acquisition and retention of talent.
"Historically, companies' leaders believed that if you promote from within, you'd end up with more loyal, devoted, long-serving employees," says William J. Rothwell, professor of workforce education and development at Penn State University, University Park, who focuses on succession planning and organizational development. "And if you didn't promote from within, then people felt they didn't have a future in that company."
Rothwell, whose book Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within is in its fifth edition, adds that organizations today tend to have a more sophisticated view of how work, including the responsibilities of the C-suite, gets accomplished. "If you have a good talent management program, then you have a good way to evaluate both the internal candidates to promote from within, as well as external candidates, from a talent pool, who are waiting to be chosen when an opening occurs," he says.
Leininger adds that the tendency to fill CMO vacancies with external hires can't really be described as a crisis, but rather a missed opportunity. "It may signal more about the lack of alignment about the role definition for the CMO, the state of succession planning, and professional development than anything else," he says. "Companies that have a strong practice in cross-functional moves within and outside of marketing will build the strongest leaders for the future."
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