Neiman Marcus Group Gets Introspective
In terms of the Great Resignation, the Neiman Marcus Group won’t have any part of it.
Though earlier this year hundreds of layoffs were disclosed — 5 percent of its workforce — NMG executives say the company is becoming more diverse, accommodating and environmentally conscious. That’s also the picture painted in NMG’s first “People Report” and second annual ESG report, both issued Tuesday.
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The reports tout progress across a spectrum of areas from pay equity, workforce diversity and representation by women in the executive ranks and on the board, to speedier hiring, increased benefits, workplace flexibility, supporting diverse owned brands and reducing emissions.
“We started three years ago looking at our culture and at ways to unleash the power of our people. We really believe that unleashing the power of our people is a vector of performance,” Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, told WWD. “The right culture drives the right behavior and ultimately leads to better performance.”
He said office attendance is no longer required and anyone can work from their home. “We’re not making going to the office a mandate. The office is a magnet.”
Van Raemdonck, himself, is relocating from Dallas, where NMG is based, to New York in August. He said he typically spends a week each month visiting stores around the country and had been spending about a week in New York anyway. He’s also frequently out of the office visiting designer showrooms and attending fashion shows in Europe and the U.S.
“At times when I am home I can be highly productive,” he said.
Providing workplace flexibility, he believes, is a quality of life issue, enabling workers to achieve a better balance between their careers and private lives. He also said it opens up the pool of available talent, making hiring easier and faster.
Several senior-level NMG executives also work remotely. For example, chief financial officer Katie Anderson works from her home in California. Hannah Kim, the chief legal officer, is based in St. Louis.
But NMG’s progressive policy is a departure from how many companies are operating post-pandemic — requiring workers to come into the office three or more days a week. Critics of remote working say it makes it more difficult for managers to get to know employees; slows communications, and that live meetings are more productive and of higher quality than meetings over the internet. Remote working also means that when in-person gatherings are called for, transportation and hotel accommodations must be arranged for out-of-towners.
NMG recently established three corporate office hubs: New York by Bryant Park, where the merchants are based; in Bangalore, India, for technology initiatives, and in Dallas, where there are catalogue, planning, legal and other operations. Two-thirds of NMG corporate staff is located at facilities in the Dallas-Fort Worth area.
About two months ago, workers began using the new Dallas hub, which is in Cityplace Tower, located between Neiman’s downtown and NorthPark flagships. NMG occupies three levels in Cityplace Tower, accommodating up to 800 people. It’s where the company’s DFW-based corporate workforce, visiting brand partners, remote associates and community partners can gather for meetings. Some local team members are there five days a week, though it’s not required.
Previously, NMG corporate offices were housed in four Dallas office buildings, three of which closed, leading to some reduction in workforce and savings on real estate costs. Neiman’s continues to operate its downtown Dallas flagship where there is additional office space for some corporate staff.
“Because we have a diverse organization with diverse backgrounds, there’s diversity of thought and that leads to better decisions. If you invest in your people, your people rise to the occasion,” van Raemdonck said.
After surveying employees and conducting employee focus groups in late 2019, “in January 2020, we very intentionally built our people strategy,” said Eric Severson, chief people, ESG and belonging officer. “We listened to the voice of our people. The clear message was that associates wanted four things: flexibility, career development, total rewards and an impact-oriented culture that enables them to contribute to the company’s progress on belonging, sustainability and philanthropy.”
This led to the company allowing employees to work from wherever they wanted, faster hiring and a higher employee NPS score.
By building a people strategy, internally called Way of Work or WOW, NMG transcended the Great Resignation, Severson contended. “We did the reverse — we outperformed the market” in terms of hiring and retaining employees.
He said the company saw a 34 percent increase in its employee net promoter score from the fourth quarter of 2021 to the third quarter of 2022 and that it’s been taking 31 percent less time to hire people. The company would not disclose its turnover rate, though enabling NMG employees to work remotely and beefing up benefits would have helped. Recently introduced was paid family leave, extended sick leave, short-term disability, increased adoption reimbursement, travel coverage for medical procedures and enhanced bereavement leave policies to be more flexible and inclusive.
