By Kent Elliott, RETS Associates
With the market improving, developers, owners and operators have new found capital, opening opportunities for ground-up development and repositioning of multifamily properties. This boost in business has induced a feeding frenzy for top talent. To attract and retain the right talent, executives must be equipped with the right resources, knowledge and plan to avoid one of the biggest problems in the multifamily space today—failed negotiations.
The current hiring problem
In the midst of the growing multifamily housing market and economy, more companies are searching for heads of development or acquisitions to increase the size of, or reposition, their portfolios. Not only has the pool of qualified candidates become shallow, but due to the market’s competitive nature and strength, hiring negotiations of senior-level positions have been scuttled at the last minute because bonus parameters or equity workouts have surfaced and can’t be matched. When negotiations fall through, the company and team are greatly affected.
Failed negotiations result in lost time, resources and money. A firm’s plans for development or redevelopment can be delayed, potentially setting them behind in market activity, missing opportunities for growth and redevelopment. With development on hold, owners, operators and developers will not be able to capitalize on market trends to grow and expand business.
How to avoid surprises
There are a number of tips, tricks and traps that hiring managers and executives must be aware of throughout the hiring process.
All hiring conversations must start with the hard-hitting questions that reveal information surrounding a candidate’s compensation and bonus package. It is at this time that a hiring manager will learn about equity payouts and can evaluate whether the firm can match them, or if conversations with the candidate should be halted to avoid wasting resources.
Another important factor that ensures a successful hiring process is to know what you are looking for. Though it is an obvious concept, it happens less often than one may think. In an honest effort to quickly fill a position, a firm may overlook lacking qualifications or personality traits. Hiring managers must also understand their firms’ cultures and ensure that candidates would fit smoothly into that culture.
There are numerous types of payout terms of which hiring managers need to be aware. Companies have different structures of payouts, and there are strategies that hiring managers can employ while negotiating with candidates to entice them to leave their existing equity and move to a new firm. For example, if a firm’s ideal candidate is two or three years into a seven-year fund, the hiring firm can offer to bring the candidate on and place them into a fund that has already been started. This makes the move less painful for the candidate, even though it may not completely replace the equity “lost.”
It is also important to understand what, beyond equity, candidates are looking for in a new position or company, and offer it to them. This may mean giving them more job responsibilities, offering management opportunities, or significantly boosting a base salary and cash bonus. A candidate may be more attracted to the hiring firm’s corporate culture, proximity to home or work-life balance, and view it as a bonus that will make up for the loss in an equity payout in the long term.
In addition, managers should be aware of traps that can derail the hiring process. Do not get caught in a time-delay where the firm’s resources are wasted or the candidate is picked up by another firm that is moving more quickly. Do not come to the table empty-handed and be prepared to discuss what your company can offer, including packages, perks, experiences and opportunities. The multifamily market is a candidate’s market, and preparation is key.
In today’s competitive marketplace, time is of the essence when interviewing and hiring top talent. To remain competitive, it is imperative to know what other firms are offering, what perks candidates currently have, and what he or she is looking for in a new position and company.
Hiring a recruitment and head-hunting firm can help you to get answers to these questions effectively and efficiently, and avoid failed negotiations. Firms like Western National Group have employed third-party head hunters to take the burden of the hiring process off of the executives. RETS Associates handled the search and began the process by diving deep into the company’s culture and needs, while also keeping in mind different types of bonus parameters that come with a senior management position within a multifamily firm. All of the hard-hitting and tough questions were asked up front, resources were saved, and the executives could focus on driving their business forward instead of hiring.
Be strategic, be accurate, be honest and be successful. There is no time to waste in the current economy.
Kent Elliott is principal of RETS Associates, a west coast real estate recruiting firm. Elliott has 20 years of recruiting and real estate experience, and he specializes in the placement of interim, permanent and executive positions in the commercial space. His clients in the West include Western National Group, Watson Land Company, LBA Realty, CBRE and Emmes.