With concerns about the availability of talent to power the real estate industry, it is time the industry looks at what makes a leader and what still needs to be done to nurture them. Andrew Baum and John Ratcliffe report
Leadership, in all its manifestations, has become the compelling mantra of the moment. All too often shrouded in the mysteries of ‘management-speak', it nonetheless remains one of the most intriguing concepts in both business and civic life. Discovering the alchemy of leadership is one of the most beguiling and elusive quests of academics and consultants alike. The authors here are no exception.
There is a need to examine the nature and needs of leaders in the property profession; and second, to explore the strategic challenges and issues that they face. This article summarises the main findings.
Spotting and supporting executive talent is a top priority issue for all organisations - not least in the real estate industry. Identifying high-potential individuals early, understanding their strengths and development needs, actively building their capability and managing their careers effectively, are all critical components of ensuring that real estate related businesses have the proper leadership to compete successfully.
The purpose of this preliminary research study was threefold:
• Through a series of "strategic conversations", by way of interviews and a workshop with leading figures in the field of real estate investment, development, management and consultancy, to identify the key experiences and qualities that enable senior executives to progress to the top of their profession and function effectively.
• By means of a questionnaire survey, to establish what the profiles of leaders in the real estate industry look like in terms of qualifications, experience and outlook.
• To begin to determine what leadership and management education, learning and development programmes are most suited to meeting the needs of the industry over the next decade, and decide how the Henley Centre for Real Estate Strategy can best provide them.
During October and November 2010 more than a dozen CEOs, or similar, from major property organisations were interviewed, and a further eight influential figures from around the real estate industry participated in a workshop, framed around the following questions:
• What turning points in your career prepared you for leadership?
• Do/did you have a mentor role model?
• What do you think you would have benefited from but did not get in your education, training or career development?
• What previous experience have you gained, and what in particular did you gain from it?
-Different property sectors
-Different industries, businesses
-Different skills and responsibilities
• What skills do you think future leaders of real estate will require?
• What are the strongest forces/influences driving change in the real estate markets?
• What is missing, in your opinion, from the general leadership skill-sets displayed in the current real estate industry?
• Who do you most admire as a leader?
-Within real estate
-Outside real estate
While the more detailed findings from these strategic conversations are laid out below, three prevailing themes recurred throughout both the interviews and in the workshop. First, that a longer, broader and deeper strategic perspective was demanded of real estate leaders. Second, that international experience was of inestimable worth in recognising and developing leadership potential and practice. And third, that property was, in essence, a "people business" requiring greater emphasis on the softer skills of leadership and management.
From an evaluation of the strategic conversations held in the interviews with "leaders" and during the workshop with "influencers" the following findings emerged.
1. Turning points
• School, sport and societies. Many, if not most, of the participants had held early positions of responsibility throughout their formative years. Likewise, at tertiary level, a good number had taken on extra-curricular leadership roles.
• University and executive education. Few cited their undergraduate educational experiences as being especially transmogrifying, whilst all those who had attended formal graduate or executive training programmes declared they derived great benefit. Indeed, one described a short course at INSEAD as "life-changing"; another the MBA at Cranfield as being "transformative"; and one that having a personal coach was a "significant turning point".
• The world of work. The first job, the first boss and the first big project all figured as notable turning points. As did the discovery of a novel method of procurement working as personal assistant to the senior partner; starting up a new department; establishing an international office; and meeting and working with someone special.
• The wide world. As already mentioned, international experience, of various kinds, came to the fore as a common point of self-realisation and aspiration. Whether it was the broader cultural milieu of Europe, the excitement of emerging markets in the Middle or Far East or the cutting edge of American business practice, working overseas was seen by most participants as a mind-changing episode in their professional lives and a stepping-stone to later leadership.
• Mistakes, marriage and other lessons. Several interviewees cited learning from mistakes, and being allowed so to do. Others mentioned the special support from their nearest and dearest. And a few talked about getting through a crisis, as all being significant turning points on the path towards leadership.
