CHAPTER THIRTEEN
MACY’S
This chapter outlines a strong approach for building and implementing
development programs for leaders at all levels.
development programs for leaders at all levels.
Macy’s, one of the most successful fashion retailers in the United States, owns and operates more than 850 Macy’s and Bloomingdales stores in forty-five states, the District of Columbia, Guam, and Puerto Rico. It also operates macys.com and bloomingdales.com. With 182,000 employees, sales totaled $26.3 billion in 2007.
Despite the organization’s powerful brand, department store retailing as a whole is under significant pressure to find its way back into the hearts and wallets of shoppers who now have more choices than ever before regarding where to spend their money. With so many choices for in-store and online shopping, consumers are becoming more and more discerning when they shop. Macy’s believes the key to future growth is innovation in product offerings and the customer shopping experience. This is possible only through excellence in leadership.
The Business Case for Leadership
Over the past few years, Macy’s has faced a number of fundamental changes that have placed increasing pressure on the company:
• In 2005 the company launched a national branding strategy, changing its own regional nameplates to Macy’s.
• With a strategy of growth through acquisition, in 2005 Macy’s acquired May Department Stores Company, a large nationwide retailer that came with a very different organizational culture.
• The current down-trending economic cycle has caused decreases in consumer spending.
• The potential talent gap has widened considerably with the impending retirement of baby boomers.
• Recently the company has implemented a large-scale restructuring that has resulted in the deployment of a merchandise planning function to local markets with the goal of getting closer to customers to understand their shopping needs better.
The retail industry is entering a place never before seen, but in spite of this, Macy’s enjoys a number of strategic advantages that position it to face these challenges. One of the company’s biggest strengths, derived from many years of success, is a clear vision of its positioning in the marketplace. It benefits from well-established brand values that serve as guidelines for how to operate internally. In addition, the organization has a strong focus on well-articulated business priorities:
• Differentiate merchandise tailored to the customer at each location.
• Deliver a shopping experience that ensures that each store is visually appealing, easy to shop, and staffed by knowledgeable associates.
• Simplify pricing to underscore the value delivered to the customer.
• Execute marketing strategies that build the brand and at the same time speak to the local customer.
Finally, the company’s history of and strong belief in leadership development as the key to implementing business priorities is a stabilizing factor to be drawn on as Macy’s finds ways to generate growth in the new world of retailing.
Addressing the Challenges
In 1999 Macy’s, then known as Federated Department Stores, had a record year as measured by the most important financial indicator of success: comparable stores sales growth. It was also in that year that the company launched the Leadership Institute, a facility and a program targeted at the development of the company’s top-tier executives. The foundation of the teachings of the Leadership Institute was, and still is, the leadership choice model. This model states that a great work environment attracts the best people who want to stay and deliver the best shopping experience for customers, which produces the best results for shareholders (Figure 13.1). The choices that leaders make every day shape the work environment and drive results.
The Leadership Institute and the general imperative of leadership development have continued to grow at Macy’s. Today the belief is stronger than ever before among senior management that stepping up to the challenges of a changing environment and capitalizing on the company’s strengths is dependent on having the right talent and strong leadership at all levels. The leadership choice model has become a well-known icon across the organization and is another stabilizing factor inside the company.
FIGURE 13.1. THE LEADERSHIP CHOICE MODEL
Each of the processes making up Macy’s leadership development strategy is derived from the leadership choice model. This decision is reflective of what many consider to be a standard best practice in the field: having uniform language for leadership development. While Macy’s employs a variety of developmental experiences at varying levels throughout the organization, the model ensures that the higher vision for each process remains constant.
The Leadership Strategy
Launching the Leadership Institute in 1999 marked a permanent change in Macy’s strategy around leadership development. A number of factors influenced the decision to develop a new approach related to business objectives, corporate culture, and market influences. The following questions indicate the strategic concerns in the design of the Leadership Institute:
• In department store retailing, a significant portion of sales revenue is derived from promotional sales, resulting in a culture that is very event based. However, leadership development is a process that must be continuous rather than intermittent. How can leadership development be made into a process rather than a single event? How can leadership development be sustained over time?
• In the retail industry, organizations distinguish themselves by focusing on image, glitz, and glamour. But in leadership development, frills amount to very little without quality of content and genuinely transformational learning. How can a leadership development system be designed that is up to date, exciting, and fun and has depth and meaning?
