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Are Retail’s Executive Ranks Too Old?
While railing against ageism, or a bias against hiring older employees, has become common, some leadership pundits argue that executive ranks need to get younger to drive innovation and solve problems that require a longer-term perspective.
“A seasoned leader may favor short-term results over long-term benefits that won’t manifest during their tenure,” Martin Reeves, chairman of Boston Consulting Group’s BCG Henderson Institute, wrote in a co-authored article in the Harvard Business Review. “Moreover, they may be reluctant to challenge the mental models or organizational structures that have underpinned their success. Conversely, younger professionals may be more open to pursuing new paths leading to long-term payoffs, given their longer career horizons. Yet, they are usually not in the position to effect change within their organizations.”
Reeves said a longer-term perspective will likely be required to tackle worsening environmental and sustainability issues, including biodiversity loss. He further noted that in a rapidly changing environment, an exec’s experience “becomes outdated quickly,” and they often lean on “less risky strategies” that align with past success when bold approaches are required.
Reeves writes, “Of course, these tendencies are not a simple function of age or tenure and don’t apply to every individual. Nevertheless, we believe that there is an argument to be made for rebalancing curiosity and experience in leadership, and to reverse the aging demographic of leadership at a time of tumultuous change.”
The average age of a Fortune 500 CEO is 57.7. A CNBC article also noted that the average age of a CEO has been rising with people living longer and healthier lives and the pandemic challenges delaying retirement.
Target last year earned headlines after announcing that CEO Brian Cornell, then 63, would stay another three years beyond the retailer’s mandatory retirement age of 65.
Recent research from Lei Gao, associate professor of finance at the George Mason University School of Business, found that companies with a larger-than-average age difference between the CEO and other C-suite executives are more innovative on the whole, including applying for and registering more patents. According to the findings, “Because younger executives have a longer career ahead of them, they can be patient about when investments will pay off. This makes them better able to counter CEOs’ orientation toward more immediate outcomes, such as financial performance and share price.”
In a column for the World Economic Forum, Arjun Shekhar, co-founder of Pravah and ComMutiny – The Youth Collective, wrote that an infusion of youth at exec levels is required with 10,000 baby boomers retiring every day in the U.S. He adds that a society largely dependent on digital tools and devices demands younger leadership. Shekhar wrote, “Apart from the abundance of energy, youth may also provide fresh perspectives, irreverence for the status quo and a disruptive, creative, innovative mind that is willing to try experiments that may fail with no concerns about reputation.”
Discussion Questions
Do you find that retail’s executive ranks skew too old or too young? How would you rate the benefits of younger versus older leadership?
Poll
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Jeff Sward
Founding Partner, Merchandising Metrics
Ryan Mathews
Founder, CEO, Black Monk Consulting
This is an age-old question pitting youth vs. experience. It’s hardly surprising that senior executive ranks skew to the mature since it can take decades of experience to acquire the knowledge needed to run an enterprise. I accept that older executives may be more conservative, but that’s not necessarily a bad thing – there’s a lot to be said for a steady, experienced hand leading the company. The real question is how do companies continue to be innovative, regardless of the age of its senior executives? Ultimately, I believe a mix of experience working in collaboration with younger leaders to inject new, fresh thinking will produce the best outcomes.
There is an argument to be made for both sides. Maybe, lowering the age gradually, let’s say, by ten years will work to maintain a successful culture one has to remember how the company got there in order to pass the baton to the next leaders. And the next leaders must have spent time in a successful organization in order to piggy back on what has worked, while being open to to new market conditions. Age and ability don’t go hand in hand.
I think this topic is a bit broader than just the senior executive ranks. Experienced merchants, planners, store operations management are retiring faster than they can be replaced which is one issue. The larger issue is the amount of experience and know how that they take with them as tribal knowledge that is not institutionalized. There’s some benefit in that newer team members don’t have that change resistant “we’ve tried this before and it didn’t work” which is a benefit of newer team members. On the other hand the knowledge of why it didn’t work before and the errors that can be avoided are retiring at a rapid rate.
Irrespective of age, “irreverence for the status quo” sets retail leaders apart.
Andy Jassy is reinventing advertising and logistics. Doug McMillon balances value with omnichannel excellence. Tobi Lütke fuses media, influencers and commerce, attracting younger brands and consumers.
These retail leaders span different generations and direct teams that are right for this tumultuous market. Customer-focused action and agility make age irrelevant.
Successful executives are innovative, creative, and strategic and have the ability to build and lead a team. That formula has never changed. However, it’s a very slippery slope to suggest that older executives do not have these attributes or are not as effective at their jobs simply because they’re older. Studies have shown, over and over again, that diversity of thought is one of the most vital indicators of a successful leadership team. That diversity should include perspectives from across various experiences, including “experience.”
We did several studies that included questions about just this topic at RSR Research. We found that overwhelmingly, leadership was Gen X, followed by Boomers (who are gradually leaving the workforce).
No ageism involved in this, but when you’re trying to cater to Gen Z and Millennials, that’s just wrong. It’s time to pass the torch. Boomers are doing it. Time for the older side of Gen X to do the same.
Focusing on age is a big distraction and largely over-generalized nonsense. Age is not the issue. The issue is skills and leadership. There are great younger leaders and there are great older leaders. Having the right people in the right jobs, and incentivizing them correctly, is what ultimately counts. The example of Brian Cornell of Target is used as an example in the article as if being 65 somehow puts him on the scrapheap when, in reality, it is not all that old. Moreover, he was asked to stay on because, under his leadership, Target has performed spectacularly well.
