According to a range of studies, the real estate industry is trailing a long way behind the leaders of the pack – usually the digital sector, professional services or even financial services – when it comes to attracting top talent. In terms of diversity, the sector does not even make it into the middle ranks, but is situated at or near the bottom when compared to others.
Why should you care? Firstly, because top talent hugely boosts a company’s bottom line. Our research shows that achieving a critical mass of exceptional managers has a disproportionate impact on corporate performance. Secondly, top talent is clearly in short supply. Against a backdrop of an ageing workforce and the rise of a new generation with different attitudes, systematic talent management makes a significant difference.
What is systematic talent management all about? There are, of course, multiple dimensions to structured talent management ranging from leadership development to succession planning and onboarding. In this short article I will focus on just two trends and how they interlink with talent management.
Looking to the future, one of the major talent management issues that will steadily gain importance over the next decade is how to lead millennials. Millennials are different: firstly, they care more about achieving common goals and a commitment to shared principles than they do about money. This means that real estate companies may need to gear their approach towards the objectives of their actions to increase their appeal. This can range from long-term team objectives that make ‘sense’ (rather than just money) to societal topics such as energy efficiency and sustainability.
Millennials also deeply value training and development opportunities. They want to be recognised and led as individuals with customised personal career plans that feature assignment rotation and international missions. Finally, Generation Y expects employers to offer flexible working arrangements and give them greater freedom to decide where and when they complete tasks. Millennials will account for 50% of the workforce by 2020. This calls for a major shift in the leadership paradigm of real estate companies.
Diversity is another key aspect of talent management that deserves more attention from the industry. Diversity is a multi-faceted concept that involves respecting and connecting with individuals from different age and racial groups, as well as from cultural, political and social background. In business terms, diversity boosts innovation, which tends to broaden companies’ product ranges and reinforce their global reach. Gender is a prominent diversity denominator and women are widely under-represented in the senior executive ranks of real estate at present.
How can companies address this issue? A first step involves removing biases within the organisation by creating much more transparency in the way that individuals are recruited, assessed and developed. A second step is to ensure that performance and potential are the only factors that count towards promotion. Diversity can also be fostered via mentoring and sponsoring relationships for ambitious women, particularly during their first two years with the company. Lastly, expanding the concept of high-potential role models tends to maintain young women’s confidence level and encourages them to aspire to top positions.
Millennials are different: firstly, they care more about achieving common goals and a commitment to shared principles than they do about money.
Embracing diversity and leading millennials are just two aspects of the structured approach to talent management that is crucial to the future success of real estate companies. In times of greater uncertainty and more rapid strategic shifts than ever before, it is important to gain a clear picture of your top leadership team’s potential. What will your executives be able to achieve in the future? Depending on how it is implemented, talent management can be a blunt sword or a cutting-edge tool that is perfectly integrated with your strategy.
Christian Redhardt is Partner at Egon Zehnder.