Sunday, March 9, 2014

Identifying Retail Leasing Talent




Identifying Retail Leasing Talent
By Forbes J. Rutherford, Rutherford International Executive Search Group Inc.,
Toronto, Calgary, 855-256-5778

About the Author: Forbes Rutherford http://ca.linkedin.com/in/rutherfordintl  leads a consortia of talent acquisition companies that allow clients to attract talent at any price point along the recruiting value chain. Rutherford International (www.rutherfordinternational.com) is an executive search and management consulting firm that supports a network of real property, private equity, venture capital and investment management firms with identification and behavioral assessment of executive talent. Furthermore, we offer rapid on-boarding and departmental enhancement strategies that can reduce time to proficiency for critical front-office functions (including sales) by 30 to 50% compared to traditional training protocols.  See: http://tinyurl.com/rutherford-group to review our integrated approach to talent acquisition.

The following is the first of a serialized article detailing the results of behavioral study conducted by a leading behavioral scientist and sponsored by Rutherford International Executive Search Group Inc. (www.rutherfordinternational.com). Through a marriage of actuarial and behavioral science, the study benchmarks the success attributes of Canada’s top retail leasing executives in the following functions: Senior Retail Leasing Manager/Director; Greenfield Leasing Manager/Broker (included repositioning of existing assets) and VP Retail Leasing. Preliminary results to date are considered 86% accurate, and the study will be expanded into additional global markets to yield additional data. The article is serialized over the month of March with brief entries published each Monday.

In my capacity as an executive search professional in real estate, I’ve been a keen observer of shifting trends in organizational design and talent for the past 30 years. Within the last decade, Baby Boomers in management have started to give way to Generation X and Y with the Millennial generation rapidly filling junior and intermediate leasing roles. This generational shift was clearly evident at last year’s ICSC conference given the number of fresh faces attending broker and owner leasing booths.

These fresh faces caused me to wonder how they may have been selected for their retail leasing role and who in the crowd had the capacity to become succession candidates to management. Some had recognizable surnames, all were eager and all were excited by the prospect of beginning their careers in a function that is foundational to creating value and a traditional springboard to promotion within the industry. The seeming promise of this pool of talent in the room seemed incongruent with the lament of old guard industry leaders who confided their frustration that for every 10 junior retail leasing representatives or agents they hired, only one would exceed their expectations.

Darwinian approach to talent selection

This lament is frequently followed up with the additional complaint that after two or three years developing a protégé’s expertise, the risk of s/he being poached by a competitor was high. It was an extraordinary statistic. Imagine hiring ten junior/intermediate leasing representatives to get one that merits promotion to Senior Retail Leasing Manager, only to run the risk of losing him or her to competition. These are odds even Vegas wouldn’t consider. Admittedly this 10:1 ratio is founded on anecdotal evidence and likely an exaggeration, however even if the ratio were 5:1, it remains an extraordinary admission of failure in the ability to identify potential leasing talent.

How should executives mitigate hiring risk when selecting a junior retail leasing representative – without resorting to a Darwinian approach to talent selection?

The answer and resolution to this question is available through a research study conducted by a renowned organizational behavioral scientist and sponsored by Rutherford International. The study benchmarked the behavioral profile of a cross section of some of Canada’s top in-house and broker retail leasing executives. Of the 85 behavioral traits assessed, we found 20 traits that are within varying degree core attributes to the high achievers in three studied retail leasing positions: Greenfield Leasing Executive/Broker; VP Retail Leasing and Manager/Director Retail Leasing.

The observations in this study are provocative

Traditional Approach to Hiring
At present the emphasis by hiring managers is on screening for traditional sales personality characteristics, perceived industry network and apparent track record when assessing prospects with experience. In the case of hiring an inexperienced prospect, the industry tends to screen for traditional sales characteristics solely. As indicated above, however this approach typically yields poor results.

In fact, the study observes:
Observation 1: The use of typical sales profiles would not successfully predict high performance in any of the three retail leasing roles as little or no correlation exists between the behavioral attributes of successful salespeople and that of high performing retail leasing professionals.

