It’s not easy working in the highly volatile real estate industry. Expectations are higher than ever before. Investors want higher returns. Building occupants demand a level of service that encompasses on-the-spot response to comfort, productivity, and safety/security concerns (and a reporting mechanism that corroborates resulting actions); employers insist on doing more with (and for) less.
Counter that with low unemployment rates and a dramatic shift in the talent pool (a multi-generational workforce, ranging from the experienced but aging Baby Boomers to a crop of amazingly bright but novice college graduates), and it has - and will continue to - become increasingly difficult to attract the best possible employees.
What’s your - and your team members’ - worth? When is the best time to make a career move? How do you get a leg up instead of being looked over when climbing the corporate ladder? What does it take to find and hire “A” players and how do you retain them?
The Numbers Game
In any discussion about career development, one of the first (but most disconcerting and debatable) topics involves compensation. More often than not, a matrix of salary numbers for “like” positions can be more destructive than constructive. Why? Two jobs with the same title can be as different as apples and oranges, based upon a professional’s responsibilities, the size of his or her portfolio, his/her company’s stature in the industry, and location/geography. Employers, too, are often reluctant to reveal statistics on dollars dedicated to compensation, fearing negative fallback from their existing staff. “Do I think most of these [published] numbers are highly interpretive? Yes,” says Kenneth J. Bohan, president and CEO at The Liberty Group (www.thelibertygroup.com), a Houston-based full-service executive search firm specializing in the commercial and multi-family real estate industries. Instead, he suggests that prospective employees and employers focus on opportunity.
For the employee, it might be about a company’s prestige in the industry, mentors with an established history of contributing to others’ successes, a firm’s track record of promoting professional development, etc. Senior professionals might feel motivated to form their own business or be lured by other companies looking to establish start-up departments. Not surprisingly, the best people are generally already happy in their jobs and performing at their peak.
For employers, landing top talent boils down to the changing landscape of the local market. “All areas - employment in gas and oil, healthcare, real estate, etc. industries - are looking for talent,” says Bohan. “That’s probably real estate’s greatest challenge.” Compound that scenario with experienced (but junior-level) professionals weighing multiple offers - because they can. “Everybody gets a counter-offer,” notes Bohan. Those employers with established, long-term incentive programs and formal, long-term business strategies will have the most success in wooing or retaining top talent. In addition, don’t underestimate the lure of familiarity. Uprooting families, seeking new professional services (like healthcare), and leaving old friends and neighborhoods are among the reasons why professionals may be reluctant to make a company move, particularly when it involves relocating to an entirely new community.
Activity Hot Spots
Development, acquisition, and construction - those areas tied to transactional activity - are leading types of positions today, says Bohan. That’s surprising, given the recent softening in selected submarkets, but indicative of the timing necessary to take projects from inception through completion (from 6 to 24 months, on average). Market knowledge is key. “The nature or level of the position, particularly one involving development, acquisition, or construction, is somewhat bound geographically. In other words, if you’ve been involved in development in the South, there are concepts of construction that may be irrelevant in the South but critically important in the North,” says Bohan. That’s why transplanting a professional from one location to another may not be ideal in many circumstances.
Geography is also tied directly into career “hot spots.” Such coastal regions as New York City; New Jersey; Washington, D.C.; California; Seattle; etc. are affected by massive amounts of red tape and high acquisition costs. “But, once you’re there,” explains Bohan, “the markets are highly controlled with respect to rents and occupancy.” In contrast, these same numbers can be easily eroded in cities with less-stringent controls in place when competition heats up. And, be assured, it will. Once again, market knowledge can help. Individuals looking to secure long-term residency for themselves and their families would do well to look to highly controlled markets.
When it comes to staff, the larger national companies are generally forced to be more sophisticated in their hiring, adds Bohan, noting, “That isn’t to say that some small companies don’t have very high-profile, high-ended, incredibly qualified staff. It’s not an absolute, but a general rule.” Expectations vary from company to company; experience is highly sought. Relevant experience in the specific desired job functions of the new position is the key ingredient that will bring the top dollar to professionals seeking new opportunities. Their best-paying opportunities are typically found in other similar competitive companies to their current employer.
“Even then,” says Bohan, “the jobs are different. Is the job of an asset manager with one of the big pension groups different than that of an asset manager working at a major property-management firm? You better believe it. Is one better than the other? No, but it will be different.” Picture this analogy: There’s a significant difference between a pediatrician and a cardiac surgeon, even though they both have the initials “MD” appearing after their names.
Back to the Numbers
How does a company know it’s playing (and paying) “fair”? Turnover and productivity are vital indicators, according to Bohan. “How do you know if you’re treating your people fairly? They stay; they consistently perform.”
And, although a broad discussion of base compensation numbers isn’t helpful, it’s crucial to recognize that a competitive compensation strategy is critical to a company’s ability to recruit and retain executives. Packages can be as creative or as structured as needed to attract the talent desired. In addition to signing bonuses, conventional bonuses can allow for participation at multiple levels. “You could participate at a company level, a regional or departmental level, or all of the above,” says Bohan. “The most important thing is that good bonus programs are objective; they’re very clear and they reflect realistic goals.”
Short-term goals, as examples, might reflect performance based on building occupancy, employee retention (a new component for managers of departments or divisions, according to Bohan), or net operating income. Longer-term options might revolve around “phantom stocks” or “stay bonuses” (meaning that individuals must be present at the time a property sells to participate). In contrast, other equity-based bonuses may not require company tenure.
Professionals looking to make a big jump in their compensation, however, must be realistic. Compensation, particularly when it involves base salaries, remains a “new hires” market. “If you’re interested in moving your own compensation dramatically forward, you probably will be forced to change companies,” says Bohan. “If you’re talented, have a great track record, and are experienced, you might see a 3- to 5-percent shift (in terms of base) from your existing company; maybe more, but not a lot.“
Generally, you’ll only see more if you plan a career move to a new company. In this case, it may be realistic to expect a 15- to 20-percent increase based on experience and demand. Look for companies that give you a clear direction to achieve any bonus programs, but make sure any change is realistic and timed. Then - and only then - go to market and position yourself.
In other words, your job - and compensation - is in your hands. Act accordingly and take control of your future.
Linda K. Monroe ([email protected]) is editorial director at Buildings magazine.