The role of the Corporate Real Estate (CRE) executive is changing rapidly. The increasingly-challenging operating environment combined with continued attention from senior company executives putting unprecedented pressure on the CRE function. Today’s CRE leaders are transforming into multi-skilled professionals in order to respond to these increased expectations.
The transformation process shows CRE executives shifting from a technical, one-dimensional role that requires hard skills, to a multi-dimensional role demanding multipurpose and soft skills. To fill this expanded role that focuses on clients, solutions and strategies, CRE leaders need to possess the right tools. Here, we look at the requisite capabilities needed not only to effectively contribute to the business, but also to boost an individual’s career as a CRE executive.
Facing the Pressure
CRE leaders succeeded in capturing senior management’s attention as they rose to the challenge during the Global Financial Crisis (GFC) to help their organisations to meet aggressive cost management objectives, which in some cases was a requirement for survival. According to a 2008 survey by CFO Research Services, 85 percent of Chief Financial Officers (CFOs) viewed CRE as important in achieving corporate strategies. However, only 40 percent of them considered it aligned to business planning. Today, the Jones Lang LaSalle Global CRE Survey – 2011 shows that two in three CRE leaders manage objectives that are part of the wider business strategy; this figure is expected to reach 74 percent, three years from now.
Although functional expertise and deep real estate intelligence are still needed to understand the ins and outs of the industry and to make informed decisions, mastering technical real estate skills is no longer enough. Indeed, CRE leaders are moving towards fulfilling a strategic and relationship role, which defines a new value proposition.
Several surveys illustrate the shift from hard to soft skills. When asked in the 2010 ‘Best Companies for Leadership’ survey what they value the most in their leaders, the top 20 global companies valued strategic thinking most highly-nearly 20 percent more than the other companies surveyed. They also said that they value technical competence much less, nearly 40 percent less than the other respondents. These top 20 companies were complex, global organisations where people are expected to lead regardless of whether or not they have a position of authority.
Legacies of the GFC have increased the pressure on CRE teams. The capacity to develop more flexible and valuable CRE strategies depends on effective and regular engagement with business leadership. Jones Lang LaSalle’s Global CRE Survey – 2011 suggests that this dialogue is emerging and, going forward, will provide a platform for a step-change in the role, remit and structure of the CRE function.
Align these results with JLL’s survey where respondents from 36 countries said that they are concerned about the structure and skills of their CRE teams. They indicated that a new talent requirement is emerging, which resulted from a tougher operational environment, forcing CRE leaders to rethink team structures and skills. This trend is creating an opportunity for CRE executives to step up and become even more well-rounded leaders, and to find new ways to meet growing technical requirements through partnerships.
CRE leaders must display a vast combination of capabilities if they are to advance their careers and fully contribute to the business in today’s environment in accordance with their company’s evolution. They have to endorse the diverse roles that deal across cultures and business units and exhibit the following behavioural dimensions such as:
Dealing with Ambiguity – Adapting and managing change, as turbulence, cross-cultural issues and matrix organisations are viewed as ‘business-as-usual’
Shifting Focus – Putting the needs of others first and being a great listener; engaging and empathising with them
Pragmatic Flexibility – Being flexible and willing to compromise on everything except ethics and core values
Honing People Attributes – Appreciating differences and responding to people as individuals; owning HR and talent development in growing and developing people. With the CRE role becoming more complicated, delegating means relying on more people. The quality of talents and the capabilities of the service-provider teams will be important determinants of success.
Besides managing across these behavioural dimensions, CRE leaders have to master four key sets of skills as they grow their teams, function and careers, while locking in their ‘seat at the table’. Aligned with technical proficiency, the skills of the strategist, value creator, agile manager and savvy communicator are what CRE leaders need to hone.
Being reactive is no longer enough. Research has shown that companies are finding ways to factor in CRE considerations early in the strategic planning process. CRE managers are increasingly aligning their function with the company’s overall strategy. Sound business judgment, along with medium-term and long-term perspectives, is needed and must be supported by solid business cases or alternative scenarios that can be submitted to the C-suite.
Thus, analysing business intelligence at an early stage and spotting trends affecting the business or the economic environment can help to anticipate external changes. Effective CRE leaders will increasingly strive to use these transformational forces to the company’s advantage, to protect it or to seize opportunities to contribute to its bottom line. Sustainability is a good example of a trend where CRE can clearly take the lead. Informed CRE leaders who have understood the strength of environmental issues before their competitors, and who have become early adopters of green measures have positioned their companies ahead of the pack, thus driving significant branding, financial and productivity benefits.
The C-suite will embrace the CRE leader’s ability to handle complexity and to clearly articulate CRE issues and options. Complexity arises from potentially conflicting assignments, such as finding solutions to run the business as efficiently as possible, while also simultaneously preparing for future business transformation. This is made more challenging by the need to ensure stakeholder satisfaction, from employees to customers, and from investors to regulators
CRE leaders are expected to be solution oriented and to contribute creatively. This quality will be particularly sought after in emerging countries, where best-in-class solutions from developed markets may not necessarily apply. Beyond their own creativity, CRE executives also have a key role to play in fostering company-wide innovation. JLL’s survey reveals that at present, 90 percent of CRE executives are required to show greater innovation and to be more solution orientated. Many of them are turning to service providers for innovative solutions to the challenges they face, and 89 percent already have or will do so within the next three years.
Coping with corporate change faster than competitors is critical in today’s fast-moving world. In a post-merger context for example, workspace is one of the most visible and effective ways to facilitate a cultural change. CRE leaders, empowered as agents of change, can create the necessary platform from which the C-suite will drive corporate evolutions. The survey also points out that CRE executives are being challenged to drive workplace mobility programmes, enable portfolio flexibility, establish new partnerships with service providers and restructure their CRE teams. All of these will require the CRE executive to become a change manager and accelerator.
For many businesses, real estate is one of the largest operating expenses. CRE leaders can help the organisation to pay attention to the sometimes-dormant value of real estate. They can ensure that real estate is not considered a burdening heritage, but that it is leveraged as a strategic resource. The workplace offers many possibilities to enhance productivity by designing an optimised environment that streamlines costs and reduces lead time, while stimulating communication, skill transfer and cross fertilisation.