The observations in this study are provocative, and underscore the importance of early assessment of the behavioral strengths of leasing representatives and placements that can effectively leverage those strengths. Read the example of a retail executive following a successful science based hiring approach prior to the Vegas ICSC conference here: http://tinyurl.com/vegasandleasing.

ABOUT THE STUDY
Underlying Science behind the Study: Job Component Validity (JCV)
 Our approach to establishing a benchmark for retail leasing performance is based on a selection methodology known as Job Component Validity. Grounded in formal actuarial science, this single standard system has the potential to revolutionize hiring. Major thought leading publications such as Science Daily, American Psychologist and the International Journal of Selection and Assessment have pointed to the ability of JCV to accurately identify almost anybody for anything in 1/1000 the time and cost.

Potential to revolutionize hiring

In the world of psychometric assessment, industry is served by a myriad of tools designed to categorize and slot an individual’s personality into an understandable quadrant or color code. It’s a confusing array of choices for the layperson. Even the categorization is perplexing:
  • Category 1 assessments are often clinical based, highly accurate and designed to provide the user with decisive options without having met the candidate;
  • Category 2 assessments are accurate within 60-70% of predictive validity but require a behavioral interview to validate findings; 
  •  Category 3 assessment tools are often characterized by their cheap and cheerful price and are most often used for staff and middle management hiring. They tend to emphasize personality type, offer no predictive correlation for success on the job in question. In fact the predictive validity of this category is so limited that the governing body of American Psychologists will fine any member found to be using one popular C3 assessment tool as a basis for hiring.
 A fundamental weakness with both Category 2 and 3 assessment tools is their lack of granularity insofar as only 26 to 50 overall character attributes are considered (few actually assess more than 35). A person’s behavioral DNA is a highly complex interplay of attributes. Limiting the number of assessed attributes when calculating Job Component Validity significantly diminishes the predictive accuracy of the assessment.

A further weakness of these tools is the authors’ penchant to dumb down the results in a manner that’s meant to be understandable to the layperson, with explanation from a certified consultant. The output is often fancy, but lacks scientific rigor.

Behavioral DNA is highly complex sequence of attributes

Predictive Validity of the Retail Study
The granularity of our benchmark is the result of a Category 1 instrument which measures 85 statistically distinct behavioral attributes. No assessment tool is 100 percent accurate; however, the synthetic validity* of our methodology can be used to estimate predictor validity in these situations within 86 percent accuracy.

Note: “Synthetic validity is a logical process of inferring validity on the basis of the relationships between components of a job and tests of the attributes that are needed to perform the job components.” International Journal of Selection and Assessment

Data Collection
Rutherford International handpicked the national survey sample based upon industry referral, a sound understanding of the three position requirements as well as having a long familiarity with each participant’s perceived high rated proficiency either within the industry or their company.

The sample highly rated performers within each of the three retail leasing roles were asked to complete an online survey. Most individuals competed it within approximately 90 minutes, but there was no time limit and the assessment could be done over several shorter periods rather than one sitting.

Core Behavioral Traits Identified – Retail Leasing
Our assessment instrument measures 85 statistically distinct Behavioral Attributes (few assessments measure more than 30) and 35 Career Themes (few measure more than 10) which interface with more than 2500 Occupational Titles….few tests measure more than 200 career titles.

Of these 85 statistically distinct Behavioral Attributes, we identified approximately 20 attributes that a successful Manager, Retail Leasing, Vice President Retail Leasing and Greenfield Leasing/Broker as a professional group demonstrated to a higher degree than the typical employed population.

A sample of the identified behavioral attributes common to this professional group are: Self-Expression, Analytical Thinking, Assertion, Initiative, Fraternity, Stamina (Physical and Mental), Stress Tolerance, Seeks Adventure/Change, Visibility (Outgoing, Extroversion, and Desire for Social Attention.)

