PREDICTABILITY OF LEASING SUCCESS – SCIENCE BASED HIRING
by Forbes J. Rutherford, President & CEO, Rutherford International
LinkedIn Profile: http://ca.linkedin.com/in/rutherfordintl
Email: forbes@rutherfordinternational.com
by Forbes J. Rutherford, President & CEO, Rutherford International
LinkedIn Profile: http://ca.linkedin.com/in/rutherfordintl
Email: forbes@rutherfordinternational.com
Imagine you are standing at a crap table in Vegas, the crowd around the table is yelling, the bells are ringing over in the slot section of the casino, the oxygen is having the desired effect making you feel a little heady, eager to play the odds. The Croupier is asking you to place your bet, poised to part you from your hard earned money.
What do you do? Do you play the ‘Come’ line – the odds are 50/50; do you really stretch the odds and choose a number but increase the pay-out? How much of your money are you prepared to risk on a roll of the dice?
Your stack of chips have grown through the night, you’ve had quite a run – a crowd is gathering, everyone is living vicariously through your success, wondering if your luck will hold. You slide half your chips onto the table, placing them strategically – as strategically as one can get in a Crap game. Everyone goes quiet; they’re amazed at the foolishness of your recklessness, however unbeknownst to the crowd you have a system that has increased your odds to 85% probability of success. There is no such thing as a sure bet but is 85% probability of success worthy of taking the chance? After all, you are in a casino, this is a game of chance – why be there if you’re not prepared to take a measured risk?
You roll the dice, the Croupier turns pale, a smile creeps across your face – the crowd goes wild.
You’re back in the office; resumes of prospective retail leasing candidates are spread across the Boardroom table. The acquisition team has just assembled a site that’s perfect for mixed-use urban retail combined with a residential tower. The city wants urban intensification; the planning department agrees to fast track the permits, but insists on a retail mix that compliments the neighbourhood. Financing terms are in place, they have never been better but are contingent on pre-development leasing of anchor retail tenants that support the project’s vision.
Everyone’s eyes are on the success of this project, departmental bonuses could be substantial. The development team has three more projects in the pipeline; however your leasing team’s capacity to lease built inventory in combination with Greenfield projects is woefully lacking. In fact only 25% of retail leasing managers within the industry have the behavioral wherewithal to be “high performing” in a Greenfield environment and none belong to your current leasing team.
What to do? Much of the pre-development leasing falls on your shoulders; you’re 53 years old, the development horizon is more than five years – less on approved sites. How successful could the company be, could you be – if you were able to compress this development horizon? This scenario is far from unusual but rather an altogether commonly expressed frustration by your fellow Vice Presidents of Retail Leasing across the industry. The majority of “high performing” Greenfield leasing executives are above the age of 45.
You have three options, the first is to engage a captured broker and give her the listing for the first half of the project – it’s expensive and the outcome of her last project offers little to write home about.
The second option is to assign Joe, an internal senior leasing manager to the project. Joe has the most Greenfield experience on the team, a great retailer network, he is a proper ‘gad fly’ – everyone loves Joe, first choice for a golf foursome – perfect for leasing existing inventory but lacks vision. He can’t seem to grasp and apply the concept of ‘highest and best use.’
Next to you, he’s the highest paid member of your team but can’t meet the demands of the development pipeline. It’s difficult to understand why he can’t – he has the perfect sales personality but that’s not the benchmark you want. In fact, there is no correlation between traditional sales personality characteristics and that of the characteristics typically found in a “high performing” retail leasing professional.
Your third option is to hire from outside. You have three candidates to consider, all have basically the same education and relative experience leasing to national tenancies.
One candidate is currently a listing broker experienced with representing owners of ‘urban street front and urban plazas.’ He makes a reasonable living but wants to work directly for an owner; he has never actually done Greenfield or repositioned an urban Centre. He benchmarks as one that would have ‘reasonable’ performance leasing Greenfield however he’s a bit lacking with process and paper. >From a team perspective, he’s not very collaborative or enthusiastic about team performance bonus structures. The most important consideration is that he’s burned out; when you factor in ‘career satisfaction’ he drops another 15 percent in overall benchmark score. He really should be looking for another career because he no longer enjoys leasing; however it’s all he knows. Shifting to an Owner is the safe bet for him but not for you, your ranks are already filled with average performers.
You second prospect is Frank, a Senior Leasing Manager, he’s never leased an urban centre or anything remotely resembling ‘High Street’ but he’s done plenty of suburban Greenfield Power Centres. He understands ‘massing,’ has good relations with the large format national retailers – he’s even brought a national tenant to the table as a co-venture partner in a development deal. He lives for the deal. He benchmarks as a very high performing Greenfield Leasing Executive but has an average benchmark score as a Vice President with respect to managing a leasing team. He’s a veritable deal junky that likely thinks he’s your succession plan. How will you manage his and everyone else’s expectation that he’s your heir apparent?
