Colorado-Real-Estate-Journal_370091

November 1-14, 2023 - Page 31 www.crej.com 50 YEARS OF SERVING PEOPLE BETTER For half a century, SVA has been the backbone of success for countless businesses just like yours. Our journey over the last 50 years has instilled us with wisdom, resilience, and adaptability, but our vision for the future and our unwavering commitment to excellence is what truly invigorates us. You need a partner who can help you achieve your own vision and goals for the future. Work with us and experience our… 50 Years of Understanding the Real Estate Industry 50 Years of Experience with Unique Housing and Real Estate Tax Credits 50 Years of Providing Clients with Measurable Results Bring Us Your Vision, We’ll Help Make It a Reality. SUCCESS STARTS HERE! Measurable Results. ® SVAaccountants.com AUG2023-AUG 2024 USA E arlier this year, recruiting firms across the commer- cial real estate industry reported that nationwide searches caused by succession planning processes had increased by roughly 50% year over year – and firms in Colo- rado are no different. Between the storm clouds hang- ing over the office segment, the pandemic causing professionals to rethink their life priorities, and the extended interest rate forecasts for 2024, many senior CRE executives in the state are moving up their timelines for retirement. This, in turn, is putting unexpected pres- sure on companies to re-examine their succession planning process- es. Succession planning can be a delicate and tricky process to get right. If a company waits until a senior leader announces their plans to retire before ramping up a successor search, it’s usu- ally too late to implement the kind of smooth, strategic process that would deliver optimal results. The best approach to succession planning is to make it a regular, ongoing thing, rather than treat- ing it as a one-off event. Following are some best practices that have worked for Colorado firms: n Make succession planning a regular part of the annual employee evaluation pro- cess. It’s typical for managers and human resources per- sonnel to dis- cuss wheth- er a given employee is p e r f o r m i n g as part of the yearly evalu- ation process, or whether an e m p l o y e e ’ s focus and pri- orities seem to have changed. What’s less common is to go a step further and think about a) the likelihood that the employee will leave; and b) who has the skills, training and experience to quickly step into their role if they depart. This is especially crucial for mid- to senior-level roles, where a ten- ured employee’s departure can have a disproportionate impact on a company’s performance. If it’s not readily apparent who has the key skills needed to replace a senior manager if he or she should leave, the organization should take that as a cue to enhance its on-the- job training programs around those specific skills that a pro- spective successor would need. n Define the attributes a successor should possess and update them over time. We’ve all heard it before, but when it comes to succession planning, it’s true: Cultural fit is often more important than specific skills. Just as importantly, the attributes a company priori- tizes among its rising leaders will define that organization’s culture going forward. With that in mind, compa- nies should take a thought- ful and systematic approach to identifying the traits succes- sors for various potential roles will need. In my experience, some attributes are universally valuable for successors: Flex- ibility combined with decisive- ness; urgency to improve the company mixed with gracious respect for what earlier leaders accomplished; a tendency to be a self-starter combined with excellent collaboration skills. Many Colorado CRE compa- nies pride themselves on their unique cultures, and this is the step where they can preserve and strengthen those assets. If the company prides itself on giving back to the community, it might want someone with deep local ties in the successor role. Does the company need a jolt from a big picture vision- ary, or does it want its leaders to be more focused on execu- tion and operations? This is also the step where companies can articulate new skills or experiences they want to bring in. I typically ask com- panies, “What does the exit- ing person do really well? And where would you like to upgrade?” n Avoid “analysis paraly- sis” by mapping out the pro- cess in advance, then stick to it. Common parameters to define at the beginning of a succession planning search include the number of rounds of interviews to be conduct- ed; the number of stakehold- ers who should be involved, and when; “deal breakers” that would eliminate a candidate; and other more in-depth steps such as personality profiles or cultural experiences (meals, outings, etc.) with the execu- tive team. Succession planning searches are more sensitive and com- plex than typical searches, and it can be wise to allow for more flexibility and time, if needed. Sticking to a reasonable struc- ture, though, can be the dif- ference between completing a search relatively quickly and seeing it drag on for months. n In unexpected succession planning scenarios, don’t wait to ask for help. When a company founder or other leader departs suddenly, com- panies frequently find them- selves lacking the necessary connections or understanding of the hiring landscape in their market to fill the role within an acceptable time frame. In one such scenario with a Colorado company earlier this year, the company was inclined to hire from within, but wanted to consider outside candidates to be clear on the market. It moved fast to retain a search firm, which was able to quick- ly gauge the candidate pool, affirm its decision to hire from within and advise on a strate- gic plan to help the successor develop key skills where they did not have previous experi- ence. Succession planning sce- narios are always challenging, especially with the personal relationships that are affected when a key leader exits a com- pany; the time pressure that arises when retirement plan- ning timelines are accelerated; and the need to maintain conti- nuity for clients and employees alike. By bearing in mind the point- ers and best practices above, however, Colorado CRE firms can address these challenges with confidence and consis- tency. s berkeley@retsusa.com Succession planning: A little preparation goes a long way Berkeley Davis Associate principal, RETS Associates Succession Planning