STRATEGIC QUESTIONS TO CONSIDER WHEN HIRING
As I scanned those fresh faces in the ICSC crowd, four questions came to mind that science based hiring and resource management can resolve. Elements of these questions will be addressed over the coming weeks:
  1. Imagine if it were possible to quickly assess the individual members of your retail leasing team’s potential for near to high performance.
  2. Conceive the efficiencies achieved if you could balance your leasing team’s effectiveness, ensuring within 86% of predictive accuracy that the leasing manager best suited for green field is attached to the development project, while the leasing manager best suited for infill leasing focuses on the existing portfolio.
  3. What is the impact on team morale of promoting your star leasing executive – who lacks the capacity to manage others – out of a desire to retain him or her? How might that promotion sabotage the very goals you set out to achieve when that leasing executive’s poor management skills begin to surface?
  4. What savings in acquisition and retention could you achieve and how much compression in project timelines could you recover if your new hires had the behavioral profile equal to or better than the top retail leasing executives in the country?
SUMMARY OF STUDY RESULTS

1. Core Attributes Relative to Traditional Sales Benchmarks
Initially, all the participants’ scores were compared to our behavioral scientist’s Sale Agent/Broker/Distributor profile which has a high degree of accuracy in predicting performance within a wide variety of industries. While all individuals participating in the research were rated as consistently “exceeding” performance expectations in their specific retail leasing role, less than 25% of the participants in the sample scored 60+ on our non-real estate “Sales Agent/Broker/Distributor” benchmark. Even when we compared respondents to his generic Sales Representative benchmark, fewer than 45% scored in the 60+ range of this profile.

Less than 25% of the participants in the sample scored 60+

(Note: 60-69 scores on either of the mentioned sales profiles would predict that individuals scoring in this range have a 50% probability of being rated as ‘high performer,’ a 30% probability of being rated as ‘typically meeting’ performance expectation, and therefore an 80% probability of being rated as ‘meeting or exceeding’ expectation.)

Clearly, the use of standard sales profiles would not successfully predict high performance in any of the three roles under study. The behavioral characteristics demonstrated by successful retail leasing professionals is quite different than those necessary to succeed in traditional sales positions.

2.     Greenfield Leasing Representative/Broker
In this category, we identified leasing professionals that have a clear track record in substantively repositioning a retail center though tenant re-mix and/or front-end development leasing using a set of drawings or executing on the owner’s vision for the dirt. We wanted to determine if there was a clear incongruity in behavioral attributes between a professional responsible for Greenfield leasing and a leasing professional responsible for leasing a stable portfolio. A clear distinction does in fact emerge.


Observation 2: 
A “Probability of Career Success Score (POS),” or “Predictor of Success Score” ranging from 60-80 suggests that only 25% of Retail Leasing Manager/Directors and 42% of VP Retail Leasing have the wherewithal to be “High Performing” in a Greenfield or asset repositioning leasing environment.

Observation 3: 
Not a single Vice President, Retail Leasing nor Manager, Retail Leasing participating in the overall survey group and who were excluded from Rutherford International’s Greenfield participant list scored within the 60 – 80 range of the Greenfield Predictive Profile.

Observation 4: 
An actuarial extrapolation of survey results would suggest that 75% of Manager’s, Retail Leasing employed by Owners/Managers do not possess the fundamental success attributes necessary to be effective in Greenfield leasing (includes repositioning of a retail asset).

Observation 5: 
Furthermore, given the Manager Retail Leasing’s poor score in the attributes critical to the Greenfield benchmark, we believe that employee development programs designed to improve these behavioral attributes will have little benefit.

What does this mean?
We are confident that this Greenfield Leasing Predictive Profile can be successfully applied to predict who would be successful in the front-end leasing or repositioning activity of a retail development.

How information can be applied.
Assuming relevant education and experience with the lease document and nuance of the business are in hand, we can predict with 86% accuracy as to whether the individual has the wherewithal to be “high performing.”




