I'm not referring to rental properties or homes, but people. Most builders will tell you that people — or lack there of — are their greatest challenge to growth. The need for qualified people at all levels is far greater than the supply. Nothing indicates the situation will improve anytime soon.
I believe this gap will become even wider as a new trend continues to evolve: the mid-life change of the seasoned manager.
For the past few years, I've witnessed the exit of many home building managers and executives who fired their companies. I'm hearing similar plans from other managers and executives who have yet to pull the trigger. This runs the gamut from middle managers to senior level executives. What's driving this? It varies by level.
Take, for example, a senior manager leading a 1,000+ unit operation. He receives bonuses running well into the seven-digit range with a total compensation package that looks like it belongs to a first round draft pick. Some may see this as the pinnacle of his career, while others see it as a stepping off point. Why?
It's the curse of more, more, more. As in more volume, more market share, more profit. Managers and executives constantly listen to refrains of "It doesn't matter what you did last year, we expect 10 percent more this year." How long will it be before we hear of a single division closing 5,000 homes/year, requiring 15,000+ lots in the pipeline?
The pressure to continually deliver the goods can be draining and less than satisfying.
The senior manager is usually well connected, has gained the trust of developers and is set financially and well prepared to start his own company. It's not uncommon to see start-ups like this go from 50 closings the first year to 300 or more by year five.
Going down the chain of command, we find the manager running a core department (construction, sales, purchasing). He typically has 10–20 years progressive experience; reasonable job security; and is well paid with attractive year-end bonuses and benefits. What motivates this person to strike out on his own?
Limited advancement in his current company. Let's face it, most division president openings tend to be filled with candidates with division president experience. There are few exceptions. When was the last time you heard of a vice president of sales or vice president of construction being promoted to division president?
Another reason a manager might go out on his own may be that the company is going through another reorganization.
Another new boss to get to know, another new system to learn, another new drumbeat to follow.
What's the point of all this? You, as a home builder, have made great strides in satisfying your customers. Have you put forth the same effort to develop and satisfy the lifeblood of your organization — your people?
Don't get caught by surprise. It's not always about the money or the numbers!
|Bob Piper is the founding Partner of the Talon Group, a leading retained executive search firm specializing in the real estate development and home building industries.|