The average age of a Fortune 500 CEO is 57.7. Damn, that’s OLD. (Insert sarcasm font here.)
Once again, I agree with Bob Amster: Age and ability do not go hand in hand.
Richard Branson is 73. Anyone care to tell me his skills are worthless and that he’s not an innovative individual and a good leader? Just lol
That wouldn’t be possible!
How fun! I get to comment as an old guy. Age is supposed to bring the maturity, wisdom and confidence to create and manage disruption. And how to balance the right amount of disruption with the right amount of continuity. Because age knows that the status quo does not have a long life. And the life span of the status quo is getting shorter all the time. So I think it’s a function of confidence and ego. Confidence to make the long term investments that the ego knows might not see a full payoff in the executive’s tenure. Aging is supposed to bring the realization that we never really knew it all and that we always would have benefitted from being a better student, never losing sight of the importance of listening and learning.
The wisdom of age and the exuberance of youth can be a powerful combination. Executives, of any age, are supposed to know how to leverage that combination. And when they don’t, a very lazy kind of inertia sets in. It’s not age or youth. It’s age + youth.
One of the most important jobs that senior leaders have is to identify the next generation of leaders for the enterprise. Nurturing and empowering these next gen leaders with a variety of experiences is the fastest path to leadership roles, including the CEO job. Great companies take enormous pride in their ability to execute this, which, in and of itself is a strategic process with lots of moving parts. I think back to the days of Jack Welch at GE and how he took an active role in the identification and development of younger executives throughout the many business units GE had at the time. It was enormously successful. Officers – whether they are younger or more mature – have a fiduciary responsibility to their shareholders and should always be looking to acquire and retain the BEST talent.
It’s going to be important for retail companies to have younger merchants to address the needs of Gen Z and Millennial customers who are setting up households and finding their personal styles. That said, it also makes perfect sense to retain very senior executives like Mr. Cornell who have spectacular track records.
This isn’t … or at least shouldn’t be … about age. It should be about the quality of thinking. With all due respect to Mr. Reeves and BCG, it could be argued that younger executives have a shorter field of vision than their older peers because they need quick hit success so they can move on to their next job, Unless they own the company, there aren’t that many fast track 30- 40 something CEOS planning to retire from where they are working. In fact, they probably aren’t planning on being where they currently sit five years from now. It’s easy to go down the “experience versus enthusiasm” or “comfortable versus disruptive” rabbit hole arguments when it comes to age, but the truth is successful leadership is really more about energy levels, openness, critical thinking, creativity, the quality of experience (as opposed to the quantity) and a willingness to embrace risk than it is about age. The world is changing so fast there is no future for entrenched thinking whether it exists in the head of someone who is 45 or someone who is 85. We all have to learn new things all the time. When a leader loses his/her/their interest in learning then it is really time to hang it up … and that can sometimes be seen in freshly-minted MBAs.
The age of the CEO or other senior leader is irrelevant, or at least the greater relevance is that person’s skill set and how it fits the particular needs of the company. Retail is not for the risk-averse but it’s not for the foolhardy either, so the CEO (of any age) should bring a balanced perspective to the table. The ability to lead a team focused on innovation alongside risk management is essential.
We as a society love to make assumptions. Older = less innovative, less fresh perspective, not as tech savvy. Younger = the exact opposite. The real opportunity lies in understanding business needs in the short term, what the trends are indicating for the long term and then assembling the proper team based not only on current skill set, but potential. Decide what the needs are for a CEO in leading the organization and then surround that individual with a team with diverse skills and talents that complement one another. If they are continually challenging one another to do their best work as a team, when the CEO does leave, the right leader for the moment is already there and ready to step in. They also know what a high performing team looks like and how to backfill their prior role to keep pushing forward for continuous improvement and success for the future.
Older leaders offer experience and stability, while younger ones bring fresh ideas and adaptability. The ideal lies in blending these qualities for a dynamic, innovative approach. Too much focus on experience may hinder innovation, while an overly youthful leadership might lack seasoned judgment. A mix ensures adaptability and insight.
However, in today’s volatile context, experience may be less valuable than ever, as it quickly becomes outdated, as highlighted by Andrew Liveris, former CEO of Dow Chemical in his book Leading Through Disruption.
The perfect age for an exec ?? I think about 60 years (and 5 mos): old enough to be experienced, but not yet addled. My thinking has evolved on this, tho….five years ago I was sure the optimum age was 55…
OK, OK seriously now, I don’t know that we can think our way to the right answer. An intelligent evaluation process is key – which is to say I don’t see how something like “patents registered” is a meaningful criteria (at least for retail) – and I’m not sure why we should reject the maxim of “letting the market decide”, as cliched as it might be.
Plenty of subjectivity and there’s no one correct answer. Having the conversation around leadership and age means understanding the needs of the company, the persons ability, relatability with others and total contribution value.
There is also an important piece in this equation not to be overlooked. That is every company should identify their next few levels of talent, and even plan for succession. Investing in younger team members by giving them the tools and support they need means healthy leadership and company performance over the long-haul.
“companies with a larger-than-average age difference between the CEO and other C-suite executives are more innovative on the whole” – and that’s the key. It’s about having a diverse range of opinions and experience, and a ‘continuous learning’ mentality rather than just looking at age. How does the C-Suite stay abreast of new technology and trends? Do they have executive sponsors that will back new and innovative programs? Do they look at the balance of their C-Suite and ensure their succession planning accounts for diversity across both age and other criteria?