Development Magazine Winter 2011

First Look - Show Me the Money

What’s on the mind of CEOs besides refinancing credit/capital, reshaping business models and controlling operating costs? Employee retention, recruitment and hiring, says the 2011 NAIOP National Compensation and Benefits Report, done in partnership with CEL & Associates.

According to the report, talent reten­tion and recruitment rank in the top six priorities of CEOs nationwide, with approximately 56 percent of respon­dent firms planning to hire new em­ployees in 2011. Other trends include a greater reliance on Performance Scorecards in 2012 in addition to in­creased use of temporary employees, consultants and “Try-Before-You-Hire” employees. Geographic differences will come into play as well, with employers in the more active markets paying higher compensation than other areas of the country.

Figure 1

Percent of Current Real Estate Executives Expected to Retire By 2020

Title / Level

% Expected to Retire

President / CEO

58 - 62

Chief Financial Officer

43 - 48

Executive Vice President

46 - 51

Senior Vice President

42 - 45

Vice President

39 - 43

*Includes resignation, retirement, permanent disability and death.
Source: CEL & Associates, Inc.

 

The Keys to Employee Retention

What do real estate leaders need to know to become an employer of choice? Chris Lee, president and CEO, CEL & Associates, Inc. offers several ideas for retaining employees, some of which include: emphasize the organization’s core values; examine ways to reduce employment costs while strengthening capabilities and capacity; and prepare for constant change and surprises – always be in touch with employees. Chris further emphasized these steps as critical to maintaining a competitive edge:

  • Deploy a contemporary compensa­tion plan. How do you structure your program to remain competitive in your market?
  • Take steps to retain outstanding talent and rising stars. Capitalize on their core competencies, giv­ing them the tools and resources necessary to succeed.
  • Implement staffing models that are aligned with the organization’s vision, goals and core strategies. Most employees don’t know the vision or goals so pick four random employees and ask them.
  • Enhance employee communica­tions and recognition programs.
  • Most importantly, deploy the right people in the right places at the right time doing the right things.

Figure 2

Emerging Trends Base Salaries*

% Change

Position

2006

2011

2006-2011

Chief Executive Officer/CEO

$520,800

$622,300

19.5

Chief Operating Officer/COO

$376,800

$405,400

7.6

Chief Investment Officer

$394,000

$367,000

-6.9

CFO/Top Financial Executive

$266,100

$362,300

36.2

Top Human Resources Executive

$126,600

$175,600

38.7

Top Acquisitions Executive

$208,500

$245,000

17.5

Portfolio Manager

$114,700

$111,400

-2.9

Top Property Mgmt. Executive

$190,700

$208,500

9.3

Controller

$125,300

$133,400

6.5

Property Accountant - Senior

$65,500

$69,500

8.8


*75th Percentile
Source: CEL & Associates, Inc. 2011 National Real Estate Compensation Survey

 

What’s Happening on the Benefits Side?

Both merit increases and bonuses are up from 2010 levels, with the 2011 company average merit increase of 2.5 percent in 2011, up from two percent the previous year. Nearly 80 percent of CEOs expect to award bo­nuses, up from 67 percent last year. Both the merit increases and bonuses are in excess of the general rate of inflation, reported at 2.8 percent for 2011. Other emerging benefit trends include an increase in dental insur­ance at 93.8 percent and a 401K employer match at 74.6 percent of respondents. On the flip side, employ­ers reported continued pass-through of higher healthcare costs to their employees in 2011 (25-29 percent of the overall costs).

Shifting Demographics Impact Commercial Real Estate Talent

Beginning in 2015, there will be a potential shortage of 15,000-25,000 “qualified” real estate professionals per year due to Baby Boomers retiring and colleges not producing enough job-ready graduates. The report indi­cates that 62 percent of CEOs plan to retire by 2020 (see Figure 1) with further consolidation on the horizon as retiring founders look for ways to exit the industry.

Conducted in 2Q11, 400 companies participated in the compensation survey, representing approximately 100,000 professionals across the office, industrial and retail sectors of private and public companies in seven regions and specialization groups. Of the total respondents, 46 percent were NAIOP members.

Compensation Trends to Watch in 2012

  • 65 percent of today’s CEOs plan to retire by 2020.
  • Colleges and universities are not producing enough “job ready” graduates.
  • The average employee tenure is 3.8 years with turnover rates increasing among senior and regional executives and onsite property and maintenance personnel.
  • Further consolidation of the real estate industry is on the horizon as retiring founders are looking for ways to exit the business.
  • More women are entering positions of leadership and authority.
  • There is greater diversity and independence at the Board level.

From the Archives: Business / Trends Articles from the Previous Issue

Young people networking

New Voices - Career Development and Industry Know-How Comprise Developing Leaders Forum 

Networking, idea exchange, education and mentoring are all vital to young commercial real estate professionals seeking to advance their careers, broaden their networks and boost their knowledge of industry practices. The challenge is where to find the tools that offer the greatest value for the time commitment.

Fuel infrastructure station for natural gas

Strategically Green - Making Money off Fuel 

A new opportunity has come on the scene that is not only sustainable but can generate revenue for developers. Clean Energy is a provider of natural gas fuel for transportation in North America and a global leader in the expanding natural gas vehicle market.