THE PRICE OF TALENT 2004-09-27 (1)

JON SPRINGER / Additional reporting: Elliot Zwiebach

Cold. Serious. Darwinian. Aggressive. When SN asked observers to describe the state of executive hiring and retention in the supermarket industry, the adjectives spoke for themselves.

They describe an industry that, due to competitive pressures and consolidation, is squeezing more work out of fewer people, in positions more challenging, than ever before. What's emerging is an emphasis on the acquisition and retention of those executives who can be successful under these conditions right away: In human resources parlance, there's a premium on talent. Those who have it are likely to be in demand and compensated well. As companies hunt for talent, others should be prepared to protect their best people.

"I think the supermarket industry has changed drastically in the last few years when it comes to executive hiring," said Jeff Weirichs, a Philadelphia-based senior consultant for the consumer goods and services practices of Spencer Stuart, a Chicago executive search firm. "They feel a tremendous amount of pressure to bring in high-quality talent, so they are reaching out to search firms to find the right people. When they do find somebody, they are aggressive about getting them in.

"They've gotten a lot less casual and a lot more serious."

While consolidation has allowed some companies to reduce their corporate head-count by eliminating redundant positions and streamlining operations to serve multiple regions and banners, the more complex nature of large, multi-regional operators offers opportunity to those with high-level skills in areas like logistics and information technology. Some observers are also predicting that a brightening economy could aid a bounce in mid-level jobs -- store, category and district managers -- but such opportunities will likely require relocation.

What's unlikely to change, observers said, are trends toward supermarket operators targeting top-level talent and putting it to work with multiple responsibilities. This reflects broad changes in business overall.

"There's no doubt there's a higher emphasis placed on people who are top performers and can get results," said Jose Tamez, managing partner of the executive search firm Austin Michaels, San Antonio. "The truth is, that's only going to grow in the future. We live in a business society where things just don't soften up."

Adopting a Talent Mind-Set

Weirichs said his supermarket clients are increasingly adopting, to various degrees, what New York-based consultant McKinsey & Co. termed "the talent mind-set." In the 2001 book "The War for Talent," McKinsey researchers argued that organizations that focus on better talent management will perform better. They urged companies to shape strategy to better appeal to talented people; to invest disproportionately behind their best performers; and to fuel development through "stretch jobs" and mentoring.

"The war for talent is very much on in supermarket organizations," Weirichs said.

It is not coincidental that one of the organizations cited in the McKinsey study was General Electric, the company that spurred Larry Johnston, who today is chairman and chief executive officer at Albertsons, Boise, Idaho. Johnston has made no secret of his efforts to change how Albertsons approached many of its functions, including human resources. His efforts are resulting in a lean organization with busy, well-regarded executives.

"We're re-engineering every facet of Albertsons, but especially the human resources function," Johnston said earlier this year in a talk at a Grocery Manufacturers of America conference. "We're focusing on lifelong learning and executive training. We're letting people transform their areas of responsibilities."

When Albertsons purchased West Bridgewater, Mass.-based Shaw's earlier this year and folded it in with its other East Coast operations, many corporate positions at Shaw's were eliminated. Paul T. Gannon, Shaw's former CEO, was retained and recently named Albertsons' chief marketing officer at its Boise headquarters.

"With industry consolidation, competition is at a higher level than it once was, and that requires a higher caliber of personnel, but people seem to grow and meet the level of the competition and the size of the company," Gannon recently told SN. "At $30 billion to $40 billion in annual sales, some of these companies are pretty complex to run."

That, he said, calls for expertise in new areas and new opportunity within executive ranks. "There's a tremendous need to bring more talent into the food business because as we add more store formats and loyalty marketing programs, and as we focus more on technology, we are creating more opportunities for people to come into the business who have skills in specialized areas, and those people have an opportunity to rise in a short time. So there's a need for talented individuals more so than ever."

The search for that talent, Weirichs said, is leading companies to look outside their own organizations more often: Not everyone starts as a bagger anymore. In recent weeks, New York-based Internet grocer FreshDirect hired former Wegmans and Weis Markets executive Steve Michaelson as its president; and Cincinnati-based Kroger picked a former Randalls senior vice president, Mark Prestidge, to lead its Houston division.

"There's never enough intelligence, so companies are hungry to find new thinking and turn the tide," he said. "A lot of the boards of the major companies are beginning to demand it as well. They're trying to get them to at least consider whether they could use outside talent in addition to what's already inside the organization.

