The Inner Circle

Few, if any, retailers are using the business-management concept of senior leadership teams (SLT) to lead the daily charge, but research shows that for long-range planning, an SLT can be highly effective.

“In an SLT environment, all the key people—the CEO, CFO, president, head of merchandising, head of operations—would temporarily shed their functional roles and work together to form a vision for the company,” Craig Rowley, VP and global practice leader of Philadelphia-based human-resources consultancy Hay Group, told Chain Store Age.

In its recent book “Senior Leadership Teams: What It Takes to Make Them Great,” Hay Group published survey data and case-study material from more than 120 leadership teams across a range of industries in 11 countries.

While Hay Group found through its research ties that an SLT can be effective for direction and strategy decisions—making investments, evaluating risk to gain, strategic planning—to expect a retailer to use an SLT to make day-to-day decisions would be unrealistic. “Compared to other industries, retail is extremely fast-moving,” said Rowley. “And it is faced with putting out fires. The last thing you’d want is for something to ‘catch fire,’ then to have to mobilize the SLT to have a meeting to discuss how to put out the fire.”

Many retailers, however, do operate with some sort of leadership team—usually an informal ‘inner circle,’ said Rowley, or an executive committee consisting of as many as 10 or 12 people. “In our definition, that’s not an SLT,” said Rowley. “That’s too many people.”

What’s the optimum number for an effective SLT? “There’s no one right answer to that,” said Rowley, “as it depends on how many people can really participate in setting the direction and driving the business. In our experience, that number falls somewhere between three and seven people.”

Hay Group’s research found that there are some situations in which an SLT is unlikely to ever work. “In retail there is a tendency to have what I call the dominant CEO who really runs the business and makes all the decisions,” said Rowley. “There may be one-on-one meetings with direct reports, but it involves an authoritative management style in which the CEO is telling them what they need to go and do.”

Outside of the dominant-CEO model, an SLT can bring value to a retail company. “This is an approach to leadership that retailers should look at and understand, and then ask themselves if it would help create a more effective organization,” said Rowley.