Marketing Moves: 2018 To better understand current trends in the appointment and turnover of marketing officers, Russell Reynolds Associates tracked and analyzed 396 notable, publicly-disclosed marketing leadership moves in 2018. 2 The 80-20 Rule of CMO Promotions Helps Explain Why Marketers Are Seen As Being Too “Jumpy” Non-marketers often think that CMOs change jobs too much. Though there are several factors that come into play, at Russell Reynolds we’ve uncovered one possible reason for this “ jumpiness.” We’ve found that marketing leaders have only a 20 percent chance of moving into the CMO role at their existing company. Once appointed as CMO, s/he has only a 20 percent chance of being internally promoted to a broader role within that company, such as GM or President. This means that 80 percent of all marketing moves happen only by moving to a different company – basically, implying the need to “ jump” jobs to get ahead. KEY FINDINGS ɳ CMO succession crisis persists. Nearly 80 percent of publicly- % EXTERNAL reported chief marketing officer appointments in 2018 were 79% 79% external hires, consistent with the previous year. Just one of 75% 74% every five new CMOs came from within the ranks, which paints a grim picture of internal development processes for marketing talent. ɳ Among sitting CMOs, nearly 80 percent have left their respective company to advance their career. There is little chance of sitting CMOs being internally promoted into a 2015 2016 2017 2018 broader role. ɳ Record turnover continues. In 2018, we tracked 396 publicly-reported CMO moves in the United States & Canada. This is the highest number we have observed since we began tracking this data in 2014. In 2017, there were 377 CMO moves and 350 in 2016. ɳ Gender diversity growth is stagnant. 42 percent of 2018 CMO % FEMALE appointments were female, which is relatively constant over the last three years. 43% 43% 42% 37% ɳ Healthcare companies go external almost exclusively. 90 percent of healthcare CMO appointments were external hires in 2018. While healthcare organizations have historically steep rates of appointing outside CMOs – 79 percent in 2017, 76 percent in 2016 and 71 percent in 2015 – this was a new high. 2015 2016 2017 2018 ɳ Inter-industry mobility showing mixed results. Last year, 31 percent of external CMOs came from a different industry, up from 27 percent in 2017, but down from 33 percent in 2016 and 35 percent in 2015. The consumer and technology industries remain most likely to hire marketing leaders from within their respective industries. Industrial & natural resources organizations are increasingly following their leads. Within healthcare, despite an overwhelming proportion of external CMO appointments, only a slight majority came from a different industry (58 percent). ɳ Marketers moving on up. Sitting CMOs are moving into general manager, president and CEO roles at higher rates than ever before, suggesting the CMO has increasingly gained commercial and strategic impact. Though a slightly greater proportion of CMOs stepped into the aforementioned P&L roles at a new company rather than at the same company in 2018 – 19 versus 17 percent – the overall number of CMOs moving into these larger roles (36 percent) is up from 32 percent in 2017 and 19 percent in 2016. 3 GENERAL TRENDS Industry Breakdown of Marketing Moves The consumer industry accounted for 54 percent of the marketing-leadership turnover in 2018, up from 52 percent in 2017 and 51 percent in 2016. In 2015, the consumer digital & media sector had over twice as many moves as the retail sector, but three years later, retail has surpassed consumer digital & media in CMO turnover. This demonstrates the increased volatility among retail marketing leaders in the past couple of years, as the industry seeks to redefine itself. The consumer products & services sector had the largest year-over-year increase from 9 percent in 2017 to 13 percent in 2018. Since 2015 the technology industry has fallen 5 percentage points in terms of marketing move-share, while the healthcare industry has gained 4 percentage points. INDUSTRY/SECTOR BREAKDOWN OF MARKETING MOVES 9% 13% 14% 15% Apparel/Retail 19% 14% Consumer Digital & Media 16% 14% Consumer Products & Services 9% 12% 11% 13% Leisure & Hospitality 11% 15% Financial Services 16% 12% 11% Healthcare 13% 11% 11% 5% Industrial & Natural Resources 3% 4% 5% 7% 6% 4% 7% Education/Nonprofit 2% 5% 6% 2% 3% 3% 3% 3% Professional Services 20% 20% 17% 15% Technology 2015 2016 2017 2018 Internal vs. External Hires The trend of externally hiring top marketers continued strongly last year as external appointments accounted for 74 percent of all marketing moves (and 79 percent of all marketing leader appointments). This mirrored 2017 levels and increased from 2015 and 2016. With just one of every five CMOs appointed from within the organization over the last two years, there is a clear CMO