Women Are Rapidly Losing Ground As The Churn In Retail CEOs Increases

By all accounts, 2023 is going to break the record in CEO turnover. Through the first three quarters of 2023, over 1,400 CEOs at U.S. companies across all industries exited their positions, up nearly 50% over the same period in 2022. And during the third quarter, vacancies more than doubled from last year.

Since outplacement firm Challenger Gray and Christmas began its CEO tracking in 2002, the first nine of 2023 had the highest rate of turnover ever. “Companies are revving up for economic changes in the coming months,” Andrew Challenger said in a statement, so “companies are looking to new leaders.”

The search for new leadership is opening the door for more women to take the top job. Some 29% of new CEOS were female to date, up from 26% last year, marking the largest number of incoming women CEOs on record. They are filling slots primarily in government/non-profits (42% of new female CEOs), health care/products companies (10%), hospitals (7%), and finance (6%).

However, across the 11 industries tracked, retail is at the bottom of the barrel for appointing female CEOs, representing fewer than 2% of newly appointed CEOs.

Losing Ground In Retail

Given that roughly half of the people employed in retail are women and they are well represented in retail C-suite and senior management positions, one would assume that retail would be an industry more open to picking women to fill the top CEO slot than others. But that is not the case.

Rather, women lost ground in 2023, according to a detailed analysis of CEO retail appointments conducted by Korn Ferry
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. Of the 47 newly-appointed retail CEOs last year, only five were female and 12 outgoing women CEOs were replaced by men. Overall, some 90% of new retail CEOs were men, and only 10% were female.

“It surprised me because boards and investors are being extremely thoughtful about trying to match their CEOs with the mandate of the business and their customer base,” shared John Long Korn Ferry’s North America retail sector leader. “I would have thought we would have retained almost as many women coming in as departed.”

Among the more prominent women leaving retail CEO positions last year were Walgreens’ Rosalind Brewer replaced by Tim Wentworth. A.K.A. Brands’ Jill Ramsey stepped aside, Revlon’s
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Debra Perelman left after five years, and Shelley Huff exited Serta Simmons Bedding after less than two years as CEO. She was replaced by Charlie Eitel, who promptly turned around and left after three months.

A.K.A. Brands, Revlon’s and Serta Simmons’ positions are being filled on an interim basis and are not counted in Korn Ferry’s analysis of CEO appointments. Also missing in the analysis are recent openings yet to be permanently filled at Party City, Beyond Inc. and At Home, all of which had men in the top slot.

Through The Glass Ceiling

While the sample of incoming female CEOs is only five, Long notes that four of those five (80%) got their positions due to succession planning. “It’s not a panacea, but it’s interesting that the few places women got these appointments were thanks to being in the succession planning pipeline.” Overall, 57% of new CEOs were internal promotions and appointments.

“The time to start succession planning is the first day the new CEO begins,” Long asserted. “Boards and CEOs need to be working to develop their leadership team so they can become part of the succession process. Because of the far-flung nature of the retail business, future leaders need exposure to many different disciplines and disparate parts of the business to succeed as CEOs.”

Appointing the CEO from inside the organization has distinct advantages. They know the lay of the land and the key players, so they can hit their marks faster.

Long observed that outside hires need at least six to eight months to really understand the dynamics of the business, then more time to put a plan and team together to begin executing.

“So that’s 18 months to almost two years to really get started, and then you need a period to ‘comp’ yourself. It takes at least three to four years to prove you can do the job sustainably,” he stated.

However, whether an internal or an external hire, Korn Ferry’s analysis suggests women have less time to prove their mettle, with an average tenure of 3.7 years compared with 7.7 years for men.

Facing The Glass Cliff

A study published in the Journal of Management, “You’re Fired! Gender Disparities in CEO Dismissal,” from researchers at the University of Alabama’s Culver College of Business, confirms boards have less patience when it comes to women CEOs.

The study of 641 CEO dismissals found that women have a 45% greater likelihood of being fired than men, regardless of the firms’ overall performance.

The researchers attribute this to what is called the ‘glass cliff,’ where after a woman has broken through the ‘glass ceiling’ to reach CEO, she is held to a higher standard than men and faces more scrutiny and criticism than her male counterparts.

“Female CEOs are more likely to be dismissed than male CEOs, and higher levels of firm performance protect male but not female CEOs from dismissal. Such results provide strong evidence that gender plays a significant role in CEO dismissal,” the research concludes.

More Turnover Ahead

While Korn Ferry has only completed five quarters studying the CEO churn in retail, the number of exits in the fourth quarter of 2023 where permanent successors were named rose from seven last year to 11 this, suggesting the pace is picking up. Also, nearly two-thirds of fourth quarter 2023 exits were unplanned, that is seven unplanned compared with only two last year.

Given the challenges facing retail in the coming year and the past three-to-four years of dramatic ups and downs in the post-pandemic period, Long advised retailers to put succession planning on the top of their to-do list in 2024.

In 2023, nearly half of the CEO exits were unplanned, adding an extra measure of disruption in an already high-risk, potentially disruptive environment.

“A majority of retailers we talk to are trying to do two things at once: trying to perform and transform the business,” Long observed. “Finding somebody to lead an organization through those processes is tough. It’s difficult to perform and transform simultaneously; you can’t stop one to do the other. It takes a very unique skill set.

“That’s why succession planning can’t be considered perfunctory. It’s vitally important to the ongoing operation of the retail business and provides an extra layer of insurance, come what may. Unplanned exits happen and absolutely cause disruptions in business, and that is a risk really not worth taking,” he concluded.