There’s a war on talent in the market now, so there’s a bit of a feeding frenzy.”
So says Kent Elliott, principal of RETS Associates, on the industry’s current state of affairs. What’s causing the conflict? For starters, in this time of record industry prosperity, much of the workforce is happy to stay put—making the filing of open positions quite challenging.
In addition, recruiters and other hiring professionals report, people who left the industry during the recession haven’t come back, creating a dearth of talent. Amid this potent mix, companies are working extra hard to identify, recruit and then retain their top performers, making sure the employees who’ve catapulted the firms to success don’t jump ship.
“It’s harder to fill positions,” Elliott declares. “If you look at national unemployment, it’s around 5% but we estimate it’s 2.5% in commercial real estate’s first-tier markets, so there’s no healthy unemployed sideline. That’s good for the economy but it makes finding talent more difficult. As a result, 90% of the talent that we hire has to be pulled out of an existing job.”
That’s forcing hiring managers to get creative—and generous. For example, recruiters are increasingly turning to a candidate or two who might not be an exact fit with the job description yet has the right skills or expertise.
“We recently did a search for VP of asset management at a private equity firm,” reveals Elliott. “There were several qualifications, including having an MBA. We brought in six candidates that had everything and one more that didn’t have the degree. The client wanted the non-MBA. We have to present the sure things and then a plus one.”
Industry firms are deploying new measures to find talent. Take for example two-year-old RealtyMogul.com. When the company was looking to staff up, it started an employee incentive program in the first quarter of this year whereby staff members could receive a bonus if they referred people to the company and those referrals turned into new hires. As a result, 10 to 15 employees of the 91-person company are friends of friends or other referrals, CEO Jilliene Helman tells Real Estate Forum. Overall, RealtyMogul.com has hired close to 60 employees over the past 12 months.
The program works well for several reasons, she says. “When you hire A-players, they want to work with other A-players so they think about the top two or three people they know. Plus, the cost is nowhere near the price of a recruiter and it’s efficient because it’s a lot easier to get through the hiring process; these are people who come highly recommended.”
At Transwestern, a longstanding commitment to public service—which includes giving employees time off to work with their cause of choice—has served as a strong marketing tool for prospective recruits, says Colleen Dolan, EVP of human resources. “It’s always part of the recruiting discussion. When I’m on college campuses and we’re speaking to groups, this is something we highlight because we’re finding that the younger generation has grown up with giving back to the community so it resonates with them.”
But of course, money talks, so companies are matching and even exceeding compensation expectations, says Tony LoPinto, global sector leader, real estate and managing director, New York regional office of recruiting giant Korn Ferry.
“A public firm recently was about to hire a very senior level executive and it became known to another firm that he was looking for a new position,” he reveals. “That second firm offered him three times the compensation the public company was offering.”
More generally, LoPinto continues, “Companies are being much more aggressive in terms of compensation and we’re seeing ‘bid backs,’ where companies are trying to get people who’ve been offered a job elsewhere to stay so they ‘bid back’ the employee. The bid backs have offered more significant compensation and much more equity. We’re seeing very bright up and coming talent get strong counter offers.”
“Companies are being much more aggressive. We’re seeing very bright up and coming talent get strong counter offers.” —Tony LoPinto, Korn Ferry
Adds Elliott, “If workers are happy, the new employer has to make a compelling offer to pull them over. Compensation now has to be 20% to 30% higher than the current salary.” The salary increase needed to lure talent “from 2011 through the end of last year was 10% to 20%.”
Then again, jobs aren’t just about money. “It’s also about where the job is located compared to where someone lives, the opportunity for advancement, and the company’s reputation,” notes Elliott.
“Money has never been the number-one motivator for people to move,” declares Jane Lyons, managing partner, Rhodes Associates. “People become unhappy when they’re unchallenged or they don’t have a boss who cares about their career development. So it behooves senior management to take a hard look at retention.”
One effective step taken by some companies, she observes, is having people change jobs—or at least, altering an existing position. “There’ve been cases of, ‘We’re going to take you from asset management and put you in acquisitions,’ or the age old one is, ‘Go do two years in London.’ You stimulate your top employees that way.”
At Transwestern, Dolan and her team closely monitor “Best Places to Work” surveys—in which they participate and then pay for the data—to find out if there’s anything the company can do better. “It’s definitely a factor in people being interested in working for a company where they see that people are treated well.”
But it’s also important for keeping the existing team happy and engaged. “We had some particularly thought-provoking feedback that our accounting group didn’t feel integrated. So we started having brown bag lunches with those teams to make sure that they’re heard. Competition for really good talent is very severe so we can’t rest on our laurels. We need to think of alternatives that would be interesting to people and are beneficial to the company in the long run.”
Areas of interest in today’s market run the gamut. “Some disciplines are particularly hot and in demand,” asserts Matt Slepin, founder and managing partner, Terra Search Partners. “Construction and development has come roaring back in some areas. Also, we’re doing more searches for asset managers, those positions are more in demand as the cycle gets more mature.”
“Money has never been the number one motivator. People become unhappy when they’re unchallenged.” —Jane Lyons, Rhodes Associates
Adds Manish Srivastava, director of academic affairs and clinical associate professor at NYU’s Schack Institute of Real Estate, “Over the past six months, senior level hiring has increased. We’re seeing recruiting for VPs, senior associates and directors. There’s an expansion of jobs in development, finance—particularly in CMBS—and asset management solutions.”
He continues, “I’ve seen internships at WeWork and other, newer kinds of firms that want real estate solutions. They’re hiring people away from established investment funds and are probably making the deals very attractive for people to come over.”
There are other new types of positions too, notes Lyons. “There’s a diversity of platforms now. We didn’t have specialty lenders platforms 10 to 15 years ago; we had banks. Now there are private equity funds, hedge funds and others—and they’re all looking for talent.”
Rick Gillham, president of Gillham, Goldbeck & Associates, observes, “Most companies are looking for strong analytical skills; especially with Excel and Argus. We encourage entry-level candidates to pursue analytical roles regardless of their long-term goal. That experience can be parlayed into any aspect of real estate.”
But companies are being much more selective about who they hire. “Hiring in the past was pretty informal,” admits Slepin. “Now, companies are using recruiters more thoughtfully to get a grouping of competitive candidates for a position, creating choice. They also have a more formal internal hiring process and are thinking about both new hires and existing teams in a more strategic, human capital fashion.”
There’s a greater formality today to gaining industry employment, adds Gillham. “There’s more due diligence prior to hiring. Companies are giving candidates intelligence, personality and aptitude testing. That’s a huge change. Industry firms used to hire people they liked, over and above and qualifications. Now, they’re looking for the best and brightest and people who are going to fit into the organization.”
In some cases, the ‘best and brightest’ are more senior executives who—in a new trend—aren’t anxious to leave or are being asked to stay. “I recently read that just in Texas, there are about 600,000 people over the age of 65 still working,” Gillham notes.
“We hear from our interviewees that they want to stay mentally and physically active, plus they want to stay socially connected; CRE is a heavily relationship driven business and many of those relationships have moved into close friendships; or they’re staying for the money and benefits. On the employer’s part, most companies are looking for a plug-and play option and they don’t have time to train new people.”
Some companies see other benefits to keeping older workers in place. “These are our future teachers, and they’re pretty engaged,” says Dolan. “They have such a breadth of experience, it’s refreshing.”
Adds LoPinto, “Because of the downturn, people are sticking around longer. Also, there’s a premium on experience; 65 is the new 55.”