succession crisis across industries. TYPES OF MARKETING-LEADERSHIP CHANGES External Internal 68% 69% 74% 74% Open/Eliminated 22% 24% 20% 19% 9% 7% 6% 7% 2015 2016 2017 2018 4 Since 2015, healthcare companies have been increasingly looking for marketing leadership outside of the organization. Last year, they did so 90 percent of the time, a sizeable increase from 79 percent in 2017. Looking over the last four years, the healthcare industry has an 82 percent external appointment rate for CMOs. Contrarily, the industrial & natural resources industry saw a sizeable decrease in external marketing-leader appointments from 2017 to 2018 – 81 percent to 63 percent – which is consistent with the number in 2016 (60 percent). EXTERNAL APPOINTMENTS BY INDUSTRY/SECTOR 100% 100% 90% 91% 90% 88% 88% 87% 82% 86% 86% 85% 81% 82% 79% 81% 81% 77% 82% 77% 79% 80% 76% 76% 74% 74% 73% 73% 70% 72% 69% 71% 64% 63% 63% 60% 60% 57% 58% 35% Apparel/ Consumer Consumer Leisure & Financial Healthcare Industrial Nonprofit/ Professional Technology Retail Digital & Products & Hospitality Services & Natural Education Services Media Services Resources 2015 2016 2017 2018 Regarding internal appointments, the average tenure within TENURE PRIOR TO PROMOTION TO CMO an organization prior to promotion to the CMO role increased (Average Years) in 2018 following several years of decline. Across all industries, 10.7 9.1 the average internally-appointed CMO spent 9.1 years at their 8.2 7.4 respective company prior being promoted into the role. This is up from 7.4 years in 2017 and 8.2 years in 2016, but down from 10.7 years in 2015. Later in this report, we look at the average tenure in the CMO role prior to promotion or departure. 2015 2016 2017 2018 Inside of Industry vs. Outside of Industry Appointments In today’s age of disruption and transformation, it is reasonable to expect that more companies would be open to hiring marketing leaders with different perspectives from other industries. Though the overall numbers demonstrate a slight increase in this tactic – 31 percent in 2018 versus 27 percent in 2017 – few industries have made a significant shift in this direction and some are moving in reverse. When looking outside of the organization, consumer and technology businesses have maintained a strong tendency to appoint CMOs from companies within their respective industries. Consumer companies hired marketing leaders from outside the industry 22 percent of the time in 2018 and 19 percent over the last four years. Technology organizations did so 29 percent of the time in 2018 and 28 percent over the last four years. The industrial & natural resources industry has seen a massive decrease in appointing CMOs from outside of the industry over the last four years. In 2015, 83 percent of new CMOs came from outside the industry and it has decreased every year since, down to just 40 percent in 2018. 5 CROSS-INDUSTRY MOVES (% refers to share of hires that came from a different industry) Overall 100% 35% 33% 27% 31% 83% 77% 2015 2016 2017 2018 73% 73% 67% 64% 60% 58% 55% 53% 50% 47% 50% 45% 41% 44% 40% 40% 40% 31%32% 29% 21% 18%22% 17% 19% Consumer Financial Healthcare Industrial & Nonprofit/ Professional Technology Services Natural Resources Education Services 2015 2016 2017 2018 There was a slight decrease in healthcare marketing leaders coming from different industries, as well. In 2018, 58 percent of healthcare companies appointed CMOs from outside of the industry, down from 73 percent in 2017, 77 percent in 2016 and 60 percent in 2015. However, in the last four years, the healthcare industry has the highest rate of cross-industry CMO appointments at 64 percent. Inside of Sector vs. Outside of Sector Appointments within Consumer Consumer-facing companies have continuously had a majority in overall marketing moves. Taking into account the individual sectors – apparel / retail, consumer digital & media, consumer products & services and leisure & hospitality – 54 percent of external marketing-leader appointments within the consumer industry came from a different sector. This is the highest proportion we have recorded since 2015. CROSS-SECTOR APPOINTMENTS: CONSUMER (% refers to share of hires that came from a different sector) 62% 58% 57% 53% 54% 47% 51% 52% 50% 45% 44% 46% 44% 39% 39% 42% 37% 29% 24% 27% Apparel/ Consumer Consumer Products Leisure & Consumer Retail Digital & Media & Services Hospitality (Total) 2015 2016 2017 2018 The apparel / retail sector is the only one in which the majority of new CMOs did not come from another sector – yet the 47 percent posted in 2018 shows a steady increase from 2016. One of the most surprising trends was among consumer products & services organizations. Though they are known for grooming marketers into future CMOs, 58 percent of their external CMO appointments came from a different sector in 2018, a large increase from 27 percent in 2017 and 24 percent in 2016.