"Frankly," he added, "it's time for that. This is an industry that's finally turned around and re-examined how it looks at its human capital."

The Baptist Is Out

All the enlightened thinking about human resources practices will only go so far to create jobs, however. Tamez said executive openings in the industry simply aren't as prevalent as they were a few years ago, even as the need exists. Executives cut loose in consolidation can wait only so long before looking outside the supermarket sector for their next job.

"You could be John the Baptist, but if nobody's looking to be baptized, you're out of business," he said. "What keeps [recruiting] firms like ours in business is when opportunities do become available, there's a high level of scrutiny and urgency to them, and it lends itself to calling a firm like ours."

When supermarket companies come calling for help, they ask for executives with experience and a proven track record. Belt-tightening has left companies without as much "bench strength" as they once had. "Anyone who's competed with the Wal-Marts of the world can be very attractive," Weirichs said. "A Kroger executive is a hot property."

Supermarket companies also have less patience with new hires than they used to. "There's much more emphasis on making an impact promptly -- right now," Tamez said. "Six or seven years ago, the ramp-up was ample. It was a softer approach. Now because of the nature of this sector, the ramp-up time is minimal. And because it's minimal, they have to find people who come in running and not jogging."

Struggles among some major operators contribute to their need for fast starters, added Jim Hertel, senior vice president of Willard Bishop Consulting, Chicago. "The demand to produce results quickly is high in all businesses today, but the stakes are raised when the business is not producing," he said. "It's no secret supermarket retailing is not the fastest growth sector in the economy. So people have to do more."

The Exit Tax

Next week marks a rare occasion at Chandler, Ariz.-based supermarket operator Bashas': A new executive is starting. Bashas' strongly believes in promoting from within, said Mike Gantt, Bashas' senior vice president of human resources. The firm recently went outside to fill the position -- vice president of information technology -- mainly because nobody in-house had quite the right background.

Gantt realizes, however, that national competitors may shop Bashas' for their next executive. Bashas' Food City division, which caters to Hispanics, might be especially vulnerable. "I'm sure some of our people have gotten a call or two from a headhunter. We're not burying our heads in the sand about that," Gantt said. "We're doing all we can to improve our package and stay competitive in the market, but our executive group is a small one and there's no fat at the top. Things are tight."

Bashas' advantage is what Gantt called "quality of work life," or an "exit tax."

"One of the things that works to our advantage is that we're located in a great area in terms of climate and we have a great reputation," he explained. "While the compensation and benefits may not be as attractive because of our size, our people won't trade this quality of life for anything. We want to make that exit tax high enough so that anybody who wanted to leave would have to say, 'I'd like to, but I'd have to give up a whole lot if I did."'

Food Retailing Salaries -- 2004

Unless you were with a medium-sized company, it's unlikely your salary changed much over the last year, according to annual food-retail salary figures provided to SN by executive search consultants Austin-Michael and Spencer Stuart. Medium-sized companies (sales of $500 million to $3 billion) showed modest increases in salaries for most vice-president-level positions. Significant changes from last year's figures show salaries of grocery vice president raised 9.5%, 10.3% and 5.6% among small, medium and large companies, respectively. Supermarket operators are also paying their human-resources people better, and spending more on salaries for executives in advertising, warehouse and transportation operations.

The chart below excludes bonuses, special incentives or other compensation factors. This is a sampling of the industry based on salary ranges of client assignments, and existing salaries of candidates, in the databases of executive search firms Austin-Michaels and Spencer Stuart.

Position: Small Co. (Less than $500M); Medium Co. ($500M-$3B); Large Co. (More than $3B)

