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about spencer stuart Spencer Stuart is one of the worlds leading executive search consulting rms. Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries, functions and talent to advise select clients ranging from major multinationals to emerging companies to nonprot organizations and address their leadership requirements. Through 50 offices in more than 25 countries and a broad range of practice groups, Spencer Stuart consultants focus on senior-level executive search, board director appointments, succession planning and in-depth senior executive management assessments. For more information on Spencer Stuart, please visit www.spencerstuart.com.
Executive summary
During the rst half of 2006, Spencer Stuart consultants interviewed over 30 chief marketing officers from major UK businesses, most of them FTSE 50 companies. We wanted to test our hypothesis that the role of the chief marketing officer (CMO) has been steadily evolving from its traditional roots in advertising and brand development towards a more broad-based, commercially oriented and demanding role requiring a rare combination of leadership, creative, analytical and nancial skills. We wanted to nd out from some of the UKs most accomplished and high prole marketers how the rulebook has changed and to explore how the CMO can build credibility and exert inuence in the business. So, as well as exploring the nature of the role, we talked to CMOs about impact, accountability, tenure, compensation, team building, succession planning and career development. In order to respect condentiality and encourage frankness, we agreed to preserve anonymity in this report.
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first, the spread of media alternatives and the resulting fragmentation of audiences has
profound implications for the way companies engage with their customers. There are clear signs that traditional advertising and communications channels are losing ground to new forms of digital media where convergence is offering marketers exciting new opportunities to connect with consumers. CMOs have no choice but to assemble teams capable of innovating within this ever-changing, technology-driven environment. The digital medias remarkable capacity for creativity and innovation has left large swathes of the marketing community having to discard outdated advertising models and wondering how to catch up with their consumers and make themselves heard above all the noise.
second, companies are reworking their specications for key marketing roles, and responsibilities are increasing. This is not just true in FMCG businesses; everywhere the role of marketing is becoming dened by the organisational and business context. Denitions of marketing and CMO job descriptions are different for almost every company. Indeed, the role played by marketing denes what a business is, what its ambitions are, and how it wants to engage with its customers. The category-based approach to running brands, both regionally and globally, has had a considerable impact on the CMO role. Many CMOs have come from category roles and retain some category responsibility; a fair number already have experience of general management.
third, outstanding leadership ability is vital for a CMO looking to drive strategy, get the most
out of large and often geographically diverse teams, and demonstrate the value and effectiveness of the marketing effort. Effective leadership harnesses the collective power of the marketing function and provides the platform from which marketing is able to inuence a companys thinking and direction.
fourth, all these changes are having a noticeable affect on marketing careers. Branding specialists are rubbing shoulders with technology experts. Category leaders are running their brands as businesses. Up-and-coming marketers need broader commercial exposure if they are to progress. And at the top of the org chart, the scope and responsibility of the role places CMOs in a much better position than ever before to step into general management and ultimately the post of chief executive.
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Perceptions of marketing
Perceptions of the marketing function differ, depending on the organisation and the sector. Fast moving consumer goods (FMCG) companies, dependent on building relationships with consumers and securing their loyalty, tend to place great value and expectation on the marketing team; brand building and innovation are high on the CEOs agenda. As one CMO puts it, marketing is fundamental to our existence. It is seen as an authoritative function within the company and a discipline to be embraced by everyone. In nancial services and business-to-business sectors, the correlation between marketing and growth is often less clear; here, marketing makes a signicant contribution but is less likely to be perceived as a driver of the business. In FMCG if you get it right for the customers, they pay more, buy more. In FMCG there is more choice and customers vote with their wallet. Yes, in FMCG it is about manufacturing efficiency and nancial prudence, but if your marketing and product pipeline is poor, you dont sell product therefore marketing drives the business. In nancial services it is not self-evident that getting it right for the consumer makes you more money. Another nancial services CMO described brand as the DNA that holds the business together, but went on to say that it was difficult trying to convince people that brand is more than logo and colours. Although marketing in his company is responsible for product design and execution, the biggest challenge has been to create a FMCG-style insight-driven proposition development model.
The CMO of one industrial giant describes his company as very marketing illiterate, a place where marketing is not at the core of the companys philosophy. One way the marketing group has generated success and built inuence has been by working closely with corporate affairs on reputational issues, helped by the fact that the company operates under a single brand. You cannot risk being perceived as a uffy creative marketer , says one CMO. To be truly respected at executive committee level you have to be a highly commercial individual with a track record of delivering signicant prot growth. Another CMO who resents the perception of the CFO as more critical to the health of a business emphasises that a CMOs grasp of nancial issues must be rst-class if that perception is to be reversed. The alternative scenario, where the CMO is seen as lacking commercial nous, is a sure sign that marketing has failed to bridge the credibility gap. Some companies have overcome the negative perceptions of marketing by merging marketing and commercial departments, thereby bringing more nancial gravitas to the function. In one such company, the perception of marketing has shifted from being a cost centre to a driver of business change, and the CMO has gradually been seen as responsible for generating revenue and creating demand.
