To coincide with the launch of BoF Careers, the global marketplace for fashion talent, a new 'State of the Industry' study by The Boston Consulting Group and The Business of Fashion reveals that close to 70 percent of luxury and fashion firms struggle to hire creative directors, while nearly two-thirds lack adequate top-management talent pipelines.
NEW YORK, United States — The race for top talent will define the next decade for the luxury and fashion industries.
A new research study finds that many executives in fashion and luxury, like their peers in other industries, are very concerned about securing talented professionals (1). One specific tell-tale: the new study — a collaboration between The Boston Consulting Group (BCG) and The Business of Fashion (BoF) — finds that 50 percent of respondents believe they lack access to the best creative talent; this appears to be especially pressing for smaller independent firms. Their concern is not only about creative roles; they are also anxious to acquire the skills needed to support a wide range of functions.
Earlier research by BCG confirms that companies that excel in a range of key talent development practices see clear economic benefits. The best practitioners see revenue growth that is fully 3.5 times faster than those of companies that have not mastered those HR areas (2). They also demonstrate profit margins that are twice as robust as those of the laggards.
For luxury and fashion firms, there are particular concerns in five main areas: employer branding; recruiting; managing talent; leadership development; and retention. Although it’s encouraging that many of the industry’s leaders realize they have to do more to attract and hold on to skilled employees, it is worrying to learn what’s still needed to improve employer branding (the job of positioning their organizations to prospective hires as favorably as possible). Fully 40 percent of those polled in the BCG-BoF survey admit they still have no systematic approaches for developing an employer value proposition. Many appear to be relying on the considerable energy and resources they have invested to build powerful consumer brands.
It’s also clear that there is some distance to go before luxury and fashion firms are tapping the full potential of today’s digital tools. As many as 62 percent of those polled say their organizations do not actively use online and social forums for recruiting purposes.
Perhaps most worrying of all: firms do not put adequate emphasis on maintaining a strong talent pipeline and succession pool for their top executives. The joint study finds that 60 percent of those surveyed admit to substandard performance in this area. This weakness appears to affect large companies as much as it does the small independents. Parallel BCG research points to a paucity of clear career paths for high-potential mid-level employees. This can lead to high-levels of employee churn and a loss of institutional knowledge as employees begin to look elsewhere.
1. Recruiting challenges exist across the spectrum of roles in fashion and luxury. The joint study confirms that most luxury and fashion companies surveyed are struggling to find great talent – and that the most difficult jobs to fill are in design and product areas, followed closely by digital and technology roles.
Design and product: In particular, top-notch creative directors are thin on the ground; nearly 70 percent of the respondents to our survey say these professionals are “impossible” or “very difficult” to find. The hunt for design talent doesn’t fare much better: 44 percent report similar challenges. More than half of luxury and fashion firms have difficulty in attracting brand directors and 35 percent struggle to find accessories designers. Technical design is another area found wanting: 42 percent of those surveyed say pattern makers are in very short supply.
Technology and digital: The hiring hurdles aren’t much lower for database managers, Web developers and technical managers—roles that have generally been “back office” in the luxury and fashion business but which, in a digital era, have the potential to make a big difference to a company’s market positioning. A third of the firms surveyed find it “very difficult” or “impossible” to hire an e-commerce manager.
Business and general management: It is becoming more and more difficult to find chief executives and general managers who combine analytical and creative skills, retail, product and brand expertise, and international experience. Explains one French executive: “It is like trying to find a sheep with five legs.” Increasingly, the industry’s business leaders are boxed into one function or geography or industry sub-sector.
2. “Employer branding” is one thing brands don’t do well enough – yet. Luxury and fashion firms may be masters of their brands—and of product and label branding in general—but those capabilities typically don’t extend to their own human resources operations. In general, firms’ leadership teams are not asking the practical questions, such as: What are the best recruiting pools? What are the external perceptions of our company and what do want them to be? What keeps some people at our firm, and why do other people leave?
