Executive departures expose candidate deficit

NATIONAL: The recent spate of senior executive departures from leading fashion companies has highlighted an acute shortage of developed talent in Australia, according to commentators.
The Australian Centre for Retail Studies (ACRS) claimed top level executive changes at a Just Group, Esprit, Myer and Colorado have revealed a company culture in which succession planning was given poor emphasis.
"There is a lot of talent out there, but Australian companies don't spend enough time developing it," said ACRS executive director Amanda Young.
"Companies should have a five to ten-year plan. Effective succession planning is about identifying people early on and giving them opportunities to play different roles within the company."
While many global industry leaders had garnered expertise through studying for an MBA, internal development programs could be just as effective, she added.
Her comments followed last month's announcement that Just Group managing director Howard McDonald intended to step down from the role, with his final date expected to occur before the end of 2006.
Meanwhile department store Myer's former managing director Dawn Robertson stepped down following its change of ownership on June 2, and Esprit Australasia's Morris Wagenheim announced his decision to quit in March, after 12 years as managing director.
Early this month Colorado Group announced the appointment of new CEO Mel Sutton - formerly Asia-Pacific regional vice-president of alcoholic drinks company Foster's Australia - following a protracted search after former head Rowan Webb announced of his intention to resign last year.
The length of time spent on some appointments hinted at a lack of suitable candidates, while succession planning was also plagued by a culture of gender inequality said Young.
"The ACRS has been running a strategic planning program for 10 years and in that time out of 35 participants only five have been women," she said.
According to a research note by Citigroup Investment Research senior retail analyst Craig Woolford, internal candidates for the role of Just Group head included two women; merchandising director Jacquie Naylor and commercial director Glenys Shearer.
CFO Jason Murray was another internal contender, while potential external candidates included Colorado ex-managing director Rowan Webb and ex-Witchery managing director Peter Lew.
The Just Group board would need to weigh up two key issues in making the appointment, Woolford claimed; "recognising the strength of internal management by promoting within, and the need for a strong leader to drive acquisitions and offshore growth".
According to the National Retail Association (NRA), the push for offshore growth and suitable candidates often drove companies to target international candidates.
However the talent pool in Australia was "pretty deep", executive director Patrick McKendry said.
Succession planning represented "the most fundamental role of a board", and simply importing leaders from overseas did not automatically mean better results, he said.
"It can also be more expensive; a US candidate might negotiate a salary equivalent to their US dollar wage, but if you think it's worth it you do it.
"However if you look at people like Stephen Goddard and Mark McInnes, both former Myer men and now at David Jones [as CFO and CEO respectively], it's clear that there is a lot of home grown expertise out there."
McKendry said the two biggest department stores in Australia had opted for Australian talent and that was a clear "telling point".
However Young said raw talent alone was not enough to ensure companies could make effective transitions from one leader to another.
"There is a lot of executive talent out there, but what's lacking is developed talent. Australian companies really do not spend enough time looking at their long-term strategy. It's not just a matter of training; it's about developing people over time."