Want to increase your profits, connect with your tenants, hire top talent and stay on the cutting edge of the commercial real estate industry with a single business strategy?
This isn’t clickbait—there is a single approach that can help your company accomplish all of this: Make diversity and inclusion major priorities.
Fostering a diverse, supportive work environment is increasingly being viewed as a critical business strategy rather than a moral calling. "Many people think of diversity and inclusion as nice things to do, but that way of thinking is out of date," says Tony Perez, senior vice president of Account Management in Occupier Services for Colliers International. Diversity refers to more than just race; it includes socioeconomic and cultural background, age, gender, sexual orientation, religion—essentially everything that makes up an individual. When a company lacks diversity, particularly in leadership roles, it is only benefiting from a narrow window of human experience.
Emerging data shows that companies with higher levels of diversity reap greater profits. Researchers at McKinsey & Company found that companies that scored highest on gender diversity are 15 percent more likely to have financial returns greater than their respective national industry medians. Similarly, those in the top 25 percent for racial and ethnic diversity are 35 percent more likely to have higher returns. That kind of competitive edge can make the difference between a company that is still profitable in 10 years and one that’s just a memory.
Luckily, any company can start moving towards a more diverse and inclusive culture. "This is a business imperative and it should be treated like any other," urges Perez. "Set goals, make a plan. This is a way to help you make more money, advance your career, attract more customers, make better decisions, keep your employees engaged. It’s worth the effort."
A LEGACY INDUSTRY
First things first: While strides have been made, commercial real estate as an industry continues to have a diversity problem. According to a recent white paper by Commercial Real Estate Women (CREW) Network, women hold only 9 percent of C-suite positions in the industry. Women of color and members of the LGBTQ community are even less represented. No matter what statistics you look at, leadership in commercial real estate is overwhelmingly white and male.
"Lack of diversity in senior leadership positions happens in almost every industry, but commercial real estate has some unique challenges," notes Holly Neber, CREW Network president and CEO of AEI Consultants. "This is an industry that operates heavily on personal connections, networks and family firms, which means not everyone has access to what you need to be successful." Companies themselves may be inherited, often passed down from one generation to the next.
While most industry professionals would probably agree this isn’t ideal, is it really a crisis? In an industry that values innovation, flexibility and adaptation, this level of homogeny is a major liability. Working environments where everyone has a similar socioeconomic background, education and culture are less likely to generate new ideas or consider all possible outcomes. As Perez puts it, "I’m Puerto Rican, and if the C-suite was all Puerto Rican men, we’d fail because we’d all be thinking too similarly."
The CREW Network report cites research from the Harvard Business Review that confirms this thinking: "Diverse leaders were more likely to create an environment where new, creative ideas were considered. And, diverse teams, they found, were more likely to have some shared experiences with their end-user. With this advantage, teams created better products." In a time when "experience" is a major watchword in the industry, understanding different possible perspectives and needs can be incredibly valuable.
Creating stronger connections with tenants is another big benefit of diversifying staff. Chris Perri, global alliance director for Global Workplace Solutions at CBRE, says that his company is seeing results from making diversity and inclusion a major priority. And, he’s not alone.
"Any customer feels more comfortable with someone who understands and appreciates their background, their culture," agrees Colliers’ Perez. "Our customer base reflects the demographics of this country, which means our industry should, too." Neber also is in agreement: "There is no question that having women in leadership, for instance, positions companies to better anticipate the needs and preferences of female clients and tenants."
For these benefits to be realized, diversity has to be authentic. A company might be tempted to appear more diverse by promoting a single individual to a senior leadership position, for example. Shallow efforts are easy to spot and they don’t replicate the benefits of having a wide range of creative thinking within an organization, as well as lived experiences that echo those of the consumer base.
"If your leadership is truly committed, it will resonate," says CBRE’s Perri. "If your leaders are just giving lip service to this issue, nothing will change." What’s more, these superficial efforts may be actively harmful. "The younger generations are exceptionally good at recognizing when companies are being inauthentic. Faking diversity and inclusion is only going to tarnish your image," explains Perri. Authentic efforts should be approached like a business strategy with concrete, measurable goals and metrics for success, rather than a vague commitment to the ideal.
It’s a cliché in the industry that no one grows up dreaming of becoming a commercial property manager, so most people stumble into the industry by chance—often getting their first job through a friend or family member. This means companies need to actively recruit from a large pool of diverse talent in order to change the makeup of their staff.
Perri works to recruit incoming talent for his company from business schools, and he says creating a talent pipeline is key. The CBRE Diversity Scholars Program offers a two-month, paid summer internship designed to prepare students from diverse backgrounds for a career in commercial real estate. "Programs like this pay for themselves many times over; we have recruited so many talented young professionals who went through this program," he shares. These programs need to be tied to specific goals and a larger overall plan, or they risk becoming vanity initiatives that don’t lead to real results.
In an industry struggling to find and recruit talent, tapping into whole new networks can offer a huge advantage. For example, Perri says that CBRE makes a concerted effort to recruit from historically Black colleges and universities. Casting a wide net and posting jobs with schools or professional organizations outside of where a company normally hires can make a significant difference.
CREW Network’s research reveals another potential strategy for opening up the field of candidates: Drop college degrees as an automatic requirement—or, at least, consider nontraditional majors. According to CREW Network’s latest publication, the "current pipeline of college graduates in the real estate field is very narrow and predominately male." Instead, hiring managers should look at core competencies and skills.
