Eighty-nine percent of senior executives at major real estate firms report that most industry organizations fail to have adequate CEO succession plans, and nearly one-third say they are not confident that their firms could immediately select a new CEO.
The findings are from a report released by Urban Land Institute, a global research and education organization, and Russell Reynolds Associates, a global executive search and assessment firm.
In fact, 48 percent of respondents say their firms review CEO succession plans at least annually, and 43 percent of respondents include assessments of potential internal CEO candidates. Additionally, 28 percent of respondents say they include specific capabilities necessary for future CEOs in their succession plan, and 22 percent of respondents classify their succession plans as formal documents. Only 18 percent of respondents say they incorporate timetables for new CEOs.
"Senior executives need to be implementing and providing the leadership programs necessary to attract, motivate, and retain the best and brightest minds in real estate," says ULI Chairman Peter S. Rummell. "Individual companies and the industry in general can benefit by acting strategically, proactively and decisively to plan for who's next and to cultivate those with leadership qualities."
According to the research, common succession planning practices include assigning succession responsibility to the board of directors as opposed to solely the CEO; upholding a formal, written succession plan focused on the future; and directly connecting CEO succession planning to succession planning for other executive positions.
"We see this as a huge opportunity for the real estate industry,” says Debra Barbanel, managing director and head of the real estate practice at Russell Reynolds Associates. “Not only does effective CEO succession planning reassure investors and employees of the firm's ongoing and uninterrupted success, it drives the engagement, development and retention of top talent and strengthens the overall leadership bench of the firm.”
Of the respondents considered leaders at succession planning, they report regularly conduct internal assessments of CEO with 61 percent saying they do so annually. To develop leaders, these respondents say the encourage interaction with board members, provide formal development plans for high-potential employees, offer specific onboarding processes, and implement human resources professionals who are effective at building talent.