• Given the immense changes occurring in the retail industry, organizations must be prepared to make necessary changes in corporate culture in order to adapt to the future. How can an overall learning experience be created that works within the existing culture while at the same time encourages the development of something new?
Additional strategic direction was derived from the organization’s firm beliefs about effective leadership development:
• The reason for leadership is to deliver on business priorities and brand values. This is how leadership is positioned at all levels of the organization.
• Leadership at all levels is important.
• In order to achieve consistency across the board, the same leadership choice model must be used as the foundation for all leadership development programs from entry level to the most senior executive.
• To establish a common language around leadership, the same coaching model governs communication about performance.
The Leadership Pipeline
At Macy’s, developmental processes are executed at all levels, a significant challenge for any organization. Because development often represents a sizable investment, many companies choose to reserve their development dollars for those at the top, focusing on leadership qualities that can be passed down to aspiring individuals at lower levels of the organization. Although this is often effective, it must be considered that development means something entirely different for a high-potential person than it does for someone on a senior leadership team. At Macy’s the challenge was to design the best development experiences for leaders at every level of the organization.
Development for senior management (store managers, division merchant managers, support vice presidents) is done through the Leadership Institute. This process for owned, designed, developed, and delivered by the institute itself. Such a centralized process is ideal for targeted groups of leaders because it is typically more coordinated and uses fewer resources than a regionally deployed strategy. It also allows greater quality and consistency in support of the national brand.
High-potential development programs are handled outside the institute. Although they maintain a centralized format for design and development, the delivery is decentralized. This decision was made because of the large numbers and geographical dispersion of the population of entry and midlevel executives in the company. With a decentralized delivery model, learning can be implemented in person in various on-site locations and by distance learning, resulting in greater impact at less cost. The following initiatives represent core leadership curriculum for Macy’s. All derive from the leadership choice model.
Foundations for Leadership
The Foundations for Leadership program is an entry-level curriculum that every new executive completes. The curriculum is made of up three programs and is based on the belief that everyone in the organization needs to know the following:
• Macy’s organizational structure
• Market positioning for the two nameplates (Macy’s and Bloomingdale’s) and a knowledge of the competition
• The vision, brand values (internally focused), and image attributes (externally focused)
• The business priorities of the company
• The fundamental merchandising model: lifestyle merchandising
• The importance of inclusion and diversity to the success of the organization
• Customer demographics
• Business acumen (how the company makes money)
• How the individual can contribute in his or her role
• The leadership choice model and how personal leadership is the key to executing the company’s vision and business goals
• A set of foundational guidelines for how each individual interacts with another as they work together to achieve organizational goals
At entry and midlevel, leadership development is primarily classroom oriented and delivered by regional training professionals in partnership with line managers who act as subject matter experts.
The first program in Foundations for Leadership is known as Making Choices. This typically occurs within three months on the job for a class of entry-level executives. The focus of this program is to introduce participants to Macy’s positioning in the marketplace, the company vision, brand values, image attributes, lifestyle merchandising, and business priorities. This ultimately gives a strong impression for the company and its culture and serves as a powerful case for leadership as a business strategy. A large learning map serves as the foundation of this peer-facilitated program.
Following this program is Retailology 101, which also occurs within the first three months on the job. Using a gamelike approach, this workshop incorporates a simulation to help participants manage a fictional retail operation. Business acumen is built by encouraging leaders to navigate complex factors that influence sales, margin, and profit, as well as to understand how their individual contribution can mean success for the company.
As a follow-up to the Making Choices content, participants take part in two additional workshops during the same first three months: “Principles of Motivation and Respect” and “Valuing Diversity: Our Business, Our Culture.” The first delves into the principles of the leadership choice model and uses interactive exercises to build on the leadership skills that create the kind of work environment where people feel motivated to contribute their best. The second focuses on diversity, its profound impact on the business, and the expectations in managing a diverse workforce.
Through the Foundations for Leadership program, all entry-level executives are introduced to the business case for leadership development to strengthen their commitment to the development process and ultimately improve their engagement in future interventions. The program also introduces them to the key corporate values and strategies articulated by Macy’s, thus reinforcing the company’s culture among the new class of decision makers. This provides both a strong stabilizing effect and a means of driving culture change through leadership development if needed.