3. Vice President Retail Leasing

In this category, we identified approximately 20 distinct behavioral attributes that a successful Vice President Retail Leasing demonstrates to a higher degree than a successful Manager, Retail Leasing. The ‘Mean Score’ for these 20 distinct behavioral traits achieved by VP participants in this benchmark was 64% whereas the ‘Mean Score’ for the same traits by Managers, Retail Leasing was 39%. This would suggest that a significant percentage of Senior Managers, Retail Leasing do not have the behavioral wherewithal to become even average VP Retail Leasing executives.


Observation 6: A “Probability of Career Success Score (POS),” or “Predictor of Success Score” ranging from 61-82 and deemed to be “Near to & High Performing” was achieved by 50% of the VP Leasing participants, while the remaining 50% scored between the 50-58 range on the POS for this role.



Observation 7: Only 33% of Managers, Retail Leasing participants that were not part of the Greenfield Leasing profile scored within 50 – 55 on the Vice President, Retail Leasing Predictive Profile. An additional 50% of Managers, Retail Leasing participants scored 14 – 46 range of this same sample which means a total of 88% of Managers, Retail Leasing scored less than 55 on the Vice President, Retail Leasing Predictive Profile for Success.

What does this mean?
The “Mean” age of VP Retail Leasing executives within Canada is somewhere between 45 and 55 years of age. When one considers the limited number of high performing executives within this group in conjunction with the weakness for high performance identified at the Manager level, we believe that the Canadian retail owner/developer will likely face succession challenges for the next ten years.

Owner/developers will face succession challenges for ten years.

Through our benchmark, companies are able to assess the success potential and manage the career trajectory of their rising management stars in a manner that meets the strategic needs of the firm’s growth. A statistical analysis suggests that a significant percentage of Managers, Retail Leasing do not possess the fundamental attributes to be successful in the role of VP Retail Leasing; nor are they likely to increase their score in regard to these specific attributes through employee development programs.

We are confident that this VP Retail Leasing Predictive Profile can be successfully applied to predict who would be successful in this role.

How information can be applied.
Assuming relevant education and experience with the lease document and nuance of the business are in hand, we can predict with 86% accuracy as to whether the individual has the wherewithal to be “high performing.”
 
4. Senior Manager, Retail Leasing
Of the entire sample of retail leasing professionals we determined that 72% had the critical behavioral attributes to achieve a high level of performance in the role of Senior Manager, Retail Leasing. Within this grouping of 72%, only 39% of incumbent Senior Managers, Retail Leasing perform at the same level as their superiors and Greenfield colleagues.

Observation 8: A “Probability of Career Success Score (POS),” or “Predictor of Success Score” ranging from 60 - 90 and deemed to be “Near to & High Performing” was achieved by 72% of the overall retail leasing sample, while the remaining 28% achieved a POS rating as “Typically Meeting” expectations.

What does this mean?
Statistically, a high percentage of retail leasing professionals possess the necessary qualities deemed necessary to be “high performing” in the role of Senior Manager, Retail Leasing (responsible for stable assets.)

This is not the case however with respect to the repurposing of or development of retail assets, where it’s evident that a significant number of the retail leasing professionals currently employed by Owner/Developers do not have the behavioral foundation to “high perform” in these roles.

Our leasing benchmark optimizes the prediction of performance

How information can be applied.
Through our benchmark, companies are able to assess the success potential and manage the career trajectory of their rising management stars in a manner that meets the strategic needs of the firm’s growth. A statistical analysis suggests that a significant percentage of Managers, Retail Leasing do not possess the fundamental attributes to be successful in the role of VP Retail Leasing; nor are they likely to increase their score in regard to these specific attributes through employee development programs.

We are confident that this Senior Manager Retail Leasing Predictive Profile can be successfully applied to predict who would be successful in this role.
Assuming relevant education and experience are in hand, we can predict with 86% accuracy as to whether the individual has the wherewithal to be “high performing.”

Commentary on Study Impact and Use of Information

“Increasing the internal talent ratio”
Your next great leasing executive may be in finance or property management. Rarely does one witness a retail property manager transferred into a key leasing role. Hiring risk is generally the reason for this reticence on the part of management. However armed with the (POS) Probability of Success score for Manager, Retail Leasing, you can reduce hiring risk while increasing the scope of your internal selection ratio when posting the position.

