By William Ferguson and Michaela Carew
Over the last 6 months, many REITs (like all public companies) have experienced unprecedented disruption due to the COVID-19 pandemic. To better understand the impact of the pandemic on REIT CEO succession and strategy, Ferguson Partners interviewed 12 Lead Directors/Chairmen of REITs across various asset classes. This article aims to detail the findings and provide perspectives to those responsible for planning leadership succession.
Leadership Skills for CEO Succession Candidates
Throughout our conversations about leadership skills required of future CEOs, respondents repeatedly emphasized the importance for a greater focus on the human capital side of leadership: a commitment to diversity and inclusion, humility and self-awareness, and an ability to communicate with the Board, the company, and external constituencies. Though these are not new skills, they have taken a back-seat to the more tactical and performance-oriented facets of leadership.
As leadership competencies have evolved, more and more has been asked of CEOs. REITs generally tend to look for CEOs with deep strategy and capital markets sophistication; if the company has a development arm, candidates often are required to have development experience, and they are also required to have strong leadership skills. While multiple skill sets are not mutually exclusive, it is unrealistic to ask one person to be highly skilled in all areas.
When asked about qualifications key to future success, nearly all Lead Directors/Chairmen mentioned humility and self-awareness. It will be important for the next generation of leadership to have an accurate and clear understanding of their strengths as a leader as well as their professional development opportunities. Self-awareness inherently fosters transformational leadership. One respondent stated, “The future of leadership is about one’s ability to leverage their teams and Boards, to come to the right solution, rather than to assume they know best.” Leaders who practice humility regularly are able to engender the trust of their organization.
The COVID-19 pandemic, coupled with the election year, and an increase in social activism, have all contributed to the rapidly changing expectations of organizations and more importantly, their senior leadership teams. The millennial, and Gen-Z population in particular, is more focused on social issues (e.g. Black Lives Matter), than any generation before. What’s more, the culture around what is appropriate to discuss at work has changed as well; employees want to know their employer is committed to diversity and social justice. The next generation of CEOs must be willing to address these issues at work, act responsibly, and be a champion for meaningful change. This culture shift will make ESG commitments and policies evermore important to attract the right talent and bolster confidence. Many REITs have organized Diversity, Equity, & Inclusion (DEI) committees within their workforces. These committees are working diligently to understand how they can attract more diverse talent and create a culture which embraces differences and makes all employees feel a sense of belonging and inclusion. To ensure success of DEI efforts, it will be important the CEO and other members of the leadership team are vocal in their sponsorship.
For further information on this topic, contact William Ferguson or Michaela Carew.
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