CPN - January 2009 - (Page 12) New Strategies Companies Reevaluate Approaches to Hiring, Compensation for Best Mix of Efficiencies, Talent By Suzann D. Silverman ncertain times are causing commercial real estate executives to reexamine their companies. A relatively quiet investment and development market is, not surprisingly, leading to a reduction in hiring and in some cases layoffs, along with a number of executive changes at public REITs. A falloff in asset value suggests that reduced compensation packages are in order, as well. But smart companies are thinking about the future. “Executives are reviewing long-term goals, reevaluating core businesses, seeking new operational efficiencies and addressing human capital and compensation opportunities,” observed Michael Herzberg, co-chairman & coCEO of FPL Advisory Group. He commented in conjunction with the annual CPN-FPL executive hiring and compensation study, produced for CPN by FPL Advisory Group’s executive recruiting arm, Ferguson Partners, and its consulting practice, FPL Associates. Executives are targeting areas for expansion or new spheres for their firms to enter and are searching for the right people to lead those initiatives. And there is no time like the current eco- U THE ANNUAL & EXECUTIVE HIRING AND COMPENSATION STUDY nomic period to pick off choice talent.“Given very challenging market conditions, in the coming year, leading industry players are expected to make targeted strategic moves to take advantage of dislocations in the marketplace,” observed William Ferguson, co-chairman & co-CEO of FPL Advisory Group. The emphasis is on executives who can drive value and cash flow,primarily asset managers but also operations and finance experts. That is taking place around the world, though to varying degrees.“The highest growth markets through most of 2008 were Brazil, India and other economies and geographies that are just now maturing as free-market capitalist societies,” noted Ferguson Partners Ltd. managing director Robert Mayes.“(But) they are no longer immune to the meltdown in the financial markets.” Latin America and the Caribbean are faring better than other areas, though hiring there is limited to specific areas of expertise. Canada is also in better shape than are the United States and markets overseas. In Europe, asset managers, CFOs and COOs who are good housekeepers are in demand, and firms are positioning for improvement as early as 2009, according to Serena Althaus, managing director of Ferguson Partners Europe Ltd. “Firms are repositioning with an aim to start the New Year with a clean balance sheet,” she said, noting that lenders are forcing them to reduce their debt by whatever means possible. In the Asia-Pacific region,firms are looking for people who can grow and run businesses, according to Peter Rackowe, managing director of Ferguson Partners Japan.And with a need to change strategy to deal with bankruptcy or to purchase distressed assets, companies are seeking executives who have corporate merger-andacquisition experience rather than just pure hard-asset real estate experience.“There will be a need for aggressive executives with strong value-add asset management skills,” Rackowe said.Still,“good acquisitions people are always in demand,” put in Andrew Peck,managing director of Ferguson Partners Asia Ltd. in Hong Kong. In the United States, the reduced asset performance is increasing pressure on compensation, according to Herzberg. But rather than simply reducing incentive payments, companies are now determining compensation differently, eschewing the traditional score-card approach to performance rating for a holistic view, considering outside influences and efforts in addition to end results. That does not mean that end results are out the window, however. Jeremy Banoff, managing director of FPL Associates, agrees that companies are taking a different approach but added that overall payouts are likely to be lower. Still, companies do need to determine achievable bonus programs. —Reach editor-in-chief Suzann D. Silverman at suzann.silverman@nielsen.com. 12 COMMERCIAL PROPERTY NEWS • January 2009 • www.cpnonline.com Illustration: Mark Bischel © Images.com/Corbis http://www.fplassociates.com http://www.cpnonline.com
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