What’s on the minds of commercial real estate CEOs today? Recruiting, employee retention and “talent management,” says the “2013 NAIOP Commercial Real Estate Compensation Survey,” completed in partnership with CEL & Associates, Inc.
“Retention and talent management remain a top priority for boards, compensation committees and management as economic conditions improve and competition for top performers increases,” said Christopher Lee, president and CEO of CEL & Associates. Approximately 67 percent of respondent firms projected hiring new employees in 2013, up from 63 percent in 2012. Participants reported that the highest levels of projected hiring for 2013 would take place in the areas of property management (51 percent), finance/accounting (34 percent), leasing (27 percent) and administration (22 percent). Projected hiring for construction and development jobs also rose, increasing from 16 to 18 percent and from 14 to 19 percent, respectively, from 2012 to 2013.
Why are recruiting and retention becoming so important? Largely because increasingly high numbers of senior executives (some 40 to 60 percent) are baby boomers who will be retiring during the next seven to 10 years. On the supply side, Lee noted, “depressed hiring over the last five years, combined with the lingering impacts of the decline of entrants into real estate during the ‘dot com’ era of the 1990s, has reduced the numbers of young and mid-career talent in the industry.” More than 61 percent of all respondents reported having “trouble finding skilled talent to fill some positions.” And nearly 65 percent reported that they expect to increase their “use of social media, online resources and tracking programs for hiring.”
“Talent management programs are building more definitive career paths and offering more ‘next generation’ leadership training, exposure, mentoring and career development” said Lee, who added that “succession planning is no longer the exclusive domain of the CEO position,” noting that human resources departments increasingly are making succession plans a priority for many other key top-level positions as well. Multigenerational family businesses are no exception, noted Lee, who added that even family businesses “are establishing more (and more specific) criteria for the entry of next-generation talent and leadership.”
Base Salaries, Merit Increases and Bonuses
Median base salaries for commercial positions in 2013 ranged from a low of $40,900 for an entry-level retail maintenance engineer/technician to a high of $538,600 for a chief executive officer. The 10 positions posting the largest salary changes between 2012 and 2014 (projected) are shown in Table 1.
The average merit increase provided by companies in 2013 was 2.9 percent, up only slightly from 2.8 percent the year before (see Table 2). CEL forecasts that merit increases will continue to rise slowly, and expects them to range from 3.0 to 3.2 percent in 2014. “This level,” Lee warned, “may not be sustainable without higher levels of overall economic growth and corresponding associated income growth.”
Lee noted that “bonus realization levels — bonus payouts relative to a maximum or target — have risen over the past few years, from a low of 64 percent in 2009 to nearly 79 percent for 2012 bonus awards.” How are bonuses being awarded? “Since 2011, there has been a return to specific (and multiple) bonus performance criteria/metrics versus discretion. An emerging trend in compensation plans is the setting of minimum standards of excellence” before an employee qualifies for an incentive bonus award.
Nearly 400 companies participated in this year’s compensation survey, which was conducted in the second quarter of 2013. Those firms — approximately 46 percent of which are NAIOP members — represented more than 100,000 distinct jobs across the apartment, office, industrial and retail sectors of private and public companies throughout the U.S. To learn more about trends, benefits and salaries across more than 150 positions, purchase the comprehensive report at www.naiop.org/compensation.