Target CEO’s 2-part people strategy that helped turn around the retailer

"Target is probably the most striking turnaround story in U.S. retail history among large companies," says Fortune's Phil Wahba.

Since CEO Brian Cornell's appointment in 2014, Target has gone from a bumbling, misdirected company with an insular culture and a series of misadventures—including an embarrassing data breach and poorly executed entry into Canada—to a revitalized retailer with 30 store brands, many of which became billion-dollar brands within a year.

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"He really saved that company from obsolescence," Wahba said on Fortune's Leadership Next podcast. It's an impressive rehab that can be attributed to a myriad of factors, particularly two people-focused strategies.

First, Cornell avoided a trap that many new leaders fall into: axing the old guard and replacing current executives with new hires. CEOs want to make a splash, so it's very tempting to "kick everybody out," said Wahba. But with that comes a loss of institutional knowledge and high performance because these employees know "where the bones are buried, or they’re the ones who had the relationships with, you know, the shipping companies," Wahba said.

Another people strategy has paid dividends in recent years: improving the Target employee experience. The retailer raised the minimum wage for some associates to as much as $24 an hour in 2022 and upped its investment in insurance and training benefits for hourly employees.

"Our most important asset is our team," Cornell told the podcast, noting that beyond wages, the company has enhanced its medical benefits and provides a debt-free educational program used by 70,000 team members nationwide.

Moreover, the company has no plans to cut talent resources or pull back on diversity commitments despite a weaker economy and growing furor over "woke capitalism."

"We want to make sure we’re playing the long game here," Cornell said. "That’s going to pay us dividends for years and years to come."

Leadership Tip of the Week

??Today’s CEOs have their work cut out for them. But Cornell offers insight into what it takes to be a successful modern-day leader. “There's a premium on agility and flexibility, on resiliency in this environment. Because there are no easy days, [and] there’s always another big problem to solve. You’ve got to plan for the challenges that might be in front of us.”

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Leadership Next?

In this episode ?of Fortune’s?Leadership Next , Alan Murray is joined by his new co-host Fortune Editor-at-Large, Michal Lev-Ram.?In Lev-Ram's first episode, she and Murray speak to Christa Quarles of Alludo , a software company whose products enable people to work from anywhere. Quarles talks about standing up for women in tech, how haikus support her management strategy and why rebranding isn't for the faint of heart.

Listen to the?episode ?and?subscribe ?to Leadership Next wherever you listen to podcasts, or read the full transcript?here.

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-?Ruth Umoh , Fortune’s Leadership Editor