What does a chief transformation officer do? Talking strategy with Macy’s turnaround expert
Just weeks before the pandemic upended business, Macy’s chief human resources officer, Danielle Kirgan, was given the massive, additional mandate of overseeing the struggling department store chain’s multiyear reinvention plan and with it, an add-on to her title to match her new responsibilities: chief transformation officer, a role growing in popularity at big corporations in need of major retooling.
Of course COVID had different plans, and soon enough, by March 2020, Kirgan, whose title is chief transformation and human resources officer, and her C-suite colleagues would be in survival mode rather than transformation mode. But the pandemic, which helped send net sales down 29.4% to $17.35 billion in 2020 and fuel a loss of nearly $4 billion before things improved this year, added urgency to the need to transform Macy’s from stagnating, bureaucratic retailer to contender in today’s retail industry.
Nearly two years later, even with a strong bounce back from the 2020 nadir, the stakes could scarcely be higher for Macy’s: It has been trying to claw back significant market share losses to rivals from Ulta Beauty to T.J. Maxx and Amazon to Target in recent years. And now it’s in the crosshairs of an activist investor pushing it to hive off its e-commerce business.
“We recognized a couple of years ago that we needed to do something demonstrably different,” Kirgan tells Fortune. That has meant taking a big transformation project and dividing it into “bite-size chunks” that are easier to execute. “When you add them all up, it’s noticeable change,” she says.
So far, the transformation she is guiding has led to big initiatives such as the beginnings of a fleet of smaller stores, an online marketplace to complement its nearly $10 billion e-commerce business, and more nimbleness in Macy’s operations, key pillars to Polaris, as its turnaround plan is known.
The chief transformation part of her title is ultimately about making sure there is an achievable strategy in place, often centered in digital initiatives, and that all executives are on the same page and are accountable. At Macy’s, that can mean things like having a clear sense from the digital chief what he needs in terms of tech infrastructure, real estate and merchandising processes, and how other divisions can support his goals, and vice versa. Many companies, from UPS to Neiman Marcus to Ogilvy, have named a transformation chief in the past couple of years to conjure up some much needed corporate renewal. The goal is to avoid having a company’s umpteenth turnaround attempt fizzle by falling prey to lip service rather than actually taking action that can save a company from obsolescence.
Friday meetings with the CEO
Every Monday, Kirgan’s team meets with other C-suite executives and senior leaders in functions such as fashion, price, and promotion strategy. While those meetings can be “sometimes uncomfortable,” she says, the idea is to make sure nothing is going astray and that people’s feet are held to the fire. She is cautious though to make sure mistakes are allowed and not stigmatized, lest Macy’s fall into the trap of hyper-caution. And then on Fridays, Macy’s steering committee meets with CEO Jeff Gennette. Kirgan, 46, also attends board meetings.
While the CTO role (not to be confused with chief technology officer) is grounded in strategy and therefore perhaps incongruent in theory with a human resource role, in Macy’s case the logic for pairing it with Kirgan’s human resource chief job is because of how labor intensive retail is. What’s more, Polaris in its first year involved a big push toward e-commerce, while closing many stores and reducing headcount.
This is not Kirgan’s first time in a turnaround role. She has had extensive experience in transformations, notably when she was at Olive Garden parent Darden Restaurants from 2010 to 2016. The restaurant company was targeted by the activist investor Starboard, whose CEO Jeff Smith promoted Kirgan in 2014 to chief human resources officer and gave her a central role in fixing the company.
She oversaw the sale of the Red Lobster business, the spinoff of Darden’s real estate into an investment trust, and was in charge of communications. She thus had a front-row seat for how activist investors operate, something quite useful to Macy’s, which is currently in discussions with the firm agitating for it to split itself in two. “There were a ton of learnings for ‘How do you listen to your shareholders? How do you focus your organization on execution?’” Kirgan says of her Darden years.
While many CTOs come from operations and digital functions, it’s not unheard-of for an HR executive to land the role. To name but one example, Amgen added the CTO job to its CHRO in 2013. (Kirgan likens the HR job to being the person with the map directing the driver rather than the person with a foot on the gas pedal and steering the car. “I don’t write the strategy, I enable the strategy,” she quips.)
Kirgan, who joined Macy’s in 2017 as head of HR, is hardly a Macy’s lifer. Indeed she can draw on a diverse experience at companies in other industries in her current role. Before Macy’s, for instance, she was at American Airlines for a year, a job quite different from Macy’s given the presence of a union and the fact that airline workers tend to be specialized. Her takeaway from that job: “How difficult change can be in an organization when you have forces like that at play.”
The Illinois native, who grew up in farm country, also spent years at foodmaker Conagra Foods, a business arguably more complex than Macy’s given the number of units under its umbrella. That taught her to allow decentralization and let business subunits breathe. “I’ve had this crazy career where I’ve seen multiple industries, and I’ve always gravitated to and chose assignments that are tough,” she says.
Of course to carry off a successful renewal, Macy’s needs to have a motivated workforce, a tall order at a time of high turnover and burnout in the retail industry. So Macy’s recently announced a hike in its minimum wage to $15, recognizing it had been lagging peers, which include Target and Starbucks, which both hit that threshold well before Macy’s did. But to differentiate itself from some retailers, Kirgan focused on things like generous tuition assistance. “We have a very winning culture, but there needs to be a little more in it for colleagues,” she says.
One area in which Macy’s has been ahead of many peers is diversity, equity, and inclusion, having a chief diversity officer since long before other companies created the role. Kirgan noticed about two years ago at investor presentations that more and more shareholders were asking her about Macy’s metrics on DEI matters for whom, she says, “culture and human capital are just as important as financial capital.” In a labor intensive business like retail at a critical juncture for Macy’s, it’s an essential matter.
So the fact that her job overseeing transformation on top of HR as a C-suite role is not a coincidence. “It’s to signal to the organization that this matters,” she says.
Never miss a story: Follow your favorite topics and authors to get a personalized email with the journalism that matters most to you.