Sponsored by IREM - Institute of Real Estate Management
The property management industry is in a state of flux—changing with the use of remote workers, new technologies and increased competition—but all things considered, the biggest challenge facing the industry is the fact that baby boomer owners are beginning to retire. Estimates are that somewhere between 54 and 63 percent of all property managers will be retiring over the next 10 years. The shifting real estate landscape coupled with the pending wave of ownership transfers spells trouble for the industry if successors are poorly prepared to take the reins of a company.
Studies show that 70 percent of successions fail. But if successors are effectively developed through the following four development stages, growth and profitability are maximized, employee turnover and customer loss are minimized, and owners get paid the full value of their business.
Stage One: WORKER/CONTRIBUTOR
This is the stage where successors learn the basics of the business, gaining knowledge of what’s involved in managing a property and how to interact with ten- ants and owners. In essence, they are get- ting good at getting the work done. Competencies in this stage involve acquiring technical and industry knowledge, along with improving technical skills.
Stage Two: MANAGER
This is the stage where successors learn how to get work done through others—overseeing multiple properties and man- aging resources. Although they may still be doing some of the work themselves, their main tasks are to provide guidance to others and to drive production, productivity and quality. Improvement in this stage comes from things like project management training, general management training and hands-on experience.
Stage Three: LEADER/EXECUTIVE
This is the stage where successors learn to lead rather than manage. It’s the point where people skills become more import- ant than technical skills and industry knowledge, and an entirely new set of competencies comes to the forefront. In order to be effective leaders, successors must improve their communication skills and learn the art of influencing others to get buy-in for their plans and ideas. They must learn to foster teamwork and collaboration along with the ability to re- solve conflict in a constructive manner. Additionally, strong leaders appreciate the need to develop others and master that ability. Finally, successors begin to enhance their executive presence by projecting mature self-confidence, taking control of difficult situations and projecting the ability to make tough decisions. A leader with good executive presence is better able to instill confidence, build trust and earn respect.
Improvement in this stage does not come from training. Becoming a better leader cannot simply be done by reading books. It requires breaking old habits and forming new ones. It requires revealing blind spots and limiting beliefs. And it requires a deeper understanding of human nature. These competencies are best honed though coaching and mentoring, both of which take time.
Stage Four: C-SUITE/OWNER
This is the stage where successors learn how to lead a property management organization—where seeing the bigger picture becomes their job. In order to do this, they must hone their strategic thinking and move beyond simply developing tactics to cultivating directions for the company that address fundamental problems or capitalize on opportunities. It requires sound judgment in order to make good decisions. Successors at this stage must be able to develop a vision for the organization and have the ability to gain buy-in for that vision. They must have awareness both of the organization and the real estate industry as a whole, looking beyond the confines of the company. The final piece in this stage is for successors to develop an owner mindset. Up to this point in their careers, most successors have only ever been employees. The reality is that owners see things differently than employees.
In order for successors to shift from an employee mindset to an owner mindset, they need to change their perspective from short- to long-term thinking; from self- to organizational-focus; from internal to external focus; and from narrow/ silo thinking to big-picture thinking. Improvement in this stage is developed over time and occurs through coaching and mentoring.
STRATEGIES FOR SUCCESSFUL DEVELOPMENT
Let’s assume the successor has success- fully mastered the first two stages of development. In other words, they’ve gained a strong knowledge of the technical aspects of the industry and have gained experience managing projects.
In order to master the second two stages, a successor must then be coached and mentored. If you take on this task, you must adopt a coach-like style of leader- ship—meaning, ask questions (rather than give answers) that 1) give you in- sights into the other person; and 2) allow you to give the other person new insights. The only way to know what questions to ask in order to give a successor those new insights is to first discover where their thinking, judgment and/or perspective is incorrect. That’s what the first set of questions accomplishes.
This coaching will help the successor develop the necessary leadership competencies, strengthen their executive presence and improve their ability to think strategically.
You must also mentor the successor. This is done by allowing them to make increasingly difficult decisions. Only by guiding their thinking can a successor’s judgment be honed. Start with allowing them to make decisions that aren’t critical. In other words, a misstep won’t harm the company. As their judgment and thinking improves, have them participate in decisions that have greater impact.
And finally, share the mistakes you’ve made in the past and the lessons learned over the years. Many times, the lessons learned are not self-evident.
THE BOTTOM LINE
In order for successors to effectively lead an organization into the future, they need to transition from contributors to managers to leaders, and ultimately to owners. It is essential that development does not stop at mastering the mechanics of the business.
Michael Beck ([email protected]) is an executive coach, business strategist and author based in Portland, Ore.
This article originally appeared in the Jan/Feb 2018 issue of JPM