Turnover in C-suites spiked across industries last year — and in retail in particular.
Next week, new CEOs will take over at both Levi Strauss and Macy’s, from their current offices elsewhere in the companies. But turnover in corner offices goes well beyond those big names.
Last year, U.S. companies announced 55% more CEO changes than in 2022, according to outplacement firm Challenger, Gray & Christmas. The 1,914 departures in 2023 set a record since the firm started tracking the data in 2002. The firm tracks public U.S. businesses, along with private, government and nonprofit companies that have CEO positions.
“There was a lot of reticence among CEOs to leave their organizations in the middle of the Covid crisis,” said Andy Challenger, senior vice president at Challenger, Gray & Christmas. “Covid rocked retail in a really significant way. Boards didn’t want to make changes, CEOs themselves didn’t want to leave. And now as that storm has passed, I think there’s been this pent-up demand for people to leave.”
Challenger said the pandemic accelerated changes in consumer preferences, which has forced companies’ boards of directors to look for new strategies and leaders to adapt.
The retail industry in 2023 saw 52 CEO departures, its second-highest number since Challenger, Gray & Christmas started tracking them, and more than double the 21 CEO turnovers in 2022, according to the firm’s data. It was below 2019’s record 63 CEO departures in the industry.
“Retail, probably, has seen the biggest shakeup in its leadership for a long time,” Challenger said.
In Korn Ferry’s separate analysis of retail CEO turnover in 2023, the executive recruitment firm found 57% of new chief executives named in the industry last year were already working for the company they will lead. Of the 43% of external hires, 45% came from outside of retail, often in adjacent industries such as consumer packaged goods and hospitality.
Women lose corner offices in retail
Next week, Michelle Gass will officially take over as the 13th CEO of Levi Strauss in its 171-year history, and its first female chief executive. She’s just one of a handful of women named as CEO at a major retailer in 2023.
Thirteen women vacated their retail CEO positions last year, and only five women took over top jobs at companies in the sector, said John Long, retail sector lead for Korn Ferry North America.
He called the trend “surprising.”
Gass moves into the C-suite from her current position as president of the denim brand. Prior to joining Levi’s in 2022, Gass served as Kohl’s CEO and was succeeded by a man, Thomas Kingsbury.
That trajectory was common for other women taking over top retail jobs. Four of the five incoming female retail CEOs were internal appointments, according to Korn Ferry.
Despite recent progress, there are far fewer women than men in CEO positions across industries. But the percentage of female CEOs is higher across all sectors than it is in the retail industry specifically.
“When we looked at replacement CEOs [in all industries], the highest percentage of new CEOs coming in that we’ve ever tracked were women,” said Challenger. “It’s a positive number, but it’s only 28%, not even close to equity.”
Just 11% of incoming retail CEOs are women, according to Korn Ferry. Retail and consumer-facing companies are often scrutinized more for gender disparity at the highest levels, since demographic analysis shows the majority of consumers making retail purchases are women.
“A lot of the reasons for why certain CEOs get chosen for their roles has unfortunately less to do with the customer, ultimately, but has more to do with the mandate that the company is pursuing,” said Long. “So if they’re pursuing a growth mandate, or a turnaround mandate, they’re more often to look for folks that have that in their background somewhere.”
The tenure length of exiting retail CEOs is also stark when split by gender. The average tenure of all departing retail CEOs last year was 6.6 years, according to Korn Ferry’s analysis. It was 7.7 years for men and just 3.7 years for women.
Even when removing two male chief executives whose very long tenures skewed the data, the average male retail CEO tenure falls just slightly, to 6 years, still significantly longer than the average female retail CEO tenure.
A few factors may explain why women have shorter tenures as retail CEOs.
One reason some experts cite to explain shorter tenures for female CEOs is the “glass cliff” phenomenon. The theory suggests women and minorities are often elevated to higher positions when the circumstances are difficult, thereby setting them up for a higher likelihood of faster failure.
“There are systemic barriers that women face. It’s improving, but it’s nowhere close to parity … getting to 10% of female CEOs has been a real struggle,” said Lorraine Hariton, CEO of global nonprofit Catalyst, which works with companies to build better workplaces for women.
“Retail is an industry that is in flex, we know there’s a lot of struggle,” said Hariton. “When organizations are struggling, they reach out to a broader pool of candidates, but if you are coming into a struggling situation already, your likelihood of success is much lower, especially if you weren’t groomed for the job.”
That’s one part of the “glass cliff” phenomenon, according to Hariton. The other part is that “unfortunately, unconscious biases still exist.”
“How are you perceived? Are you given the benefit of the doubt?” she said.
The fact that patience for women CEOs is lower could explain the shorter average tenures.
Hariton notes women are “overpopulated” in other roles, such as general counsel, chief financial officer, human resources jobs and marketing. But seemingly, fewer companies are grooming women for CEO roles in their succession planning.
“I just look forward to a day when we don’t have to talk about this,” Hariton said.