Many organisations over the last decade have gained an increased awareness and understanding of the critical role diversity plays for their boards of directors and C-level positions, especially in the real estate industry, writes Serena Althaus.
Firms have expanded their recruitment efforts to attract a more diverse workforce, but there are still many barriers that exist in recruiting, retaining and developing diverse talent, especially in today’s highly competitive ‘War for Talent’ market. Through Ferguson Partners’ research and working directly with boards and senior management teams, we have found that greater diversity in top management positions has been slow to evolve. According to a Ferguson Partners 2016 Diversity Survey, diversity is good for business.
Approximately 97% of participants believe that diversity initiatives have a positive impact on the bottom line – 14% higher than in 2005. Companies are recognizing that when there is diversity in all forms – gender, ethnic and cultural – companies have greater financial success.
This survey also found that real estate companies are starting to experience increased pressure from customers, investors and other external factors to enhance their diversity efforts. Whilst 38% of total respondents indicated that they are experiencing outside pressures, the percentage for real estate private equity firms and real estate investment managers is significantly higher at 75% and 58%, respectively.
Organisations such as the European Commission (EC) have called on publicly listed companies to voluntarily commit to increasing the number of women that serve on boards to 30% by 2015 and 40% by 2020.
• More Diversity = Stronger Culture, Innovation and Performance
Companies with a more diverse board of directors and senior management teams perform better than non-diverse teams. There are many reasons why diversity positively impacts companies, including:
• Strengthening the Bottom-line: Diversity in leadership roles can boost profits and bottom-line results. For example, when Catalyst, a research management company, examined Fortune 500 companies using the number of women on their boards, those in the highest quartile in 2009 outperformed those who had the least women by 42%.
• Enhanced Decision-Making: A more diverse team is able to bring different perspectives and expertise to the table, which can create innovative solutions for solving complex issues and challenges.
• Creating a More Inclusive Company Culture: A diverse culture helps alleviate perceived prejudices and helps foster an organisation that promotes participation from all employees.
A Roadmap for Success: Steps for More Diverse Teams
• Executive Focus & Communications: If a company is going to encourage diversity, it has to start at the board level and drive it through senior management. In addition, companies need to ensure that mid-level executives understand and support diversity goals.
• Monitor Company/Investor Expectations: Many companies and investors have diversity objectives they expect their real estate partners to honour and advance. Understanding these external requirements can be leveraged to help enhance accountability within the company.
• Expand Search Criteria: In board and senior management searches, a key criterium is often previous board or C-level experience, which makes it difficult to attract diverse talent. Therefore, it is important to recognize a variety of experience factors and have the willingness to move candidates into their ‘first’ board, or C-level position.
• Look Beyond the Real Estate Industry: Real estate is a broad industry, which touches many adjacent fields. Real estate companies can benefit from gaining the perspective of individuals in related fields.
• Focus on Candidate Quality, Not Quotas: It is better for management to focus on longer-term cultural change and, when necessary, demonstrate the link between diversity and improving performance.
The real estate industry is making progress regarding diversity in the boardroom and C-level positions, but there is still a long way to go. Diversity can ignite stronger profits, better-decision making and a more culturally inclusive working environment, which helps the recruitment and retention of the best talent in the industry.
Serena Althaus is Senior Managing Director at Ferguson Partners Europe