2. Mentors, role models and heroes
• Family, friends and self. Unsurprisingly, virtually all participants gave credit to those closest to them in supporting and sustaining their career progression. Fathers, and even grandfathers, figured prominently. Most interestingly, perhaps, were the handful who saw themselves, first and foremost, as role models to those whom they led, and for whom they were responsible.
• Early professional years. Several saw it as significant that they had acted directly as personal assistants, or as close associates, to eminent figures in the property field during the early stages of their careers. A couple were very clear that they had positioned themselves, almost from the outset, in teams where they perceived the "action" lay, and the "main players" performed.
• Colleagues, clients and consultants. Although very few recognised a single person as a particular role model, most admitted to drawing eclectically from a number of leading personalities they encountered and admired throughout their working lives. These came from colleagues, clients and consultants alike. Some participants distinguished, quite sharply, between sources of business inspiration and mentors of professional practice.
• Great gentlemen and good sports. Unpredictably, though perhaps not that surprising, the view was voiced that certain distinguished individuals with whom the participants had worked had exercised extraordinary influence over them in a much broader sense than purely vocational. Some culturally, some socially and some ethically. Indeed, a few actually could trace their core corporate values and professional beliefs to such relationships. Others their social and cultural interest outside work. (It has to be noted here that there is an unfortunate accuracy with the term "gentlemen" as no women were identified at any stage in the study.)
• Formal mentoring. Apart from a few individuals who had retained personal business coaches, with some considerable success, the cohort concerned was not one that had gone through a system of formal mentoring. They did, however, largely express approbation for such programmes and, in a number of instances, had directly been responsible for implementing them.
3. Perceived deficiencies in property education
• Management, business and finance. Generally, there was serious criticism that both undergraduate and professional education and training was lacking in these salient subject areas. One interviewee declaimed, in fact, that his university course was entirely silent on such matters.
• People skills. The point was forcefully, and repeatedly, made that interpersonal skills, such as communicating, listening and persuading, were sadly neglected in real estate education. Even marketing and negotiating, which lay at the heart of so much property business, were scantly treated. There was also little exposure to different ways of thinking about and doing things.
• Strategic perspective. Another common cri de coeur across the conversations was the need to develop greater leadership capacity throughout the industry in the art and science of strategic thinking, planning and decision-making. Being able to understand and deal with increasing turbulence, and tackle the complexity, risk and uncertainty that come with it, was seen as an immediate and growing imperative for real estate leaders - actual and aspiring.
• Systems thinking and an holistic approach. In similar vein, the participants in the workshop made particular play of the desirability for property professionals to comprehend more completely the connectivity of everything in society and the economy with everything else, and formed the view that systems thinking within a more holistic framework would benefit planning, prioritising and decision-making in the industry. Little of this, it was argued, was evidenced in either undergraduate education or in continuing professional development. "We are poorly prepared for change" was one individual indictment.
• Technical, organisational and administrative. Although difficult to describe as a consensus, there was still a strength of feeling that a knowledge of, and proficiency in, real estate concepts, methods and techniques was a prerequisite, or at least a desirable attribute for the effective leadership of property-based organisations. Contrariwise, with the organisational and administrative aspects of the industry, where some respondents clearly saw real estate as a special business case, others viewed it in a more generalised business form. This dilemma was also reflected in divergent views regarding dedicated degree, sandwich courses, professional entry and non-cognate postgraduate programmes among participants.
4. Future attitudes and aptitudes
• Awareness, strategy and risk. There was widespread recognition that the building momentum of globalisation, sustainability and responsibility would demand of leaders in the real estate industry a greater understanding of the driving forces of change - social, technological, environmental, economic and political - and a facility to forge resilient strategies for their organisations in the face of growing complexity, heightened uncertainty and variable risk. Some of the participants specifically stated that there was the need for a new enlightened mindset across the profession, and a fresh way of thinking about property organisations.
