Targeting High Performers – An Introduction to a Three Part Series
As Principal of Rutherford International Executive Search Group Inc., I have observed economic inflection points that have caused shifting employment trends within the Canadian commercial real estate industry since 1986. Today, the industry continues to adapt in response to a rapidly evolving environment. Technology and the Internet have democratized access to knowledge, improved capital flows, and condensed decision trees to the point where the dynamics of a deal from inception to completion are no longer constrained by transaction friction.
Employment opportunities that exist today were mere futuristic musing in the 1980s – or entirely unanticipated. From engineering science to operational analytics, from emerging sustainability frameworks to shifting ownership structures, building owners and operators face wide-ranging new challenges. Each new inflection point in the economy fosters opportunity and in many instances generates the need for new functional roles that demand a completely different make-up of skills. The following is a brief review of some of these inflection points.
Consider the early 90s,which ushered in shifting ownership structures including the move to public REITs. These, in turn, prompted the creation and ascendance of the Asset Manager role. Few could define this new role at the time, but somehow everyone just knew it was needed. The question of where to focus the role – property management, leasing, finance or investment – was destined to be answered by each organization a little differently, depending on its culture and business objectives. Today, however, the position is firmly entrenched within owner and advisory organizations.
The new millenniumsaw virtually every city planner become a Jane Jacobs acolyte. Along with tiered and rampant development fees, they championed intensification of our work, recreational and living space. This urban renaissance not only led to the comeback of the 80s style entrepreneurial commercial developer focused on the high-rise condo market, but also fostered the creation of a myriad of new jobs. Within major Canadian markets, high-rise mixed-use office, retail and residential developments introduced an immense economic multiplier effect across the breadth of the urban business community.
Capital pools shifted their investment weightings in favor of commercial real estate. Once considered aggressive, a 5 to 8% percent allocation of pension fund assets in real estate is now perceived as conservative. Through effective use of technology and access to big data, pension funds are far more efficient in underwriting their investment risk today than they were in the late 80s when I first began monitoring their activity.
Canadian REITs will be celebrating their 20thAnniversary this year. When first launched as an investment vehicle, REITs prompted more than their fair share of skepticism. I recall conversations with CFOs and capital market professionals confessing their lack of confidence in the platform. The smart money wasn’t sure if this embryonic concept would become an acceptable retail investment vehicle. The early institutional first movers in this space would need to trade their units in order to create a robust secondary market. That took a few years to happen, but now every savvy boomer with a thirst for investment yield has an allocation of REIT units in their portfolio. REITs have impacted the employment of and wealth creation opportunities for real estate professionals in a manner that far exceeds what was available to the industry professional in the late 80s and early 90s.
Consider the application of technology in my profession. I recall recruiting the president of a major development company while driving up Toronto’s Don Valley using a car phone that cost more to wire into the trunk of my car than perhaps the car itself. Now this same call is made via video conference from the deck of a sailboat on a wafer thin tablet. Time, distance and location have become irrelevant to effectively conducting business.
But for all the wealth and job creating inflection points in our economy, ask a CEO what is relevantto maintaining a continuously improving business process, the likely response is not “access to capital” but rather “having ready access to talent, the ability to hire right, and knowing how to motivate human capital.”
This challenge is what keeps most CEOs up at night and often presents itself as a succession planning issue. The problem, however, is more one of scarcity than deployment; there are simply not enough high-performingexecutives available. Recently, I matched a CEO with a Chief Investment Officer, when asked if we had found the right match relative to the CEO’s personality, my behavioral scientist indicated that the likelihood of finding another candidate as closely matched was 1:25,000. While admittedly gratifying to me given my role as an executive search consultant, the statistic underscored the harsh demographic reality our industry faces, and will continue to face for the foreseeable future.
In this vein, Gallup has predicted the emergence of a global war for talent. Thought leaders of all stripes concur with this view and are prodding public policy makers to embrace this reality. What can we expect in a war for knowledge workers? Any well fought war involves strategy and tactics. A conventional campaign within that war requires effective logistics, while an unconventional one demands audacity. Winning the war will require all four traits and more.
Accessing, hiring and motivating talent human capital need not be hard, but success demands that we set aside our assumptions, resist the illusory comfort of following instinct, and instead place confidence in the actuarial math that underpins science based hiring. 40% of all senior level hires in corporate America fail within 18 months, meaning organizations that neglect science based hiring do so at their peril. Mistakes are costly, and happen far too often.
There is a simple means to improving these odds and ensuring the probability of success. I have some thoughts on this subject which I’d like to share with you over a brief three-part series called, “Targeting High Performers & Predicting Performance.”
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