Special to Realty/Builder Connection
With 2010 expected to be another slow year for real estate, many industry executives and analysts are wondering what additional steps - beyond cost cutting and downsizing - can be taken to weather the turbulent times.
The answer, according to Bill Ferguson, author of the new book “Keepers of the Castle: Real Estate Executives on Leadership and Management,” is actually quite simple. Only leadership-strong, balanced, and experienced leadership at the executive level will pull the industry through to the next upcycle.
Ferguson is a Phi Beta Kappa graduate of Harvard University and is the CEO of his own international consulting company, which is based in Chicago.
“The unfortunate reality is that some executives within the real estate industry–men and women motivated by their own egos and greed–helped contribute to its downfall,” says Ferguson, who interviewed 150 CEOs, chairmen, and other senior managers in order to present a portrait of leadership in all arenas of the real estate industry including residential, healthcare, hospitality, and commercial, in his new book. “But I believe that the truly great leaders in this industry will get it back on its feet.
In an attempt to overcome the recessionary fallout and pervasive illiquidity causing the real estate crisis, many leaders in the industry have cut their budgets to the bone and have been forced to downsize. Now, says Ferguson, companies must implement another business strategy–a focus on leadership and building a leadership bench within their companies.
To rebuild America’s largest industry, today’s leaders must avoid the mistakes that led to the real estate market’s recent struggles. Here are some of the most damaging:
1. Letting your ego get the best of you.
“Egocentric leaders who blur the lines between personal and corporate interests or who are intolerant of the perspectives of others should not be welcomed at today’s real estate companies,” says Ferguson. “High-performing CEOs recognize that gaining the confidence and loyalty of all employees is one of their most important objectives. They need to show a firm command of issues and develop a strategy that works.”
2. Allowing intra-organization competition to hurt the company.
“Many real estate businesses revolve around investment transactions or sales forces. The individuals on these teams are typically provided incentives for production volume, and the more successful organizations orient these employees as coworkers and collaborators rather than competitors. Bottom line: Company performance targets need to take priority over individual achievement.”
3. Forgetting the proper risk balance.
“Success is all about taking calculated risks and winning a lot more than one loses. Everyone in an organization needs to take risks in order for a company to grow and remain competitive. But leaders who rise to the top and stay there consistently make the right decisions in weighing risk”
4. Pretending to have all the answers.
“For a CEO, acknowledging not having all the answers is an essential component of leading by example and rallying the team. It can transform weakness into strength. When you communicate a sense of vulnerability, you connect with people. It helps build a winning, low-ego, ‘we’re all in this together’ culture, embodying a team orientation over a ‘me’ orientation.”
5. Allowing lax management to become a business strategy.
“Effective leaders realize they must complement their tried-and-true, kick-the-bricks instincts with MBA skills, financial proficiency, and a managerial temperament. In fact, institutionalizing entrepreneurship has become the paradigm for real estate leadership in today’s globalizing economy. The challenge of doing so requires companies to install effective management platforms that can nurture and preserve entrepreneurial vision and avoid the chokehold of bureaucracy.”
6. Avoiding change.
“To profit from new strategies in the shifting real estate landscape, change needs to be well considered and implemented expeditiously throughout ever more complex and sophisticated organizations. Under any circumstances, the playing field constantly changes. Interest rate fluctuations, economic tides, consumer confidence levels, and demographic shifts ripple through the marketplace, requiring constant attention and analysis even during the most prosperous times. Complacency can kill any business. You can’t take anything for granted. High-performing companies can never rest on their laurels.”
7. Going global the wrong way.
“The march toward business globalization means that real estate company management teams must be oriented toward developing global strategies and seeking lines of business overseas. Effective teams must be able to operate across borders with an understanding of how to maneuver around cultural and national differences. Nurturing partnerships and relationships with experienced local players in growth economies around the world will become more essential to enable company expansion.”
8. Hiring prima donnas.
“Winning management teams discourage ‘rock star’ hires of executives who use company platforms to launch personal success rather than fostering company achievement through working with others to build platforms. Managing and leading well in a large organization means surrounding oneself with good people. In hiring for and promoting to senior leadership ranks, chief executives should look for executives who exhibit fairness, integrity, and low ego.”
9. Avoiding responsibility.
By taking responsibility for mistakes, says Ferguson, leaders underscore the importance of accountability throughout the organization and help establish a strong value system for people to support each other, as well as encouraging collaboration.
“Keepers of the Castle: Real Estate Executives on Leadership and Management” (ULI, October 2009, ISBN: 978-0-87420-101-7, $36.95) is available at bookstores nationwide, online booksellers, www.bookstore.uli.org, or directly from the publisher by calling 800-321-5011.