The CMO of a global industrial business insisted that marketing must be more data-driven and fact-based when making the case for investment, implementing and tracking new initiatives just as the rest of the business would. On top of this, he said, the CMO and team must have marketing nous the instinct or intuition to know when to go with something and when not to, because you know it is or is not going to work. This is analogous to general managers for whom having all the nancial skills is never enough: they have to have commercial and business acumen.
The CMO must be someone with sound commercial sense who can see the big picture.
Breadth of experience is an important element of the CMOs portfolio. During the early phases of a marketing career exposure to several sectors is highly desirable. The CMOs we interviewed had worked on average in three different sectors in their careers to date, suggesting that both CMOs and the companies they work for are enriched by the cross-fertilisation of ideas and best practices. Similarly, a CMO should have had the experience of working closely with leaders in HR, IT, sales and nance and be able to draw on a variety of operational and strategic perspectives. A strong connection with IT is becoming increasingly important, as digital media bring a new level of complexity to marketing campaigns. According to one CMO, there are two types of CIO: one who asks what do you need and then sees if he can deliver it within his cost constraints; the other has a point of view, is interested in understanding the customer perspective, and genuinely adds value. The latter is preferable every time. Experience of international markets was also considered to be an important element of the ideal CMO prole. Indeed, people who have rarely strayed far from head office are at a distinct disadvantage, since it is unlikely that they have been tested by local market conditions or have learned how these can affect product development and brand management issues. Today, it is not enough to possess all the traditional elements of the marketing mix. Yes, the CMO should have a passion for branding and a deep-routed and obsessive belief in the consumer, but much more is required. The CMO must be someone with sound commercial sense who can see the big picture. He or she must be rigorously analytical; able to put together a robust business case; network, inuence and communicate across the functions; possess a air for devising portfolio strategy and investment choices; and contribute effectively to overall business planning. On top of all this comes the critical but often elusive quality of strong and inuential leadership.
Leading people
As marketing teams become central to the success of businesses, CEOs are looking to their CMOs to provide inspirational leadership. Not only must CMOs be outstanding ambassadors for the marketing effort internationally, but they must keep their teams challenged and motivated. One of the ways in which successful leaders distinguish themselves is by recruiting and nurturing great talent. One CMO describes himself more as a collective driver of performance than a hands-on marketer; staffing countries with top talent is now a vital part of his role. Most CMOs appear to hold regular reviews to consider emerging talent and internal moves, or to focus on their own succession; a few single out HR directors as key allies within the organisation. Active management of talent inside the marketing team is high on the priority list, although in a surprising number of cases it was assumed that a new CMO appointment would be external, or that the department would have to reorganise as a result of the CMOs departure. This suggests that some companies may be storing up succession problems. It is also interesting to note that few CMOs currently list talent development as a factor in their remuneration package.
Building inuence
CMOs and their marketing teams are having to live with a greater level of scrutiny and accountability than ever before. This is good news for results-oriented CMOs looking to increase their inuence within the organisation and win a seat at the top table. With CMOs on the boards of just seven FTSE 100 companies, board membership is not a realistic goal, since the trend in the UK is towards fewer rather than more executive directors sitting on plc boards. For many CMOs, board membership is a red herring. The executive committee (ExCo) is where they need to establish their presence, exert their inuence and promote the marketing agenda. Three quarters of those we interviewed sit on the executive committee or equivalent, and a further 15 per cent are members of other inuential committees, or sit on subsidiary boards. Building inuence within an organisation involves a great deal of effort and takes time but it is one of the most important things a CMO can do. Of course, there are numerous factors that will account for the level of inuence that a CMO enjoys. Results matter, but so does the ability to communicate, hire good people, work as part of a top team, develop relationships across functions and collaborate with business units.
The CEO should effectively be the marketing director a lot of people see the CEO role as above or beyond marketing that is fatal.
