Why fmcg can no longer claim to lead the way in commercial excellence
By: David Sables, CEO at Sentinel Management Consultants Ltd
Many people are, like me, proud to work in fmcg. For decades, other industries have looked to ours for professional rigour, and commercial and operational excellence. Since the emergence of Microsoft, tech companies have been poaching talented people from blue-chip grocery companies and even hiring training companies like Sentinel to teach them the fmcg ways of working.
But this claim of commercial excellence is fast becoming one we can’t make. A combination of mergers, acquisitions and cost saving has led to flatter organisational structures throughout the sector.
Although roles remain in equal numbers at the middle tiers of these organisations, huge numbers of directors and leaders have been forced on to the job market. This issue has been compounded by the impact of the pandemic on suppliers with hospitality sales, forcing a number of their staff to look beyond fmcg. What they saw outside was other sectors in spectacular growth paying 20% to 50% above their current earnings. Hence there’s been an accelerated migration away from grocery that will not be reversed.
This is evidenced by the Simmance Partnership’s FMCG Sales and Marketing Salary Guide, featured in The Grocer in February. Our commercial salaries have lagged versus inflation, and we have an ever-increasing migration out of our industry into tech and other more financially worthwhile sectors. Sales directors specifically have suffered a 1% reduction in basic salary on average across the past three years which, with inflation, amounts to a 7% reduction.
Retailers are also suffering the impact of flattening organisations. I’ve written before about the massive responsibility piled on very young buyers to a hilarious cacophony of criticism from the politically correct about my ageist view. Actually, like it or not, capability in-role comes from either experience or training and ideally both. Right now it’s evident that neither are properly in place in many organisations.
You know how these things work. Job moves are so often on the back of someone who rates you and has themselves been promoted. So the threat to fmcg is that when the leaders move, they take the next tier of high-performers with them, causing a cascading sector brain drain.
Steve Simmance, founder of the Simmance Partnership, believes that to raise capability, skill and add to the gene pool of existing talent using external recruitment, you have to apply a minimum 15% financial premium. But due to a fixation on budgets, he sees recruitment briefs along the lines of: “I want to find better people than I have, but I only want to pay what I am paying my existing teams today.” Of course, the reduction of jobs means they can pay less, but the best will leave.
Let’s face up to it now: we are in a flat industry with declining jobs numbers, paying 20% behind the growth industries. Does anybody out there still believe we’re the best?