To maximize the effectiveness of the learning, it is essential to look not only at the content itself but at how it is delivered. At the entry level, design approaches must be chosen considering the needs of younger learners. They come from a world of technology, blogs, speed, YouTube, and reality TV. In order to maximize the impact of learning and encourage ongoing engagement, today’s learners require the following:
• Creative approaches help to keep the learning interesting and appealing, interactive and concise.
• Use of technology allows a variety of innovative and hands-on approaches, such as simulations, to be practiced either on-site or in remote locations.
• Participants must be exposed to a careful combination of facilitator versus peer learning. While access to facilitators allows the delivery of expert content and advice, peer interaction is important for building networks critical to entry-level executives, as well as support and teamwork.
• Discovery learning is a necessary element in a program-based learning curriculum: unlike lectures, it increases retention through hands-on work and direct application.
• Competitive games are an effective way of tapping into the competitive nature of the participants to drive engagement. They are also effective in promoting team-based problem solving and incorporating fun and excitement into the learning process.
Performance Through People
Following Foundations for Leadership and within the first six months on the job, executives in supervisory roles take part in the Performance Through People process. This primarily aims at educating supervisors on the most critical leadership functions associated with their role: building connections and a strong sense of followership among direct reports, developing others, building teamwork and motivation among teams of direct reports, and managing change processes within their department or function.
The Performance Through People portion of the model acts as an ideal complement to the Foundations for Leadership process for those who supervise. Whereas Foundations for Leadership focuses on developing leaders’ knowledge of the business and basic leadership skills, Performance Through People builds competency around many of the more leadership-oriented areas as a preparation for high roles in the company. Everything that is learned in Foundations for Leadership is now focused on achieving goals through others: on-boarding people to a new team, teaching and coaching individuals to build the skills they need to be successful, developing a united team, and implementing tactical changes in the business. The process itself consists of four instructor-led courses, each ranging from three to four hours in length:
• Making Connections: Most new employees decide if they have made the right employment decision during the first days on the job, and turnover is highest in the first few months. This program focuses on how supervisors can provide an effective orientation and build strong connections with their employees.
• Developing People: Supervisors learn to identify opportunities for training and coaching their direct reports. Participants practice teaching a new job skill and conducting effective coaching conversations that involve others in their own development. The emphasis is on creating a trusting environment that supports development.
• Leading Teams: This program is designed to allow participants to discover the characteristics of effective teams and develop the leadership skills needed to foster trust, support, and high performance in their own teams. This is not about team-building activities, but rather about the day-to-day leadership required to sustain a high-performance team.
• Leading Change: As the pace of change continues to accelerate, the need to implement change becomes a critical skill. Supervisors can be implementers of change decisions made at a total company level, as well as initiators of change they would like to make in their own areas. This program examines the dynamics of the change process, the leader’s role in paving the way for change, and how to work effectively with those who are affected by change.
The Leadership Institute: Education for Senior Leadership at Macy’s
Macy’s faces two significant challenges in filling the leadership pipeline: helping leaders make the transition to more significant levels of management and ensuring there are sufficient backups to fill openings of key positions for the future.
The Leadership Institute provides formal education to Macy’s top eighteen hundred executives. Programs are designed to build leadership capability while strengthening organizational culture. Two key areas of focus are supporting newly placed vice presidents in their transition to senior-level roles and accelerating the development of high-potential executives.
Developed through a partnership with Linkage, the Accelerated Leadership Development Program (ALDP) is a series of formal learning events and experiential activities to address the skills necessary to meet critical responsibilities identified by Macy’s senior executives. Program participants are nominated by their respective divisions or functions and are recognized for their contributions and potential to operate at higher levels. The program is designed to provide personal leadership development, improve business and strategic thinking, and challenge participants’ views of retail and Macy’s.
The program consists of two sessions, separated by two to three months. The first session prepares participants to address their leadership challenge by assessing and dealing with their skills in such areas as strategy formulation and execution and branding. This session develops the longer-term perspective of these managers, whose demanding jobs often focus them more on short-term conditions. The second session prepares them to influence, coach, and develop others; examine various models of leadership; and apply the best ideas and practices. They also focus on how to ensure that their ideas have impact and how to influence senior leaders across the corporation.
