CMO succession path in crisis: Firms seek external hires to name next gen CMOs

The marketing industry is facing a continued "CMO succession crisis", with 80% of publicly reported appointments in the first half of 2019 being external hires, according to a study by Russell Reynolds Associates. This trend is consistent since the start of 2017.

The report revealed that internal promotions were being seen in less one in five CMO appointments.

This implied that next-in-line marketing leaders will likely need to change employers to reach the top marketing position. "This is likely because today’s VP-level marketers are often so specialised that many of these mid-level marketing leaders lack a deep understanding of the full spectrum of marketing that is demanded of a CMO today," said the company.

The consumer products and services sector had the largest increase in proportion of external appointments, from 61% in the previous year to 80% over the first half of 2019. Industrial and natural resources organisations have trended toward a 50-50 split of external-to-internal marketing-leader appointments over the last year, which was a sizeable decrease from 79% external over the previous 12 months. However,

Organisations are moving away from promoting long-tenured marketing executives into the top role.

For internal appointments, the average tenure with the company prior to promotion was 7.2 years, a decrease from 9.7 years in the previous 12 months.

Among the CMOs who were internally promoted, almost half of them were promoted to a president or general manager role in the last two years. Last year also saw a slight decrease in CMO promotions to president or general manager roles, down to 44% from 48% in 2017.

Additionally, both digital roles and strategy and innovation roles have been an increasingly common next step for CMOs, digital roles saw a 12% increase over 0% in 2017 while strategy and innovation roles saw a 7% increase to 20% in 2018.

Speaking to Marketing, R3 founder Shufen Goh said a lot of her marketing transformation work at the global consultancy is led by CMOs with an agenda to evolve or even disrupt themselves. "External hires can bring a fresh and less biased approach, but the only caution is ability to rally rest of organisation behind the change. That requires vision and leadership - traits that are hard to find," she said.

Meanwhile, McDonald’s Malaysia marketing director Eugene Lee said he does not think that it is impossible to be promoted internally, adding that he is "probably among the 1% that came from the bottom up". Lee joined McDonald’s Malaysia as a marketing officer and has worked his way up over the past eight years.

However, he too, faces the same challenge in finding successors. He explained: "We may have talent that is up-and-coming, but they are only going to be ready in the next five to eight years."

If we need someone now, that’s where the talent crunch comes about.

Lee added that as marketers move up the ranks, they need to understand the business as a whole beyond marketing executions and that is where there can be a gap. However, personally, he prefers to hire more entry-level individuals and groom them, rather than mid-level executives.

"I get to carve out their thinking and groom them in a way that is suitable for the organisation," he said. Managers or senior managers, on the other hand, may come with their own mindsets or own way of doing things, and that exposure might not be suitable for the company that they join.

Sunway Malls COO Kevin Tan said the company only hires externally when there is no suitable candidate from within. He believes planning is very important in grooming talent, and it is the responsibility of the CEO, COO and HR to identify the potential next-in-line.

"We provide various training, courses and send our employees to conferences to gain exposure and insights for personal growth. We take our time to groom our employees and those who show potential can become their own heads or take the lead of a department in an existing or new mall," he said.

According to him, CMO is a "rare concept" in the mall industry in Malaysia. At Sunway Malls, what it has instead are CEO, COO and heads of departments, who run various retail developments under a structure known as Centre of Excellence. The Centre of Excellence’s role is to provide a knowledge sharing platform to enable best practices to be implemented throughout each of our retail developments. Through this, Sunway Malls increases the management capacity of the CEO and COO and ensure the expectations of each mall performance are met through the heads of departments and heads of each mall.

Marketing moves

In the first half of 2019, there were over 200 senior marketing job changes, an increase of 12% versus the same period last year and the highest total in any six-month period. Record low unemployment and record high job openings has caused a flurry of hiring activity with senior level marketers, said the report.

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Overall, the average tenure for outgoing CMOs last year was 4.3 years, up marginally from 4.2 years in both 2016 and 2017. For those who joined a new company, the average CMO tenure was slightly lower: 3.5 years in 2018, up from 3.2 years in 2017. Promoted CMOs have a similar tenure to those who arrived at a new company but saw a year-over-year decrease to 3.5 years in 2018 from 3.8 years in 2017. The median tenure for CMOs was three years in 2018, and 2.8 years from 2016 to 2018.

The consumer industry has a slight majority in marketing moves, accounting for 54% of marketing leadership turnover in the first half of 2019. Specifically, consumer products & services saw the largest increase over the last six months, up from 12% to 19%, while leisure & hospitality saw the largest decrease—from 13% to 9% in the same span.

Nearly half of 2019 marketing leadership appointments to date have been women. This is the highest proportion of female CMO appointments seen by Russell Reynolds Associates in a six-month period. The previous high was 47% in the second half of 2016. Financial services and industrial & natural resources companies appointed more females than males to the CMO role, with female appointments accounting for 56% and 55% of each industry’s respective total.

For the report, Russell Reynolds Associates tracked and analysed 214 notable, publicly-disclosed marketing leadership moves in the first half of 2019. It has been monitoring CMO moves over the past six years.

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