• Values, standards and ethics. Generally, there was an appreciation that society expected higher levels and standards of performance, accountability and transparency of business - together with more effective monitoring regulation and enforcement. The emerging cadre of leaders would have to be familiar with, and comfortable about directing and managing real estate organisations in this setting of stricter governance. Not just locally, but globally. More specifically, some participants observed that there was a need on the part of the real estate industry to respond more actively to the expanding role of corporate social responsibility and take more pride of place in the public realm.
• Leading and managing clever people. The importance of looking after what were popularly described as "the rainmakers" was stressed repeatedly. It was widely recognised that in many, if not most, property organisations a handful of star performers created disproportionate amounts of value. Competitiveness depended upon recruiting and retaining such smart people. Special leadership strategies were required to give them space, connectivity, scope, support and respect. Furthermore, as one CEO stated: "The deal-makers want a say." In the same context, there was an appreciation that more attention should be paid to identifying and nourishing potential talent throughout the organisation in all aspects of its work.
• Cross-border competence. In the words of one noted CEO interviewed: "Cross-border skills are appalling!". There was common agreement that property professionals should be better versed in the legal, economic and cultural conditions prevailing in the markets and societies where they practise and conduct business.
• Mastering the business basics. A frequently expressed view was that leaders in the real estate industry used to get where they are, and largely still do, by being good surveyors, not by being good at business, or by being good managers. This, it was commonly held, is changing. Some even feared that the pendulum might swing too much the other way - with the accent switching excessively to shareholder value, at the cost of quality of service and client satisfaction.
• Property as a product. By contrast, it was felt by a number of participants that there was a need to return to a position where property was understood, whether it be for investment, development, management, marketing or valuation purposes, more for its inherent functional and physical qualities than simply as just another financial asset class. This required a special kind of informed and experienced leadership.
• Wisdom, integrity and trust. At a more abstract level, there were frequent references in many of the interviews, and at the workshop, to: greater intellectual curiosity among property professionals about the nature of real estate and its function in society and the economy; a better understanding of the dimensions and challenges of corporate integrity, and the concomitant questions of organisational design, communications practices, working relationships and leadership styles that increasingly are raised; and the related issue of trust in an industry that customarily attracts such opprobrium.
• People, principles and the big picture. Several leading CEOs emphasised that, above all else, real estate was a "people business", and this sentiment was echoed to varying degrees by virtually all those interviewed. Indeed, a couple of eminent CEOs notably stated, quite unequivocally, that their role as leaders was about people, not about making or losing money. They, and others, also held strongly that the principles they personally espoused should be seen to be practised unwaveringly and set standards for the organisation as a whole. Almost everyone contributing highlighted the need for future leaders to comprehend "the big picture", developing a broader perspective on the world of property and the influences brought to bear upon it.
• Succession planning and remarkable people. Commonly CEOs claimed that succession planning was a high priority on their corporate agendas. Clearly, some approached this in a rigorous, structured and systematic way, but it was not evident that all did so. Interestingly, a few felt they had been singled out for succession themselves at a relatively early stage, though, understandably perhaps, the question of self-fulfilling prophesy was not possible to pursue. Several leading figures declared that they assiduously sought out "remarkable people" from different disciplines and walks of life so as to gain a wider and deeper appreciation of social and economic dynamics and a better understanding of unfolding events.
• The changing nature of work. Surprisingly few of those interviewed offered opinions regarding how changes in space, human resources, technology, the workplace and the nature of work itself might affect leadership styles and strategies, most probably because the issue was not specifically raised. Those who did comment, however, envisaged major shifts in terms of location, creativity, communication, collaboration, experience, employment, knowledge and information. Leadership, at all levels, it was felt would be affected in myriad ways, as yet unexplored.
This research was conducted on behalf of the Henley Business School
*Andrew Baum is Professor of Land Management at the Henley Business School, University of Reading, and Honorary Professor of Real Estate Investment at the University of Cambridge
*John Ratcliffe is Professor in Strategic Foresight at Henley Business School and Visiting Professor of Built Environment Futures at the University of Salford