Commercial real estate companies face big challenges in attracting and retaining exceptional professionals.
THE COMPETITION AMONG real estate companies for talent heated up dramatically in 2017. The “2017 NAIOP/CEL Commercial Real Estate Compensation and Benefits Report” reveals that demand for transformative leaders, next generation stars who could “lead” a division, department or practice over the next 10 to 20 years, has created a bidding war for exceptional talent.
Three Executive Positions Hardest to Fill
The three positions garnering the most attention were focused around leadership, knowledge and talent: Division/Department/Practice leader, Talent Management leader and Director of Research.
The number of firms working to identify and hire Division/Department/Practice leaders was acute. Real estate firms recognize that visionary leaders who create aligned aspirations and inspire great performance from others are very hard to find. Tenure and longevity alone do not automatically create a true leader.
The second position in high demand was Talent Management leader. The cornerstone for success in every real estate firm is the quality of its talent. The number of firms elevating the leader of talent management, formerly called the human resources director, to a C-suite position accelerated over the past 12 to 24 months. However, finding individuals who can create a highly productive workplace environment is proving to be a challenge heading into the second half of 2018.
The third position in high demand is Director of Research. Real estate companies increasingly require a robust research function that enables one’s firm to differentiate its brand and create a competitive advantage. Real estate research is no longer just about collecting data; it is all about interpretive research and predictive analytics that can create the most value.
The Biggest Challenges
One of the biggest challenges facing real estate firms in 2018 is how to deal with a multigenerational workforce. The ability to navigate between and among generations (from the silent generation and baby boomers to Generation X, the Millennials and the emerging Generation Z) can be very difficult. Each generation has different perceptions, opinions, and expectations of title, compensation, work, communications, benefits, work/life balance, transparency, technology and policies. Juggling the diverse needs and expectations of four to five generations in the workplace is a requirement now.
From training to business practices, to internal communications to empowerment, expectations and needs vary widely between generations. Clearly, one policy or procedure “for everyone” does not work. Flexibility, adaptability and accommodation are key strategies to successfully navigate and manage a multigenerational workforce.
A second major challenge, which began in 2014/2015 and accelerated in 2017, involves the inclusion of more associates/team members in long-term incentive programs. Formerly reserved for a few top executives and the “deal team,” long-term incentives are becoming more commonplace for the second and third levels below the C-suite. From enterprise stock programs, phantom promotes, B-shares, share appreciation and performance units to profit sharing, real estate firms are increasingly recognizing the value of locking in the next generation stars and aligning the interests and motivations of the entire leadership team.
The perfect storm of growing demand for exceptional talent, rising compensation expectations, a multi-generational workforce, and an accelerating number of “boomer” retirements makes competition for talent one of the top priorities for real estate firms. Retaining and motivating next generation leaders and stars is critical to achieving a strategic and competitive advantage.
2017 Benefits Trends
Listed below are some of the trends revealed by the “2017 NAIOP/CEL Commercial Real Estate Compensation and Benefits Survey.”
Medical, Dental and Vision Coverage
The number of companies offering health insurance for part-time employees rose 5 to 7 percentage points.
The number of companies offering medical savings plans/health savings accounts (HSAs) increased 6 to 7 percentage points.
The number of smaller companies (those with 50 or fewer employees) offering vision plans increased by 8 percentage points.
Other Insurance Coverage
Overall, the number of firms offering supplemental long-term disability insurance rose by over 4 percentage points.
The percent of the premium covered by the company, however, declined by 2 to 4 percentage points.
The number of smaller companies offering “immediate” vesting increased by 8 percentage points.
The number of smaller companies offering a formal full-time “business casual” dress code policy rose 8 percentage points.
The number of public companies offering tuition reimbursement benefits increased by 7 percentage points.
The number of firms offering an off-site fitness subsidy rose 4 to 5 percentage points.
The number of smaller companies offering on-site workout facilities increased by nearly 5 percentage points.
The number of companies offering subsidized training/professional development increased 7 to 10 percentage points.
The number of firms offering paid or subsidized membership in a professional organization rose 6 to 9 percentage points.
Measures Used to Reduce Medical Coverage Costs
The number of companies that increased their deductible declined over 4 percentage points overall; for public companies, it declined by nearly 15 percentage points.
The number of firms that increased their out-of-pocket maximum declined 5 percentage points overall; for public companies, it declined by nearly 13 percentage points.
Overall Medical Insurance Costs
(Annual Combined Medical and Dental)
Full-time Employee: Rose by nearly 2%.
Employee + 1 Adult: Rose 5%.
Employee + Family: Rose nearly 5%.
Full-time Employee: Rose 14%.
Employee + 1 Adult: No Change.
Employee + Family: Declined nearly 2%.
By Christopher Lee, president and CEO, CEL & Associates, Inc.