It also helps to be intentional about your overall hiring strategy. "Commercial real estate tends to do a lot of hiring during economic booms, which means these efforts can sometimes be rushed or haphazard," says Perri. "Larger organizations are more likely to have the flexibility to look at their hiring practices and do long-range planning, but any organization can look critically at their practices and improve on them."
CBRE also supports a variety of affinity groups—networks based on an identity, such as LGBTQ or military veteran. Each group has been founded by a CBRE employee and is linked to someone in senior leadership to ensure support is available. Perri believes these are important spaces for employees to share similar experiences and find additional support. These groups also are important for fostering workplace culture: "Many of our employees sit in a client facility, so they don’t interact with their CBRE colleagues on a daily basis," Perri says. "These groups are another reason for them to come into our offices and connect with the rest of the company."
These identity-based networks can work well for some organizations, but no company should solely rely on them as a diversity and inclusion strategy. "You can’t be effective with a passive approach," explains Perri. "You need concrete goals and real numbers." If an approach is failing to produce results, there needs to be accountability in place.
Colliers’ Perez agrees. "The best organizations understand that this is a foundational aspect of their business. That’s when you know people are serious and understand this issue." Goals should be explicitly stated and, as with any organizational goal, there should be consequences within the organization for falling short.
DO PEOPLE WANT TO WORK FOR YOU?
If diversity means bringing a broad range of people into an organization, inclusion means allowing them to prosper once they get there. A company isn’t truly inclusive if whole departments remain mostly homogenous or if the senior leadership all looks the same.
This kind of lopsided "diversity" speaks to the kind of inauthentic approach that will alienate many young professionals. "When I step onto college campuses and ask young people what they are looking for, there’s so much more focus today on the culture than on career path or even compensation," says Perri.
Importantly, lack of representation in senior leadership also conveys important information to potential employees about career paths and compensation. Tosha Clay, LEED AP O+ M, CPM, regional asset manager for Physicians Realty Trust, considers looking at the makeup of a firm as part of due diligence in considering a job. "When I interview for roles, I look at who the senior leaders and executives are in that organization," she says. "If I don’t see diverse representation at the senior level, it does cause me to pause and ask myself whether my opportunities for professional advancement might not be limited there as a Black woman."
This is not unfounded. CREW Network’s report cites research that women are promoted more slowly than men and are less likely to be considered for senior leadership positions. Women have a harder time finding mentors than their male counterparts. If a company has never promoted anyone who looks like you, it’s reasonable to wonder if they ever will. "Being the first at anything is a really difficult road," notes Clay. "It’s not the path of least resistance; it’s going to be hard. Not everyone has the willingness to be a trailblazer, and we should not expect that from anyone."
Instead, companies that are doing diversity and inclusion well tend to have an exceptional workplace culture overall. Clay says her current company, Physicians Realty Trust, is the best place she’s ever worked. "It’s about making people feel valued," she explains. "My viewpoints are taken seriously here. Our CEO takes the time to connect with the employees—I even have his phone number. There’s no sense that I’m being excluded."
Colliers’ Perez emphasizes that truly inclusive environments allow people—for example, LGBTQ employees—to be "their whole selves" at work. "If you feel like you can never talk about your spouse or your family at work," he explains, "that means you can’t chit chat about your weekend with your colleagues, you can never fully relax and you certainly can’t do your best work."
True inclusivity extends to informal work settings where deals or connections may be made "off the clock." "If I’m working in a company where important conversations are happening and decisions are being made on the golf course or at a dinner party, I may not get an invitation to those events, which means I’m at an automatic disadvantage," Clay says. "It can be very difficult to break into those types of social circles within an organization." In some cases, employees may be unable to participate in these social events, due to a physical disability or a religious restriction. Employers need to ensure that no one is being excluded from material conversations.
Companies also must ensure they are compensating people fairly. CREW Network’s 2015 benchmark study found that women in the commercial real estate industry earn 23.3 percent less than men. Employee salaries should be scrutinized on a regular basis to ensure equity. This may mean changing the organizational compensation model. For example, "commission-based compensation can be a deterrent to women, since they typically cannot rely on the same number of referrals and connections as their male counterparts," explains Neber. Make your company’s compensation—including bonuses and commissions— more transparent to both ensure and broadcast equity.
For companies that are interested in strengthening their business through a commitment to diversity and inclusion, there are plenty of resources available. Start by doing an honest assessment of the current workplace culture and setting goals for improvement. To some extent, that requires a shift in mindset.
"Whether your organization is small or large, there are things you can do that cost nothing," says Clay. "Pay attention to who you invite to your meeting. Pay attention to who is talking. Actively invite people to present or share their perspective so they are empowered to become an active participant and not just a fly on the wall."
In fact, companies who haven’t made diversity a priority may be a self-correcting problem. "If your company is full of people who all look the same, come from similar backgrounds, share the same culture, your company won’t be successful in five or 10 years," says Perez.
Both individual and organization-wide behaviors can make an impact, and this shift should not be seen as a burden, but an opportunity. Creating a strong diversity and inclusion strategy for your company now may be the best thing you can do for your bottom line.
This article was originally published in the November/December 2019 issue of BOMA Magazine.