Many of the CMOs we spoke to emphasised the connection between the ability to communicate effectively and to build inuence. Nothing damages the marketing cause more than people who speak a different language to the rest of the business. Jargon alienates non-marketers and reinforces the idea that marketing is a black art mystifying, arcane and set apart. It should be none of these things. If one of the aims of a marketing function is to educate non-marketers, then being able to communicate in clear terms is vital. When it comes to brand building, any CMO must not only learn what the brand is about, but also articulate its values clearly, making it relevant to other functions. No CMO can inuence the entire organisation single-handedly; there is no substitute for hiring and developing outstanding people who will carry the torch. It is hard to be successful if you are not surrounded by rst-rate talent. Whats needed is clarity of strategy and brilliant people executing awlessly. Attracting top talent makes people look up and take notice.
After demonstrable results, effective communication and building a great team, the fourth factor that increases a CMOs inuence is the ability to build relationships and collaborate whether it be with R&D, operating, supply chain and training colleagues, or with divisional/ regional managing directors. This means taking a consultancy approach, understanding marketing needs and nding out what keeps managing directors awake at night, as one person put it. Another advised fellow CMOs to assert your value and that of your department, then create a structure of committees/forums which involve cross-functional teams. Creating such a forum might be key to bridging the gap between marketing and R&D to achieve the most efficient product development from idea generation to launch.
There are four ways to drive change: tell, sell, consult and co-create.
CMO tenure
The average tenure of the FTSE CMOs we interviewed was 39 months at the time of our meeting. This compares favourably with a recent survey conducted by the Spencer Stuart US Marketing Officer Practice, which found that the average tenure of CMOs at the top 100 branded companies is just 23.2 months. In both US and UK studies, CEOs occupied their positions for an average of 54 months.
Average tenure of CMOs by sector (years) Technology & Media Industrial Financial Services Consumer
. .
Of the UK CMOs we interviewed, 37 per cent have been with their companies for more than three years, compared with only 14 per cent in the US study. In the US study, nearly half were new to the job over the previous 12 months, in our UK study only 11% had been in their jobs for less than a year. There was general agreement that a CMO should be in place for no less than three years (or three planning cycles); more than ve years in situ for a CMO is unusual.
CMO remuneration
There is no observable correlation between the size of an organisation and the CMOs total remuneration package. However, there is a clear correlation between the scope of the role, the extent of the CMOs inuence and remuneration levels. Those CMOs who have a close working relationship with the CEO, whose performance is measured according to revenue growth and other nancial criteria, who lead a sizeable and international marketing team and exert signicant inuence throughout the organisation appear in the upper quartile of pay. That is not to say that all these factors are essential for a CMO to be ranked among the highest paid there are a number of CMOs whose businesses are predominantly UK-based, yet who receive total packages in the top decile. What counts in such instances is the role and perception of marketing in the organisation, the ability of the CMO to innovate and demonstrate protable growth, and the CMOs position and inuence within the executive committee.
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Whats next?
Around half the people we interviewed have ambitions to move into general management, with the rest content to continue their careers as marketers. Of those wishing to continue their marketing careers, the majority work in FMCG businesses, where the real power now lies in global category roles. One CMO described herself as the most driven and least ambitious person, quite content to stay in a marketing role. One of the biggest obstacles in the way of those CMOs who want to move into general management is the silo effect. To overcome this tendency it is important for the CMO to be able to inuence and communicate the marketing message throughout an organisation an essential skill for a potential CEO to master. Many CMOs consider taking on a non-executive directorship, although in reality fewer than 20 per cent sit on other boards. A surprising number are contractually prohibited from taking on any outside directorship, although by contrast one CMO made it a condition of her employment that she be allowed to do so (but with a non-competing business).
Well-chosen non-executive directorships are a wise move for CMOs looking to move into general management...
Well-chosen non-executive directorships are a wise move for CMOs looking to move into general management, as the boardroom experience will introduce them to a range of debates and decisions they might not otherwise be exposed to. One CMO related how he has directly beneted from acting as a non-executive director of a small plc that has had to manage its costs closely. He has been able to apply what he has learnt about this plcs cost control measures to his own departments scal planning and control, albeit in the context of a larger corporate environment. CMOs comfortable with todays focus on commercial accountability, business acumen and nancial literacy will be in a good position when it comes to making an upward move. But as one highly experienced CMO warned, the biggest mistake moving from marketing into general management is the temptation to see the job as different, or somehow beyond marketing. You should never, ever shed the marketing mindset that should be present in every senior role in every organisation.
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uk contacts
Nicky Demby London t: +44 (0) 20 7298.3422 e: ndemby@spencerstuart.com Jonathan Harper London t: +44 (0) 20 7298.3401 e: jharper@spencerstuart.com Jonathan Smith London t: +44 (0) 20 7298.3328 e: jsmith@spencerstuart.com Edward Speed London t: +44 (0) 20 7298.3324 e: espeed@spencerstuart.com
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