New Report Highlights Concrete Steps CRE Firms Can Take To Increase Gender Diversity
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Despite solid evidence that gender diversity improves companies’ bottom lines, women still hold a small fraction of the top jobs in commercial real estate. Fixing the problem is within reach, but the upper levels of the industry will need to hold themselves to account.
The strategies outlined in the white paper, titled Accelerating the Advancement of Women in Commercial Real Estate, include creating different types of compensation models, structured mentoring and sponsorship programs within companies, and actively offering women development opportunities.
CREW also stresses the value of expanding recruitment strategies to strengthen the pipeline of talented women and people of color as well as working to tackle unconscious biases through training.
“I’m a strong believer that the leaders in this industry, a majority of which are male, have the ability and responsibility to enact change, both within their own organizations and with their colleagues and peers,” said Mollie Fadule, a CREW board member and head of affordable housing at Katerra. “The real estate world is big, but the relationships are close … I think if women are able to find strong mentors and sponsors with their organizations that will support them, and help them move into leadership positions, we could make great progress.”
It is an issue that needs urgent attention. Women, per CREW’s most recent figures released in 2015, make up just 9% of the C-suite, though they hold 54% of midlevel associate and senior positions. The gender pay gap persists, with women’s average income 23.3% lower than that of men in commercial real estate. CREW plans to release updated figures next year.
“While some of these statistics can be a little bit disheartening, I do see we are making progress,” Fadule said in an interview before the report's public release. "There is a huge opportunity for women to step forward."
The paper makes a strong business case for gender diversity in commercial real estate. Globally, companies in the top 25% for gender diversity are 15% more likely to have returns above industry medians, the paper notes, citing McKinsey & Co. research. Ensuring a board has 30% female representation could push up a company’s net margin by six percentage points.
Seeing women reach the top of their fields is a worldwide challenge, and far from unique to commercial real estate. But the industry has its own complex set of challenges.
For starters, the pipeline is skewed toward men from the beginning. In 2017, 73% of the recipients of real estate bachelor’s degrees were men. That same year, 72% of the graduate degrees in real estate were obtained by men, according to CREW’s paper.
A major barrier for women is making the step from associate to senior vice president, managing director or partner-level positions, CREW found. Right now, just 27% of those positions are held by women.
That career transition, Ackman-Ziff Managing Director Marion Jones said, is incredibly challenging for both men and women — and not well-supported by the industry. At the age when people typically are making that step up, women are often having children and handling the demands of being a new mother.
However, Jones said family obligations are "often a convenient excuse to explain why women aren’t advancing."
“That really pivotal, clutch period is when you most need a strong and powerful network, because you really don’t have any favors to trade yet,” Jones said. “Many women are entering that pivotal moment with weaker networks, which sets them up for something in between ‘slow advancement’ to ‘utter failure.’ It has zero to do with competency.”
Real estate companies should give talented women opportunities and exposure to upper management early, the paper notes, as well as develop programs and initiatives to help balance work and life, recognize women leaders and hold company-run mentor programs.
“It’s an old boys' club,” said Compass Vice Chair Adelaide Polsinelli, adding that her company’s investment sales division has at least 10 senior women, an anomaly in this business. She said she expects to see more women in senior levels over the next decade, but she acknowledged the industry is not for everyone.
“You need a tough skin,” she said. “It’s for hungry go-getters.”
One answer, according to the paper, is adapting compensation models, so women join the industry and can continue to move up the rungs without taking on as much financial risk.
The commission-based model is often heralded as a way around pay discrimination, but some commercial real estate players have said it can be more complicated for women.
“One-hundred percent commission can be a deterrent to many new entrants to the brokerage business,” Barbi Reuter, the president of Cushman & Wakefield | PICOR Commercial Real Estate Services in Tucson, Arizona, said in the report. “The ‘Mommy tax’ and other penalties for off-ramping that affect compensation and progress should be eliminated. It took me eight years and one recession to return to my pre-maternity leave income.”
Some brokerages noted in the report are offering salaried jobs, as a way of broadening their recruitment. At NAI Farbman in Michigan, new commercial agents receive a one-year salary of $25K, plus 10% to 20% of their senior broker or mentor's share of transactions if they play a big role in the deals.
In Seattle, NAI Puget Sound Properties is offering $30K for a one-year program, plus some of a mentor's share of the commission, according to CREW.
“We are in a talent acquisition war, we are losing talent in commercial real estate to CRE tech and they are going to be forced to be more diverse — whether they want to or not,” SVN International Corp. Chief Operating Officer Diane Danielson said in an interview. “We need to sponsor and not make assumptions about women and what they want or don’t want … There are people who say they are not ambitious, they don’t want to be in leadership. That’s a personal decision.”
Though women remain woefully underrepresented in higher positions, bright spots are emerging. Cushman & Wakefield CEO Brett White wrote in the paper that his executive management team has dedicated time in the past year to finding ways to be more inclusive.
Last year, 42% of C&W's new hires around the world were women, and 40% of the external board of directors are now female, White wrote.
At Capital One Commercial Bank, all managers are required to take part in an "inclusive leader workshop” and the company now has an Emerging Women Leaders Program aimed at increasing their exposure to executive relationships. A total of 53% of associates there are women, and 49% are people of color, per the paper. Bozzuto Management Co., where senior leadership is nearly 50% women, runs unconscious bias training.
Fadule, a newer member of CREW's global board, said change is happening, and she feels a sense of hope.
“If you look at progress [that] has been made over the last 15 years, if we can continue to accelerate, the situation that my daughter will enter into when she graduates from college will be very different from the one I entered into," she said.
CORRECTION, SEPT. 13, 3:30 P.M. ET: Diane Danielson is the chief operating officer of SVN International Corp. An earlier version of this story misstated her title. This story has been updated.