What does it take to nurture and grow a private, non-family commercial real estate development company? Brian Coulter, managing partner at The JBG Companies, a prominent investor, owner, developer and manager of real estate properties in the Washington, D.C, metropolitan area, described how his firm handles these challenges, at NAIOP’s Development '13 conference.
Coulter offered the following 10 tips:
1) Create a “flat” organization. JBG’s organizational structure has few levels of middle management between staff and executives, and no single leader. Instead, it has an executive committee that acts as a board of directors, a management committee that runs the company’s day-to-day operations and four groups that work under the management committee, focusing on investment, corporate, development, and asset management issues.
2) Institute an anti-nepotism policy. JBG wants its employees to advance and be rewarded strictly on the basis of their performance, so it has established a strong anti-nepotism policy to encourage hungry, young, entrepreneurial professionals to join the company and make their mark in that way.
3) Establish a mandatory retirement age. People within the JBG organization today must retire at the age of 65. The company currently has 19 partners; as they “age out” and retire, their departures will provide room for others to grow and thrive. (Retiring partners, however, will be eligible to negotiate new contracts if they want to continue to work for the firm.)
4) Plan early. It is never too soon to plan for generational transitions, because it generally takes a long time to get buy-in from all senior staff.
5) Use outside consultants. Coulter suggested that other firms that want to implement these types of policies should bring in an outside organizational consultant. Although such consultants may not be popular with employees, he pointed out, they are necessary because they can ask tough questions: “When are you going to retire? Are you going to retire?”
6) Groom replacements. Generational transition is not the only transition an organization needs to worry about. All company executives have “spheres of control”; different people run important parts or functions of the company. What happens if they get sick or die long before they plan to retire? At JBG, everyone in the company must groom his or her replacement; the company wants redundancy in all spheres of control.
7) Open up the office to encourage communication. When JBG remodeled its headquarters, it created a stairway between floors and installed glass on all of the offices and conference rooms. People interact well and are able to see what’s going on throughout the office.
8) Allow employees to have a stake in company. JBG currently has about 550 employees, 50 of whom (including all 19 partners) participate in the firm’s investment funds.
9) Communicate, communicate, communicate. Coulter stressed that it is impossible to over-communicate with employees. In addition to the usual methods of employee communications, JBG holds “town hall” meetings where everyone gets together to socialize and discuss company issues.
10) Maintain an open door policy. The company welcomes entrepreneurial ideas and new solutions to old problems, and encourages its younger employees to speak out. Have a good idea? JBG wants to hear it. Have a complaint or criticism? Bring JBG a way to fix it!