NMG employs more than 10,000 workers. During the Great Resignation, from 2021 to 2022, 50 million Americans quit their jobs, though this year, the rate of resignations in the U.S. is declining.
Severson also said 59 percent of those in vice president or higher positions are women. NMG has more than 100 vice presidents. Fifty-seven percent of the members of it board of directors are women.
Also, racial and ethnic diversity in leadership roles starting at the vice president level and going higher increased from 18.2 percent in fiscal 2021, to 19.8 percent in fiscal 2022. The goal is to reach 21 percent racial and ethnic diversity in leadership roles by 2025. Fifty-seven percent of the total workforce is non-white, compared to 53 percent a year ago.
In fiscal 2022, NMG spent $29.6 million buying from diverse-owned brands and working with diverse-owned businesses. Previously, the company did not calculate its spend on diverse brands and businesses.
In other initiatives, NMG more than a year ago launched a Fashion Your Future six-month guided learning engagement program that “challenges associates to adopt a growth mindset, self-reflect and identify goals for personal and professional development.” The program includes assessments, live workshops, e-learnings, small group discussions and leader speakers.
The retailer also has a McKinsey Connected Leaders Academy characterized as a career development program for high-potential Hispanic, Black and Asian leaders. It’s focused on leadership skills, networking with peers from other companies, and creating impact in their respective areas.
According to the ESG report, the company is fur free. “The policy prohibits any use of any fur from animals killed solely for their fur including, but not limited to, mink, fox, lynx, chinchilla, rabbit, coyote, astrakhan/karakul lamb, kangaroo and raccoon dog — and allows ethically sourced sheep fur products referred to as ‘shearling’ or ‘sheepskin,’ as well as cattle fur referred to as ‘calf hair’ and ‘cowhide,'” a spokesman said.
Among the goals cited in the ESG report:
Increase sales from sustainable and ethical products to 10 percent by 2025, from 5.12 percent in fiscal year 2022.
Reduce scope 1 and 2 emissions 50 percent by 2025, from the 31 percent reduction experienced last calendar year, from a 2019 baseline.
Procure 100 percent renewable electricity by 2030, from the 19.9 percent achieved in FY22.
Raise $3 million for charity by fiscal 2025. Since fiscal year 2020 to fiscal year 2022, $1,559,327 has been raised for charity.
Extend the useful life of 1 million luxury items through circular services including alterations, restorations, resale and donations, and partnerships with Fashionphile and Give Back Box. So far, NMG claims it has extended the life of 760,414 items.
Increase revenue from sustainable and ethical products to 10 percent by fiscal year 2025, from the 5.12 percent achieved in fiscal year 2022.
NMG has implemented energy efficiency upgrades in 13 locations, totaling more than $15 million in capital expenditures. At the Boca Raton, Florida, store, the rooftop HVAC units that were leaking were updated and at the Bergdorf Goodman women’s store in New York, the chillers were converted from natural gas to electricity, for efficiency gains.
“We procured renewable energy for that building, further reducing expected emissions from the site. We also procured renewable energy for two of our other New York properties…complementing existing renewable energy use throughout California and New Jersey locations,” Severson said.
Regarding pay equity, Severson said, “Our inaugural pay equity analysis reviewed 100 percent of U.S.-based job titles in consultation with an independent third party who confirmed equitable pay practices at NMG. After accounting for the job, department, location and hour compensated, female associates earn over 98 percent of their male counterparts’ compensation, and non-white associates earn over 99 percent of white associates’ compensation. We will continue to review and consistently report on our pay practices every two to three years, making adjustments as appropriate to pay our associates equitably.”
The Neiman Marcus Group is privately held by Davidson Kempner Capital Management, Sixth Street Partners and Pacific Investment Management Co. Eventually, the group of owners will want to cash in on their investment, possibly through a public offering of NMG or a sale to another retailer, or to private equity.
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