Why Target’s next CEO could be an outsider


(Photo by Reuters/Keith Bedford)

Five months after Target was hit by a massive data breach, the company's CEO has gotten caught in the bullseye.

Gregg Steinhafel, who was chairman, president and CEO of the discount retail chain, resigned from the company Monday following "extensive discussions" with the board. In a statement, directors said that "the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target" and that they asked the outgoing CEO "to serve in an advisory capacity during this transition and he has graciously agreed."

Whoever replaces Steinhafel at Target will have his or her hands full. In addition to bringing back customers who fled after the retailer's data breach, the new CEO will need to clean up after the company's disappointing expansion in Canada and its decline in profits in the holiday quarter. Steinhafel's successor will also need to be an accomplished brand maven, able to recover the shine on the company's tarnished image, which took a hit after the security breach.

If history is any guide, Target would seem likely to pick an insider as a permanent replacement. The company has been described as "famously insular" and, in the past, as a firm with "an allergy to public attention." Steinhafel, a 35-year-lifer who was in the top job for exactly six years, was preceded by company icon Robert Ulrich, who spent his entire career at the company and 14 of those years at the helm. Most of the company's executive officers have been at the retailer for at least a decade, if not far longer. Two of the internal candidates mentioned in reports as potential successors, Tina Schiel and Kathryn Tesija, have been there since the 1980s.

But while an outsider might be a jolt to the company, it could be a good one. Fresh thinking and an objective, unemotional perspective on recent events would be useful skills for whoever leads this company next.

A number of signs suggest the board may recognize that. For one, it retained the executive search firm Korn Ferry. While search consultants commonly evaluate and select internal managers in the course of their search, Target spokeswoman Dustee Jenkins told Reuters the company would look both inside the retail industry and outside of the sector for candidates. Jenkins responded to my questions about the company's search process by pointing to the board's statement and a letter from Steinhafel, saying in an email that "we prefer to let the documents speak for themselves." 

Moreover, the company explicitly sought an outside executive to replace Target's former chief information officer, who resigned in March. Last week the company announced that the job would go to Bob DeRodes, a former government adviser who has held technology management positions at First Data Corp., Home Depot, CitiBank, USAA Federal Savings Bank and Delta Air Lines. This move suggests that Target may be less averse to outsiders now that it's trying to move on from the data breach crisis.

Finally, the company has had five months since the breach to evaluate any internal candidates for CEO, but instead chose to name its CFO as interim leader. Even if Target only just made the decision for Steinhafel to leave — Jenkins said in an email to On Leadership that "the decision was just made recently" — the problems at Target have been apparent for a while now. That would prompt most boards, and likely Target's, to at least evaluate which other homegrown executives might be good contenders for the permanent CEO job. And given that Steinhafel's time in the role had already reached six years, a little longer than the median CEO tenure, the board presumably already has a good sense of the internal candidates as part of the normal succession-planning process.

CEO searches are not quick affairs (just look at the months-long, high-profile search at Microsoft), so it may be some time before Steinhafel's successor is announced. But I wouldn't be surprised if this is the moment when the company brings in an outsider to hold its top job.

Read also:

Target CEO opens up about data breach

The least narcissistic American CEOs

Like On Leadership? Follow us on Facebook and Twitter.

Jena McGregor writes a daily column analyzing leadership in the news for the Washington Post’s On Leadership section.
SECTION: {section=business/on-leadership, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business/on-leadership, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business
Next Story
Lillian Cunningham | May 5