Intensive feedback is part of the program. Participants are given an external coach who interviews the divisional head of human resources (HR), their boss, and the principal for their division about their challenges, successes, and leadership style. This feedback is integrated with their written assessments. All participants receive a mini-survey follow-up and share their results with their direct reports. This mini-survey targets a few key areas of leadership behavior that the participant has chosen to focus on and change over a four-month period. The program content varies each year to address competitive concerns.
Several learning approaches are used:
• Leaders teaching leaders. Top leaders act as facilitators and teachers. These executive committee members become comfortable teaching within their areas of focus or expertise and skilled at facilitating and modeling open dialogues and exchange. They also act as sponsors to the individual action learning projects that participants complete.
• Partnerships with top college faculty and industry experts as needed.
• Use of interactive means to spark creative thinking. This element varies from year to year. It has included a vehicle racing simulation, having actors teach executive presence, and the leadership lessons of Antarctic explorer Sir Ernest Shackleton. The goal is to challenge people’s traditional ideas of learning and provide serious business content.
• Hands-on application of tools and practice, which is blended into the design of both formal sessions.
• Leadership stories. Senior executives have shared their leadership stories and use this exercise, based on the work of Noel Tichy, in class.
• In-depth assessment and coaching. This includes the use of the Linkage 360-degree Leadership Assessment Instrument (LAI), a personality assessment (The Hogan), and having participants write an autobiography.
• Business application through use of an on-the-job challenge opportunity. Each participant works with his or her manager and the division principal to define a stretch challenge that they must complete over a six-month period.
Both the assessment and the results of the challenge assignment are connected to the individual’s development plan, which is formally reviewed by management. The challenge is a cornerstone of the program. Each year, we increase the learning and business impact of these projects. While many organizations feel that action learning can be done only in groups, this challenge assignment forces participants to stretch and create their own action learning networks as they seek to achieve their tasks.
The projects are reviewed by the institute leaders, divisional HR support, the participants’ bosses, and their bosses’ boss and senior leaders from other divisions or functions. We use three key criteria: (1) the challenge must push the participant to build a network and influence across functional lines, (2) the challenge can be related to the participant’s job but should be an assignment with some risk where success is not guaranteed, and (3) the challenge must prompt new strategic thinking and not have an obvious answer.
During the next six months, there is follow-up on two levels: first in terms of behavioral change and growth in leadership effectiveness, and then tracking the challenge assignments for completion and business impact. Over the years, participants have used projects to test new growth ideas, build new customer services, work on mentoring and diversity initiatives, and expand improved processes in distribution and other areas. There has been a clear, measurable return on investment on many of these initiatives.
We use alumni to teach in the program. The use of in-depth assessment and involvement of senior management signals to participants the interest in them as individuals. The involvement with step-up opportunities and mini-survey follow-up tells participants that this learning is meant to be applied. Finally, the use of various learning approaches helps develop flexibility in learning.
ALDP has become a milestone in the careers of participants and has created an alumni network of more than 150 leaders across the company. This group is a critical part of Macy’s future talent pool, and ALDP is only one part of the work to develop leaders as they progress through the company.
Fast Start
Stepping into the role of store manager can be daunting. Store managers are responsible for creating an outstanding shopping experience for customers, executing company strategy, generating millions of dollars in sales, and supervising hundreds of employees. Often they are located in remote markets and may see their bosses only a few times a year. It is critical that they make a successful transition, quickly connecting with their teams, assessing the state of the business, and establishing their vision while building credibility with key stakeholders.
Fast Start, a synchronous distance-learning program, is designed to help store managers make an effective entry and transition to their new roles. Delivered using Centra, a virtual classroom environment provided by the University of North Carolina Charlotte, ten to fifteen store managers meet virtually for two two-hour sessions. Leadership Institute staff and an experienced store manager facilitate each session. These store managers provide wisdom from their own transitions as well as their years of experience in the retail industry. The program helps store managers address issues such as these:
• How do I assess the state of my business and my team?
• How do I understand the culture and the political environment?
• How do I build credibility with my team, boss, and peers?
• How do I avoid typical pitfalls in the transition?
• How do I build a plan to drive the business in both the long and short terms?