CEO: $200,000; $350,000; $575,000

President: $185,000; $290,000; $480,000

VP Finance/CFO: $125,000; $200,000; $255,000

VP IS/CIO: $110,000; $190,000; $225,000

VP Marketing/CMO: $115,000; $180,000; $245,000

VP Operations: $125,000; $180,000; $215,000

VP Grocery: $115,000; $160,000; $190,000

VP Perishables: $115,000; $165,000; $190,000

VP General Merchandise: $105,000; $145,000; $175,000

VP Merchandising: $130,000; $175,000; $205,000

VP Meat/Seafood: $105,000; $135,000; $175,000

VP Produce/Floral: $100,000; $130,000; $160,000

VP Distribution: $100,000; $135,000; $220,000

VP Real Estate: N/A; $170,000; $210,000

VP H/R-People Resources: $110,000; $160,000; $200,000

VP/Director Diversity: N/A; $110,000; $130,000

VP Risk Management: $85,000; $120,000; $160,000

Director Advertising: $90,000; $105,000; $125,000

Director Training: $80,000; $95,000; $120,000

Director Warehouse: $85,000; $115,000; $140,000

Director Transportation: $80,000; $105,000; $130,000

Director Meat/Seafood: $80,000; $110,000; $130,000

Director Seafood: $75,000; $90,000; $105,000

Director Produce: $80,000; $100,000; $115,000

Director Floral: $75,000; $85,000; $100,000

Director Deli/Bakery: $80,000; $100,000; $115,000

Director Grocery: $85,000; $100,000; $125,000

Director General Mdse: $80,000; $95,000; $120,000

Director Operations: $90,000; $120,000; $140,000

Director of Real Estate: N/A; $110,000; $130,000

Director Internal Audit: N/A; $110,000; $140,000

District Manager: $85,000; $105,000; $120,000

Category Mgr Non-Perish: $70,000; $80,000; $85,000

Category Mgr Perishable: $70,000; $80,000; $90,000

Buyer Perish/FF/Dairy: $60,000; $65,000; $75,000

Buyer Dry Grocery: $60,000; $65,000; $75,000

Buyer Non-Food: $50,000; $60,000; $70,000

Meat Buyer: $55,000; $70,000; $75,000

Produce Buyer: $55,000; $70,000; $75,000

* Salaries have been rounded off to the nearest $5,000

SOURCE: AUSTIN-MICHAEL EXECUTIVE SEARCH AND SPENCER STUART

HOW TO GET A JOB

Some observers sense hiring in the supermarket industry is making a comeback. Yet they do note that the rules will be a bit different now. SN asked retail recruiters what perspective job-seekers should think about before considering moving on.

GET IT DONE

As described in the accompanying story, job responsibilities are expanding. Companies are increasingly looking to retain, recruit and reward their top performers. It sounds obvious, but the better you perform at your current job, the better prepared you will be to advance to another. "The people who will always be able to attain the job they want are those with a history of getting results," said Jose Tamez, managing partner of the recruiting firm Austin-Michael, San Antonio. "The best predictor of future results we have is past results."

Recruiters also suggested that job seekers "fill the gaps" in their specific skills as a means to become more marketable. "Even if you happen to be an introvert, it's important you work on communication. That's vital in the workplace today," Tamez added. "By communication, I don't mean standing by the water cooler talking about the Jets game. I mean the ability to communicate ideas and goals."

WRITE IT DOWN

"You'd be surprised to learn how few senior executives have an updated resume," noted Jeff Weirichs, senior consultant for the consumer goods and services practice for executive recruiter Spencer Stuart Management Consultants, Philadelphia. Having one is just a start.

A well-written resume, recruiters said, not only details a personal career history, but quantifies the results of that career. "I encourage candidates to include specific numbers, facts and figures -- square footages, weekly sales volumes, sales per man-hour -- any metric they are measured upon," stated Jason Wickline, vice president of Judge Inc., Atlanta.

Getting into the habit of keeping a diary or journal devoted to accomplishments in the workplace can serve as reference point to writing a resume, added Tamez. "Be a producer of positive results and quantify it specifically," he recommended.

TALK IT OVER

More than ever in the supermarket industry, moving up means moving out: Geographic moves are routine for the advancing professional, recruiters agreed. However, they said job seekers should be certain of their willingness to commit to a move.

"Hold a conversation with your family," Wickline suggested. "You should first consider whether you can move, then consider the areas you'd like to target."

Job seekers should be open not only to new geographies, but to new philosophies. "Try to picture yourself and how you fit into the organization long-term. Do you fit culturally? The worst thing that can happen is somebody moving to a new organization with the idea of changing the culture singlehandedly to the one they just came from," Weirichs said.

CHECK IT OUT

The competitive nature of companies focused on attracting top talent and a general scarcity of jobs overall have created an atmosphere good for recruiters, who can target key acquisitions with precision. Public job postings can lead to a deluge of responses companies must slog through.

So it helps, recruiters said, to make and keep your own contacts and listen for word-of-mouth opportunities. "Keep up the networking," suggested Tamez. "Have an outlet to be apprised of opportunities in the market, whether it's from people you know in other companies or recruiters."