Multi Housing News May 2012 : Page 23
management Corporate Culture Are negative perceptions preventing your recruitment of top talent? By Bill Whitlow, Terra Search Partners In our business of retained executive search, we like to talk about “the playbook” our recruits bring when we hire them from a strong company. In our apart-ment practice, this most often means leaders in the industry, particularly Camden, Equity Residential and AvalonBay, who are consistently leaders and best regarded in terms of strong overall systems and culture. Recently, I heard an owner say that he likes to “hire people from EQR” because they are well trained, well motivated and bring a strong approach (i.e., a playbook). But while the term “playbook” is typically eas-ily translated in terms of policies, systems and ap-proach, “organizational culture” is a less tangible concept and often more diffi cult to defi ne. According to one defi nition, organizational cul-ture represents a collective basic pattern of assump-tions shared by people in an organization—a belief system that guides the way they interact with each other and with stakeholders outside the organization. But if asked, many companies in the apartment industry would be hard-pressed to defi ne their own organizational culture. Most often they might defi ne a goal, such as having “a customer centric culture.” However, this characterization misses the deeper meaning and potential benefi ts of embed-ding good culture within an organization. Regard-less of the level of corporate resources or size of your company, the many benefi ts of creating positive corporate culture are too great to ignore. Less turnover Some companies are well known for their turn-over. Conversely, other companies are able to achieve high employee retention, and consequent-ly, a high level of positive recognition within the industry. How does Camden, for the fi fth consecu-tive year, continue to make Fortune Magazine’s list of the “100 Best Companies to Work For in America”? How has Archstone kept so much of its senior team intact through what has been an in-credibly painful transition? I think in both cases, it is because they are companies with strong leaders and culture designed and built from top to bottom. Less corporate drama Camden, EQR and AvalonBay all stand out as companies that have been sticky in terms of their senior management teams. Such level of stability says good things about management and the fi rm, which we believe translates down to the folks in the trenches feeling good about where they work. The way companies treat their associates directly cor-relates to how those associates behave towards ex-ternal constituents such as residents, investors and informed us that employees at this particular com-pany were not treated very well. The executive team had spent no time thinking about creating a positive organizational culture. Consequently, un-happy employees left the company and spread the bad word. The negative perception made it diffi cult to recruit talent. I should add, however, that too much stability within an organization is not always a good thing and can (a) cause less opportunity for people to ` The way companies treat their associates directly correlates to how those associates behave toward external constituents such as residents, investors and even competitors. a even competitors. When your employees have a positive perception of their employer, they are ca-pable of exerting a powerful positive infl uence on everyone’s perception of your company. Greater revenues It is diffi cult to directly tie positive culture to in-creases in performance metrics such as greater rev-enues, occupancies or stock price. But we do know that lower resident turnover and lower associate turnover tie directly to bottom-line performance. It is harder to quantify, but we also know that invest-ments in people, such as training and a positive work-place environment, pay dividends in the long run. The other side of the coin is how a lack of in-vestment and effort to create a positive culture in their organization can wound a company’s efforts in all of the above areas. Again, we are not sure how to quantify this against stock price and per-formance, but we intuitively know that the nega-tive is probably even costlier than the positive is a benefi t. Recently, I took on a client whose company had a reputation as a diffi cult place to work. Within a short time after starting our search, the market move up (and therefore leave) and (b) limit the fl ow of “new blood,” thereby limiting a company’s innovation and perspective. One last thought. This article cites Camden, EQR and AvalonBay as standouts when it comes to culture. While such large fi rms have greater re-sources and are therefore better able to amortize costly overhead programs, companies of all sizes can achieve these goals. Indeed, we have often found that the “mom and pop” organizations have the strongest and most positive cultures, with com-mensurate low turnover rates among residents and associates. No company is too large or too small to succeed at creating great culture and great organi-zation. Highly motivated teams can be found with-in any fi rm that is willing to invest and engage in the “culture building” process. Every fi rm can learn from the successes of others both inside and outside of the apartment industry. MHN Bill Whitlow is a partner with Terra Search Partners, an executive search fi rm that specializes in the real estate industry. www.multi-housingnews.com | May 2012 23
Management: Corporate Culture
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