At the end of each session, each participant develops a plan to improve performance. Table 13.1 sets out an example of a store manager’s plan focused on improving the store’s work environment.
The Leadership Choice
Designed for newly placed vice presidents from all job functions, the Leadership Choice program helps executives make a successful transition to more senior levels of management, explore Macy’s point of view on leadership, learn about current leadership capabilities, and build a plan to improve business performance and leadership effectiveness.
This four-day program provides 360-degree feedback, explores a variety of leadership topics, and gives participants an opportunity to apply what they have learned in a team-based computerized simulation. Participants learn how to:
• Strategize how to step up to the broader responsibilities of a senior leader
• Identify personal leadership strengths and areas for improvement
• Ensure quality execution, balancing long- and short-term initiatives
• Conduct development conversations that lead to positive outcomes
TABLE 13.1. A STORE MANAGER’S PLAN FOR IMPROVING THE
WORK ENVIRONMENT
WORK ENVIRONMENT
• Reduce turnover by enhancing the work environment
• Build partnerships and commitment to achieve their plans
During the program, significant time is spent networking with peers and interacting with senior leaders about the challenges facing the business.
In 2007, the Leadership Choice program played a significant role in helping to integrate six hundred senior executives from the newly acquired May Company into the Macy’s culture. Because of the importance of this initiative to the future success of the organization, the Leadership Institute, with the assistance of the Advantage Performance Group, conducted a follow-up study to determine program impact. Table 13.2 presents a summary of the study.
TABLE 13.2. LEADERSHIP CHOICE PROGRAM SUMMARY
Merchant Leadership Development Program
The Merchant Leadership Development Program is designed to accelerate the development of high-potential merchants who are slated for promotion within twelve to eighteen months. Up to this point, these merchants have had minimal supervisory responsibility and one line of business to manage. On promotion, they will manage multiple lines of business with a significant jump in volume responsibility as they supervise a multilevel team.
This program is designed to help executives:
• Think more broadly about the business
• Build credibility with their management and key stakeholders
• Work effectively through others
• Understand the impact of their decisions on the business and people
Through use of a computerized simulation, participants experience what work will be like at the next level. This simulation, along with an individual assessment, helps participants identify the skills they currently have that will benefit them at the next level, as well as their opportunities for improvement. They leave the program with a development plan that they can execute on the job with the support of an HR partner.
The Leadership Institute conducted an impact study in association with the launch of this program in 2004 to determine the degree to which participants were able to apply what they had learned and to measure improvement in skill capability. Table 13.3 summarizes the impact study.
Supporting Key Business Initiatives
In addition to the ongoing leadership development curricula, Macy’s learning and development function, including its Leadership Institute, frequently supports significant changes in company strategy. Following the 2005 acquisition of the May Company, the learning and development team led the way in the development and implementation of a plan to help integrate all new employees from the May Company.
TABLE 13.3. MERCHANT LEADERSHIP DEVELOPMENT PROGRAM
STUDY SUMMARY
STUDY SUMMARY
Through the work of the learning and development function, six hundred senior leaders from May attended leadership conferences, which gave them exposure to Macy’s senior leadership, company strategy, and an exploration of cultural differences between the two organizations. Each leader left the conference with a personal leadership transition plan.
Following these conferences, similar events were held in the various divisions and regions of the company for entry- and midlevel leaders. These were followed by role clarification and skill-building sessions designed to help orient all new May employees to the company.
Recognizing that a transition of this magnitude takes significant time, a year later the six hundred senior leaders who joined Macy’s as part of the acquisition were invited to the Leadership Institute for additional leadership development. It was their opportunity to learn more about the company’s philosophy of the leadership and business model, assess their current leadership capabilities, and build an action plan to ensure their success in the new company.
Future Efforts
For Macy’s, as with any other organization, the ongoing practice of leadership development results in natural evolution. As participant feedback is collected and programs are evaluated, new insights emerge for continuous improvement. In addition, the business environment is always changing, resulting in new business strategies, which often call for new leadership development initiatives.
Currently Macy’s faces another change. The company has just completed a major restructure in twenty of its markets in support of My Macy’s, a new localization effort. The goal is to get closer to customers and more clearly identify customer needs. This will enable each store to provide just the right merchandise and experience for that location. The goal is for every customer to enter a store and feel as if the store is My Macy’s.
