Development Magazine Winter 2012

First Look - Hiring and Telecommuting Increase in 2012

What’s on the minds of CEOs besides reshaping business models, refinancing credit and controlling operating costs? Employee retention, upgrading the talent base and hiring, says the 2012 NAIOP Commercial Real Estate Compensation and Benefits Report, completed in partnership with CEL & Associates.

According to the report, talent retention and recruitment rank among the top five priorities of CEOs nationwide, with approximately 63 percent of respondent firms projecting increased hiring in 2012, up from 56 percent in 2011. Relating to specific positions, participants reported the highest projected hiring increases for 2012 in property management (46 percent); finance/accounting (31 percent) and leasing (23 percent). Projected hiring for construction jobs also rose, increasing from 11 percent in 2011 to 16 percent in 2012.

Other trends include an increase in the number of companies offering telecommuting and flextime benefits, and restructuring of both annual bonus and long-term incentive plans. Pre-employment psychological and aptitude screening tests are also on the rise by employers in 2012. Geographic differences will come into play as well, with employers in more active markets paying more than counterparts in other areas of the country.

The Keys to Talent Retention

What do real estate leaders need to know to become an employer of choice? Christopher Lee, president and CEO, CEL & Associates, Inc. offers several ideas for retaining employees:

  • Create and implement contemporary hiring practices and more robust on-boarding, training and career development programs. Consider the outsourcing of non-core positions/functions;
  • Develop a written talent management plan that is aligned with the company’s strategic and long-range business objectives; and
  • Identify ways to reduce payroll costs (e.g., rebid insurance coverage, increase the use of temporary employees and independent contractors and utilize rent-to-buy employees).

Lee further emphasized these steps as critical to maintaining a competitive edge:

  • Adopt a charity or community cause to assist in recruiting Gen Y employees;
  • Cross-train and recruit “best athletes” — not necessarily the best “position players;”
  • Benchmark your personnel costs to external metrics; and
  • Most importantly, deploy the right people in the right places at the right time doing the right things.

What’s Happening on the Benefits Side?

The average merit increase provided by companies in 2012 was 3.4 percent, up from 2.8 percent the previous year and more in line with the 2008 figure of 3.6 percent (See Table 1). Merit increases were on par with the general rate of inflation, estimated at 3.4 percent for 2012. However, CEL forecasts merit increases will decline slightly in 2013 to roughly 3.3 percent, below the projected inflation rate of 3.7 percent.

Table 1
Merit Increases

Year
Metric
Merit Increases
Senior Management Exempt Employees Non-Exempt Employees Overall Company
2006 Average 4.2% 3.7% 3.3% 3.9%
2007 Average 4.7% 3.9% 3.7% 4.2%
2008 Average 3.3% 3.5% 3.5% 3.6%
2009 Average 1.4% 2.0% 2.1% 2.0%
2010 Average 2.2% 1.9% 1.9% 2.0%
2011 Average 3.0% 2.6% 2.7% 2.8%
2012 Average 3.5% 3.1% 3.4% 3.4%
2013 Forecast Average 3.5% 3.0% 3.2% 3.3%

Source: CEL & Associates, Inc. 2012 National Real Estate Compensation Survey and Benefits Report

Other emerging trends relating to benefits include increases in the number of vacation, sick and personal days that employees can carry over. In 2012, the number of vacation days allotted for carry-over increased from 10 to 12, while sick days increased from 11 to 20. With regard to bonus plans, the report indicates that 84 percent of participant organizations offer an annual bonus plan and 45 percent removed bonus freeze restrictions in 2011.

Shifting Demographics Impact Commercial Real Estate Talent

Beginning in 2015, there will be a potential shortage of 15,000 to 25,000 “qualified” real estate professionals each year due to Baby Boomers retiring and colleges not producing enough job-ready graduates. There is a growing opinion that 2012 to 2015 is the next key time period to make money in real estate, thus there is increasing pressure to retain outstanding talent without breaking the bank.

Conducted in 2Q12, 380 companies participated in the compensation survey, representing approximately 95,000 professionals across the office, industrial and retail sectors of private and public companies in seven regions of the U.S. Of the total respondents, 50 percent were NAIOP members. Learn more about trends, benefits and salaries across 150 positions in the comprehensive report available at www.naiop.org/compensation.

Compensation Trends to Watch in 2013

  • Increase in hiring “value creators”
  • Decrease in post-and-wait job listings and increased focus on talent network strategic sourcing vehicles (i.e., LinkedIn)
  • Increase in use of video interviewing and employment branding techniques
  • Increase in the outsourcing of administrative, IT and marketing positions
  • Renewed focus on succession planning, training and certifications
  • Shift to more dynamic performance feedback models
  • Greater alignment of business strategy to workforce planning

Table 2
Top Ten Positions Posting the Greatest Base Salary Changes (%) Between 2011 and 2013.

Position 2011 2012 2013 Projection % Change 2011-2013
Top Development Executive - Office/Industrial $256,300 $309,600 $322,400 26%
Portfolio Manager - Retail $116,100 $134,500 $139,600 20%
Portfolio Manager - Office/Industrial $111,400 $127,800 $132,400 19%
Top Property Mgmt. Executive - Office/Industrial $208,500 $236,900 $246,700 18%
Property Accountant - Senior $69,500 $77,800 $80,400 16%
Chief Executive Officer/CEO $622,300 $688,800 $716,800 15%
CFO/Top Financial Executive $362,300 $395,500 $411,600 14%
Top Property Mgmt. Executive - Retail $209,000 $224,100 $233,700 12%
Controller $133,400 $141,800 $147,600 11%
Top Acquisitions Executive - Retail $257,900 $273,600 $285,400 11%

Source: CEL & Associates, Inc. 2011 and 2012 National Real Estate Compensation Survey and Benefits Reports
Notes: Data provided is for the 75th percentile. Salaries represent the office, industrial, retail and residential property sectors unless otherwise noted.

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