Mentoring may be the key to closing the gender diversity leadership gap in commercial real estate.
MENTORING BY SENIOR executive women of their less-experienced female peers may hold the key to increasing gender diversity in the male-dominated real estate investment management business. Far more than simply providing role models, mentorship can help women gain the advanced skill sets they need to develop into candidates for senior leadership.
The dearth of women leaders in real estate is reflective of the situation at the upper levels of most industries today. Women account for just under half (47 percent) of the overall U.S. workforce, yet their numbers dwindle significantly in the senior leadership ranks. According to the 2013 Catalyst Census, women held 14.6 percent of executive officer positions. Among top-earning executive officers, women accounted for only 8.1 percent.
Where are the women leaders in real estate investment management? A 2012 Ferguson Partners Ltd. study, “Correlating REIT Enterprise Performance & Board Diversity Representation,” revealed that most real estate investment management CEOs have backgrounds in acquisitions/investments. Women in real estate, however, are largely in client-facing roles that, while important, do not carry the strategic weight of acquisitions. To break that pattern, women need to become more experienced in all aspects of acquisitions, especially negotiation, which traditionally has been a male-dominated activity.
Cultivate New Skills
“In acquisitions, the responsibility is to negotiate and to be tough on due diligence, either overcoming matters or reaching agreement on pricing. That is the ‘hand-to-hand’ combat, the direct negotiation,” said Laurie Dotter, president of Transwestern Investment Group. “Negotiation skills are not typically cultivated and mentored for women as well as they are in the networks and learning systems that the industry has created for men.”
Women who want to rise in real estate investment management must hone their negotiation skills while also becoming savvier in handling the styles of those on the other side of the table — particularly top brokerage people, who tend to be men. “I can mentor young women and teach them skills to negotiate, but I cannot change the people with whom they’re negotiating,” Dotter added.
Skill-specific mentoring by women, for women, will also make female senior leaders more visible within their organizations in a way that wasn’t the case 20 or 30 years ago. In fact, real estate investment management was so male dominated in the late 1980s and early 1990s, it kept many women away. Among the women who did enter the industry, many later opted for career changes or “off-ramped” from the fast track, either to have families or to continue their education. As a result, few women maintained a career path to senior leadership.
The Ferguson Partners study found that only about 5 percent of firms in the industry have meaningful representation by women. Many of the businesses with women in senior leadership are the real estate investment arms of larger financial institutions, which have diversity mandates. But what can be done at the other 95 percent of real estate investment management firms with little or no gender diversity in their management ranks?
Make Diversity Mission Critical
The answer is greater commitment at the uppermost levels of an organization to diversity and to increasing the visibility of women leaders. “Making progress on diversity takes focus, attention and effort. It doesn’t just happen,” said Lynn Thurber, chairman of LaSalle Investment Management.
“Leadership on diversity requires the CEO to believe, from a core value perspective, that it is mission critical,” added Deborah Harmon, CEO of Artemis Real Estate Partners, which she co-founded with Penny Pritzker, who now serves as U.S. Secretary of Commerce. “Diversity of perspective is a foundational principle at Artemis, and it reflects a culture of inclusiveness and openness that challenges the traditional industry norms.”
Gender diversity is a strategic advantage. The Ferguson Partners study found that, over a five-year horizon, real estate investment trusts (REITs) with at least two women on their boards outperformed other firms by approximately 3.6 percent per year. Today, two health care REITs are led by women. Lauralee Martin, one of the highest-ranking women in commercial real estate and former chief executive of the Americas division of Jones Lang LaSalle, is president of HCP Inc. Debra Cafaro has been CEO of Ventas Inc. since 1999 and chairman since 2003.
Firms that value diversity and provide mentoring to encourage women to take on broader roles will likely attract more female talent. “Women make a decision to go where they see other women,” Harmon added. “They see women who are senior leaders and they think, ‘Okay, I can do that.’”
Visibility among senior women who have balanced work and family can also help younger women to navigate these responsibilities. While acquisitions tends to be a 24/7 business, women who have supportive spouses/partners and some degree of flexibility in their work arrangements can find ways to lessen the career-family conflict.
“Some women opt out prematurely. They make decisions based on a view that they can’t have it all,” said Amy Price, chief operating officer of Bentall Kennedy USA. “My view is unless you try — and women have to be part of the solution — you won’t have it all.”
Women must be proactive in managing their own careers, to build relationships in the industry, network with other women and men, and avail themselves of mentoring opportunities. As more women advance through the ranks, the next generation of talented women will be attracted to the industry and to organizations that value diversity, to the benefit of all.