By Matt Slepin
At a recent meeting of the Urban Land Institute (ULI), I had the opportunity to lead a panel of three post-Boomer real estate executives to think about new generation leadership in a still fairly old-generation business. What these leaders had to say will be obvious to many executives across a variety of industries but maybe surprising to people in the real estate world.
The culture of the real estate business has forever focused on the art of the deal much more than the discipline of building a great company. As panel moderator, I wanted to explore the balance between deals and company, especially with a group of next generation leaders. The revelatory insights from this panel show why a focus on the business platform, the foundational underpinnings of the business, is essential to facilitating deals.
Our panel had two leaders of investment managers and one leader from a regional, vertically integrated investor/developer. The panelists included Jason Kern, CEO of the Americas for LaSalle Investment Management, who has been in the chair for about three years, Amy Price, COO of Bentall Kennedy, who has been in the chair for about four years, and Chris Payne, managing director at SARES REGIS Group, who has been in the chair for about two years.
What Makes a Culture?
The real estate matters. Of course. Senior leadership is tasked with facilitating deals and with being savvy allocators of capital and managers of risk. This we all know. But, for companies with a long term perspective, the business cannot be just a collection of deals, it has to have a sustainable business model that outlasts any one deal or any one leader. Hence, for all three leaders, they are spending equal or greater effort in support of and in service to a strong, positive corporate culture.
Jason Kern was promoted to CEO of the Americas for LaSalle Investment Management after successfully building the Asia-Pacific real estate advisory business for HSBC. I found it interesting that LaSalle, one of the original generation of real estate investment advisors, picked a relatively young investment banker to lead its business and actually assumed, counter to my thesis, that Kern would bring a deal-first management approach. Quite the contrary, Kern has prioritized the importance of platform and culture. He explained, “Clients very much value longevity, consistency and track record.” Consistency comes from the stability of a reliably productive leadership team. But when you place such a high value on the leadership, what about who comes next? Big companies have a talented bench waiting, and a major reason for them to stick around is the dangling carrot of possible promotion. So the question is, “How do you support your leadership team and demonstrate what clients value, while also cultivating, encouraging, and retaining that next generation of leadership, especially in as established of an organization as LaSalle?”
Solving questions like this has occupied much of Kern’s time as he has worked to balance change and stability, increased opportunities for the bench of younger members of the team, and respect for the relationships, skillset, and institutional knowledge of the tenured leaders. Finding “this balance of supporting the current leadership while cultivating the next generation has been a real challenge,” said Kern, but clearly a major part of his mandate in moving the company forward.
At Bentall Kennedy, Price has embraced what many fear: change. She explains, “We’re looking for people who like the idea of change” and she spends a lot of energy focusing on how to productively harness and indeed embrace the inevitable changes that any company would face.
Creating a culture that embraces change is, as Price describes it, “an important distinction” between “doing deals” and running a company. It underscores that point, again, that focusing on the company itself, fundamentally, is equally important to deals and assets.
At SARES REGIS Group, Chris Payne sees as essential to the company’s success, the nurturing of those high potential managers who may ascend to more senior roles over time. Payne offers that those “ready to spread some proverbial wings require opportunities to explore their capabilities and develop their management skills.” Payne goes on to say, “we as company leaders have to find those opportunities and make them available.” Preparing future leaders requires a long term commitment from senior executives to developing the talent within an organization.
These leaders had obviously given careful consideration to that elusive thing we call “corporate culture.” So it made sense to ask these leaders to weigh the importance of transactions versus organization and platform. Kern was quick to point to supporting the organization as more important. “I’m a baseball manager,” he said, “and my job is to put the players on my team in a position where they’re most likely to succeed” and if this happens then they can expect to generate “the good investment performance that we’ve had historically.”
Payne didn’t say one matters more than the other, but did say he came from a deal background and gets a “smile on my face when I get to look at new deals”, but today is spending much more time on organizational matters, because this focus is so essential to where SARES REGIS is heading. This is a sentiment Price echoes, as Bentall Kennedy recently dedicated significant time to going through a thorough assessment of the leadership, which included outside consultants, management committees, investment partners.
Chris, Amy, and Jason are all post-Boomer generation leaders of companies created by Boomers in an industry that is becoming more and more institutionally driven. For this next generation of leaders in an increasingly institutional and sophisticated business, is there a different set of values to leadership than their predecessors? “Does culture have meaning?” I asked (somewhat rhetorically). Everything these three leaders offered suggests the answer is an obvious yes, even if tough to define or create a headline. The panel was unanimous – the discussion focused on retention, on generational transitions, on creating multiple paths for success, all examples of focusing on building strong, lasting organizations. There is clearly meaning here with a focus that creates stability, provides a foundation for success, and, consequentially, aligns with their investors into the next generation.
Deals are important. Assets are important. Of course. But, as the panel shows, leadership at strong companies spends as much time on culture and platform, maybe even more time, than is spent on deals. The impact is huge. These leaders are making sure that their companies will have staying power and legs, ultimately compelling business both for their employees and for their investors.
About Matt Slepin
Matt Slepin is the Founder and Managing Partner of Terra Search Partners, a retained executive search firm helping real estate companies build great teams. Terra Search Partners serves many of the country’s foremost REITs, private equity firms, pension fund advisors, private developers and owners, family owned businesses and non-profits. Matt writes frequently on matters pertaining to human capital in the real estate business.