You can reduce hiring risk

Becoming known within the industry as an organization where individuals have the opportunity to break out of functional silos raises your corporate brand identity thereby reinforcing the organization’s image as a great place to work.

“Understanding what you have”
Whether acquiring a property or an operating company, the granularity of our bespoke research helps you enter a new market; strengthen the existing leasing team or department including the assessment of talent prior to an acquisition, merger or co-venture.

“Managing employee expectations”
We’ve noted in our research that it’s possible and quite likely that your Manager, Retail Leasing is a “high performer” with respect to leasing a stable portfolio, but lacks the behavioral attributes for promotion into the VP Retail Leasing position. How do you manage the career expectations of this star performer?

Manage an employee’s expectations

The benchmark allows you to manage an employee’s expectations by applying other means of recognizing their importance. For instance, with foreknowledge companies are able to structure a performance based compensation and recognition structure that rewards the high performing manager while moderating the individual’s perception that leadership of staff equates to career growth.

“Hiring Process Re-engineering”
There are hard and soft costs to wrongful hiring and/or hiring error. Hiring effective and motivated people can become a predictable and consistent process. Employers simply needs to align every aspect of their recruitment, interview, and assessment process around the promotion of their corporate brand and the “science of hiring.”

“Leasing Team Planning – Bench Strength”
Our approach utilizes key behavioral factors and the Drexler-Sibbet Team Performance Model to enable analysis of strength/gaps against required performance; and to identify best fit from an individual and team balance perspective. For example, firms hiring Manager’s, Retail Leasing for a relatively stable retail portfolio should have little difficulty in hiring a competent “first string” to its leasing bench.

Your first string of leasing professionals quickly wilt

However throw in an element of economic chaos or projects that require some form of re-purposing or re-valuation through a tenant remix, and the capabilities of this first string may quickly wilt into a third or fourth string of leasing professionals.

“Employee Development Programs – Focusing on Strengths”
Companies invest heavily into the development of their employees; often these programs are designed for multiple participants and have little effect if meant for behavioral modification. A person’s behavioral attributes are relatively ingrained by the time they finish adolescence although it is possible to make some adjustments by focusing on one’s ‘near strengths.’

Shifting a "Behavioral DNA" takes a great deal of effort.

The benchmark allows you to apply programs that are customized to the individual by targeting specific ‘near strength’ attributes where improvement will have the greatest effect. To have a high performing “POS” score one must have a 65 point score or greater in a majority of the attributes key to the POS benchmark. Statistically, it’s not possible to move an attribute’s behavioral score more than five points, yet moving a key attribute from 60 to 65 through a targeted career development program will have a dramatic effect on the POS score and the individual’s ranking. Shifting  "Behavioral DNA" takes a great deal of effort.
Note: Read Article - "You are what you were and will be what your are" 

“Mentor/Mentee Programs – Risking Mediocrity Counseling Excellence”
It is not uncommon for a junior leasing manager to be placed under the wing of a firm’s Senior Leasing Manager. However imagine if it was determined that this particular Senior Leasing Manager’s POS score indicated that h/she was unlikely to progress beyond an average status in their current role, while the young protégé had all the attributes to be a high performing VP Retail Leasing executive one day. In this instance, is it appropriate that this Senior Leasing Manager should mentor, and if so, to what extent and for how long should h/she be responsible for the junior representative’s development?

Survey Results to be continued:
April 14th for Succession Planning through customized success profiling

I’ll be publishing excerpts of the study each Monday for the next two weeks. If you would like to receive forthcoming excerpts directly please contact me at forbes@rutherfordinternational.com.

In the meantime, should any other questions come to mind, I would be pleased to offer you additional insights from the survey and offer insight as to how we could impact the development of your leasing team and ongoing succession strategy.

Sincerely,
  
Forbes J. Rutherford, President, Rutherford International, Toronto/Calgary
forbes@rutherfordinternational.com or  855-256-5778