The study underscores the fact that too few of the industry’s firms invest enough effort in employer branding. It’s something of a paradox: most of the industry’s players appear to believe that their substantial commitments of time, money and resources on the branding of their offerings will create a bright “halo effect” that will serve to attract and retain great talent.
We believe this is short-sighted. Companies need to develop specific strategies around employer branding and allocate dedicated spending to this area. They should consider “strategic workforce planning”—a systematic and continuous approach to acquiring, developing and retaining the talent they need. (See below.) Firms also need to take a multi-channel approach to marketing themselves as employers. Digital is an area of opportunity here: at least half of the firms in our survey do not have any digital social strategy or any dedicated social media resources to promote their employer brands.
3. “Digital” hasn’t really arrived in the recruiting department. The luxury and fashion industries are still heavily dependent on headhunters and recruiters, with around 40% percent of all new business and creative hires sourced via those channels. This means that, along with employee referrals, most roles are being filled by “old school” methods. That said, digital and social channels must be pursued much more avidly than is the case in luxury and fashion today.
Further analysis suggests that, from a candidate’s perspective, four of the seven most important recruiting channels will be digital. Alongside company Web sites, job portals will be essential destinations for job seekers. And online advertising and social media pages will be crucial too. (There is one caveat: popular digital channels such as LinkedIn are great for many professional connections, but they are usually seen as less useful for creative talent.)
We urge firms to overhaul their recruitment processes to shift more of the necessary initiatives toward digital, to forge closer links to online hubs that cater to creative work, and to recast more of their efforts in formats that are conducive to presenting in digital outlets. If these have been important in recent years, they will become downright critical as an even more tech-native generation gets ready to join the workforce.
KEY RECOMMENDATIONS: What needs to be done differently?
Our latest research study confirms that firms’ leadership teams must launch active initiatives in five areas:
1. Invest in an employer brand: An employer brand has to be built as carefully as any product brand—and nurtured just as carefully. Every firm has to find ways to tell its story and has to be clear about what differentiates it from others as an employer. Then the company must identify the right channels to take those stories and messages out to current employees as well as to potential candidates—and to keep doing so.
2. Consider strategic workforce planning: This rigorous, systematic approach to talent first defines the capabilities that a business needs to succeed in the context of its strategic objectives. In parallel, strategic workforce planning maps the current availability of the required capabilities. Then, by comparing the “demand” and “supply” data, firms can quickly see where their most crucial talent gaps lie.
3. Reinforce the use of digital and social media to source the best candidates: To create a portrait of the company that will help bolster its employer brand, firms should use all digital channels and platforms—from Google+ and Pinterest networks to targeted e-mail programs. To augment recruiting strategy, they have to do more to reach out through their Web sites, through a range of job forums, and via social media. And to recruit specific candidates, they must ensure that applications are invited and handled online, and that the application process is as streamlined as possible. There is plenty of room to improve the ways in which creative portfolios can be shared (and protected) digitally.
4. Get to know the schools (personally): Firms can get closer to pools of fresh talent on both the business and creative sides by forging closer relationships with educational institutions. Those relationships can provide frameworks for internships that can be invaluable screening mechanisms as well as ideal training grounds. Brands can access schools and colleges directly or go through trade associations such as the Council for Fashion Designers of America (CFDA) and the British Fashion Council (BFC).
5. Focus on identifying and building tomorrow's leaders: As the competition for talent heats up, some of the most in-demand roles are those that combine creative know-how with business acumen. Firms need to identify these talented employees early—those currently on the payroll as well as within candidate pools—and work hard to develop customized programs to develop and retain them. In particular, firms must do more to attract, develop and retain women leaders. Women are not well represented in the management of the firms that sell luxury – yet they are major buyers of those goods and services.
Jean-Marc Bellaiche, Thomas Gaissmaier and Sarah Willersdorf are based in the New York office of The Boston Consulting Group. The full 'State of the Industry' study by The Boston Consulting Group and The Business of Fashion, "The Race for Talent: Fashion and Luxury's Greatest Challenge for the Next Decade," will be published in early June.
2 - “Creating People Advantage 2012: Mastering HR Challenges in a Two-Speed World,” BCG, October 18, 2012