Spencer Stuart, a global executive search and leadership consulting firm, first brought attention to the short tenure of Chief Marketing Officers. In 2004, they reported that CMO’s lasted less than two years (that number now is now four years). Spencer Stuart’s work prompted McKinsey, Bain, and other consultancies to examine the role in papers and articles. All this analysis could be boiled down to two primary reasons for short tenure: too-high expectations and poor cultural fit.
There was a fad-like quality to the early rounds of hiring CMOs. It was like CEOs looked around and said, “Hey get me one of those!” I recently interviewed Chris Hummel, CMO at United Rentals, for my upcoming book, Needs and Wants: The Universal Truths of Marketing. Chris has been CMO at Unify and Schneider Electric prior to his current position. He believes the hiring company often defines the position too broadly or may not know what they really need so it is critical to be specific in what the role is to deliver while ensuring solid chemistry with the company and fellow executives.
Executive Search consultants, Russell Reynolds, recently added to the discussion with their own report on marketing executive turnover. You can access the PDF here: RRA Marketing Moves Q1-Q2 2016 or read it below. You will find that being a marketing leader is not for the feint of heart.
To better understand current trends in the appointment and turnover of marketing officers, Russell Reynolds Associates tracked and analyzed 175 notable, publicly disclosed marketing-leadership moves in the first two quarters of 2016.
Record turnover. So far, 2016 has witnessed the highest level of marketing-leader appointments and turnover since Russell Reynolds Associates began comprehensively tracking all major appointments four years ago. In the first six months of this year, we recorded 175 marketing-leader appointments, compared to 147 in the prior six months and 134 in the same period of last year.
Retail volatility. Some industries, and most notably the retail industry, experienced particularly high volatility. Among the top 30 US-based retailers by revenue, 48 percent have turned over their marketing leader in the last 12 months alone. See From CMO to C-Uh-Oh1 for more insight. In the first half of 2016, retail appointments accounted for 17 percent of all CMO hires, up from 9 percent this time last year.
External hires dominate. The clear majority of marketing officer appointments during the first two quarters were external hires, at 62 percent, as they were in the first two quarters of 2015 (63 percent). Technology companies exhibit the greatest tendency to recruit an external marketing leader, in 86 percent of appointments in the first half of the year.
Outsiders in financial services. Financial services continued its strong and persistent trend of appointing marketing leaders from outside the sector, with 62 percent of financial services marketing-leader appointments pulling talent from outside the industry. The consumer sector is the source of the most cross industry hires to financial services (50 percent).
Insiders elsewhere. The consumer and technology industries maintained their trend of appointing marketing leaders from within their own sectors.
Gender diversity grows slightly. Women accounted for 40 percent of all marketing-leadership appointments, up one percent from Q3-Q4 2015, and from 34 percent in Q1-Q2 2015.
External elevations more common than internal promotions. Of the marketing leaders that left their role in Q3- Q4 2015, only 23 percent were internally promoted to roles like president, chief digital officer, or chief executive officer. However, of those that left their company during that time period, 33 percent joined new companies under similar titles.
Continuing a pattern we have seen in previous quarters, the consumer sector accounted for just over half (53 percent) of the turnover among marketing leaders. Within the sector, the breakdown was as follows: 16 percent of marketing moves took place in retail – up 4 percent from the final two quarters of 2015, the largest increase of any sector – 14 percent in consumer digital and media companies, 13 percent in consumer products and services, and 10 percent in leisure and hospitality.
The high level of turnover among retail marketing leaders is undoubtedly the result of ongoing industry turmoil, as legacy brick-and-mortar retailers continue to adapt to the reality of multichannel commerce and the rapidly changing consumer landscape.
Internal vs. External Hires
The majority of marketing leader appointments continue to be external hires. As has been the case for the last few years, the first half of this year saw companies looking externally for their marketing executives significantly less of the time (64 percent) than they did in the second half of the prior year (73 percent of the time). Those proportions were consistent with data from the year earlier, with 63 percent of marketing hires coming externally in the first half of 2015, but 84 percent in the second half of 2014.
Three sectors, in particular, continued to exhibit strong trends in the sources of their external hires over the past two years. The majority of technology and consumer external appointments still came from inside the sector (72 percent and 84 percent, respectively). For technology, this was a decrease from 79 percent in the previous two quarters; for consumer, this was a significant increase from 70 percent in the previous two quarters.
In contrast, only a minority of external marketing-leadership appointments in financial services came from inside the sector (38 percent). This was a two percent decrease from the prior six months, and an 8 percent increase from the first half of 2015.
Where Do Chief Marketing Officers Go?
To gain additional insight into marketing officers’ career paths, we analyzed the patterns of marketing leaders who left their roles in Q3 or Q4 of 2015. Of those departing marketing leaders, approximately 23 percent were internally promoted into a non-marketing role, while 61 percent left the company for a new opportunity. The remainder either retired (4 percent), or have either not yet taken on a new role or not made their new employment public (12 percent).
In the latter half of 2015, of those who left to pursue a new opportunity, 75 percent stayed in the same industry, while 25 percent moved to a different industry. Of this same group, 55 percent take on a marketing leadership role, while 18 percent move up to a higher, non-operating role (i.e., chief growth officer, chief strategy officer, etc.) and 15 percent moved to an operating role. Also, 14 percent began working as independent consultants.
The report goes on to list each of the 175 marketing moves the consultancy tracked in the first two quarters of this year. Thanks to Russell Reynolds for keeping the lens on these issues.