Again, the learning and development organization has led the way in supporting this strategy. They have been significantly involved in role clarification, development of new business processes, and the design of training to support the restructure.
Conclusion
In many ways, the example of Macy’s is unique. First, the retail industry is in a distinct position and comes with natural consumer-driven dynamics not found in other industries. In addition, many smaller companies may not have the budget to support leadership development endeavors of this magnitude. However, there are a number of lessons that any practitioner can take away:
• When designing a leadership development system, give careful consideration to the stabilizing and destabilizing forces that continuously push and pull at the organization. Every company has challenges that must be overcome, and leadership development is a means to that end. Thus, these challenges should be an integral part of the overall leadership development strategy. For example, traditionally high turnover ratios among frontline retail employees prompted Macy’s to pursue development interventions that focused on the skills of effective supervising and follower development. In addition to these challenges, stabilizing forces serve as strengths to an organization and contribute to its ongoing success. Macy’s has an intimate knowledge of these forces and makes a point of leveraging leadership development as a means of reinforcing these strengths. For example, the company realized that one of its greatest strengths is its firmly grounded and well-articulated set of business values. As a result, the Foundations for Leadership process was designed to offer a curriculum of training around the core values of the business, its customers, and its niche markets. This came in the initial parts of the development process, and thus these values inevitably serve as the backdrop for future development interventions.
• Every leadership development system needs to have a common language to promote consistency and uniformity. Development objectives must remain clear to participants; otherwise, the result will be confusion that will erode commitment and engagement. A clear business case will result from a well-accepted model or strategy that identifies what the organization wishes to accomplish through leadership.
• Solely focusing development on senior leadership teams may be adequate in smaller organizations where learning for those with high potential can take on a less formal approach; however, it is not enough in a large organization. Leadership development initiatives must be conducted among high-potential or entry-level executives not only as a means of improving their best capabilities, but also as a way to reinforce the culture of the organization. To do this, it requires that development processes be molded to align with the needs and priorities of different leadership levels. For high-potential talent, this may mean peer networking and support systems to serve as a resource during an individual’s continued growth in the company. Concurrently, senior development efforts may focus more on leading teams or departments, developing others, managing change and transition, or understanding the business scenarios that result in organizational growth.
• Individual leadership development programs must incorporate a number of teaching methods to maximize impact and keep from becoming redundant. Consider the ratios of facilitator versus peer interaction, lecture versus hands-on learning, and technology-enabled approaches versus traditional approaches, for example.
• Success in the retail business is dependent on the organization’s ability to understand customers and keep their needs foremost in their day-to-day operations. The same holds true for leadership development. Each initiative must be tailored specifically for the leader to whom developmental resources are intended. For example, the Macy’s Fast Start program is built for the store manager, whose role provides very little interaction with a boss or other supervisory figure, requires an ability to quickly read and adapt to business opportunities or challenges, and requires flexibility in the face of transition.
About the Contributors
Debbie Friedman is operating vice president at Macy’s, where she heads the Leadership Institute, a training function whose mission is to strengthen the leadership capabilities of the top eighteen hundred executives. Her leadership has helped Macy’s reach its place as one of the Top 100 Companies in Training and Development by Training magazine two years in a row. She has held other training positions at Macy’s, including director of training at Lazarus, a Midwest division, and at AT&T in the sales and marketing education organization.
Friedman holds a master’s degree in education from Xavier University, Cincinnati, and a bachelor of arts degree from Stern College for Women, Yeshiva University. She is the author of Demystifying Outsourcing: The Trainer’s Guide to Working with Vendors and Consultants (Jossey-Bass /Pfeiffer, 2006).
Mary Martin is director of learning and development at Macy’s. She is responsible for the training provided in all Macy’s stores for sales associates and managers and also for management and leadership development for entry- and midlevel executives.
She began her career at Macy’s in 1987 at the Lazarus division of what was then Federated Department Stores. She has also held training positions at AT&T in the sales and marketing education organization and as the community and workplace educator for the AIDS support organization of greater Cincinnati. Other background includes secondary education classroom teaching and genetic counseling.
Martin holds an undergraduate degree in biology/chemistry from the University of Akron and master’s degrees in curriculum and instruction and in medical genetics from the University of Cincinnati.
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