Your third prospect is Beth, a Senior Leasing Manager who is employed with a regional mall owner. She has similar education and tenure but isn’t as conversant with the complete lease document as the other two candidates. She’s frustrated by that reality, and is smart enough to recognize the limitations the asset management and legal departments have placed on the scope of her function. She hasn’t done any Greenfield but has had some input into the tenant mix of an enclosed mall repositioning. Beth’s at a juncture in compensation where she can make a change to improve her career. She seems like the least probable candidate in terms of your immediate need and yet she scores higher than all the prospects in both Greenfield leasing and as a VP Retail Leasing. The predictive accuracy of the benchmark is 85% – she’s not your ‘Present’ but she’s your ‘Future.’ What to do?
Your first priority is to secure leasing talent for the current development and expedite the development pipeline by increasing your leasing team’s Greenfield bench strength. You hire Frank – prospects like him don’t come along often; in terms of industry professionals the research suggests that 75% of Managers, Retail Leasing and 58% of VP Retail Leasing do not have the wherewithal to be “high performing” in a Greenfield leasing environment.
You do the deal, your peers on the Executive Team are ecstatic – in one surgical strike Rutherford International has enabled you to increase your development capacity and undermine your competition. Everyone’s all smiles until you tell them that you’re cutting Joe loose. You can’t afford the new Greenfield hire and continue employing Joe. Besides, you have less costly Retail Leasing Managers that are adept at in-fill leasing and managing the existing portfolio. If only Joe had the wherewithal to lease-up a development project….
But wait, you’re not finished! You’ve taken care of the ‘Present’ but what about the ‘Future’ – one hire doesn’t shore up your Greenfield bench strength. What about Beth from the regional mall owner with the “Potential for Success Score” that exceeds more than 50% of current Vice Presidents of Retail Leasing and ranks equally high in Greenfield leasing? She is more rarer than Frank, your new Greenfield leasing executive!
With Joe’s departure, you still have some chips to place on the table – you hire Beth and have HR structure a management and personal development program around her. She needs a Mentor that benchmarks as high as she does, so you carve some time out of your schedule for her. You can’t be too obvious, the rest of your leasing team have some “near strengths” that if properly developed could push them into a “high performing non-Greenfield leasing benchmark.” You arrange for them to take personal development programs customized to their “near strengths” and measure their improvement against the benchmark.
Your team’s gaps have been filled, near strengths are being improved upon, new deals foster enthusiasm, morale rises, and you become an employer of choice….
You rolled the dice having fixed the odds by utilizing a science based statistical “Predictability of Success” benchmark equaling 85% accuracy; your running the table with new tenancies, your competition turns pale, a smile creeps across your face – you can’t wait for the ICSC in Vegas.
Acknowledgement:
This narrative was extrapolated from research competed by Rutherford International and Dr. Larry Cash, world renowned expert in behavioral based performance measurement. Rutherford International had the top retail leasing executives throughout Canada participate in a behavioral study conducted by Dr. Cash which allowed us to create a behavioral benchmark profile for three specific roles in retail leasing. Proprietary to Rutherford International, the retail leasing benchmarks are able to determine within 85% predictive accuracy a person’s potential for “high performance.” We’ve established similar propreitary benchmarks for a number of key key real estate, finance and investment functions within the global real estate community. Other than improving hiring success, sample application of the benchmarks are: identify hidden organizational talent, develop succession strategy, determine team gaps, target employee development, career counseling and avoidance of improper hiring litigation. A copy of the research highlights may be acquired by connecting to Forbes Rutherford’s LinkedIn account.
About the Author:
Forbes provides executive search, facilitates the creation of strategic partnerships/alliances, including the management of a roster of turnaround specialists. He supports real estate, finance, investment, construction, infrastructure, logistic’s, resorts, specialized manufacturing and private equity firms who face complex organizational challenges within a changing global marketplace.
His business strategy is directed towards establishing a long-term “trusted advisor” relationship with an exclusive mix of international contacts and clients. His company’s private network spans 727,200 individuals and supports the following business verticals: Commercial & Retail Real Estate; Planned Lifestyle & Resort Communities; 3P, Airports, Infrastructure & Civil Construction; Integrated FM & Corporate Real Estate; Private Equity Investors; Life Sciences & Bio/Nanotech; Nuclear, Cleantech & Sustainable Technologies; International Trade & Logistics; Business Continuity & Corporate Security; Retailers and Corporate Turnaround.
Company’s Owned:
1. Rutherford International – Executive/Board Search, Turnaround, Private Equity, Succession Planning
2. NEXTalent Inc. – Staff/Management Recruiting/Assessment
3. REtalentSelect.com – Interactive Ad Agency – Careers in real property & finance (Direct targeting without the cost of a recruiter.)
4. REjobnet.com – International Real Estate Job Board – soft launch August/2012
Specialties:
Executive Search, Project Team Development, Private Equity Matching, Strategic Alliance and Partner Search, Restructuring & Turnaround Advisory, Succession Planning, Scientific Behavioural Analysis