REALtalk - Conversations with Commercial Real Estate Leaders
Rising to the Leadership Challenge – with Bill Ferguson (Ferguson Partners)
On this episode of REALtalk, Bill Ferguson, Chairman and CEO of Ferguson Partners, joins REALPAC COO Carolyn Lane to discuss rising to the leadership challenge, the characteristics of great leaders, and what the future of leadership looks like.
The episode covers:
- Bill’s new book: The Test is Now Upon Us
- Skills of leaders in real estate vs other industries
- Traits and attributes of what make great leaders
- Generational differences between leadership styles
- Factoring leadership into a company’s succession planning
- Mistakes made by leaders, especially during crises
- How great leaders responded to covid-19
- How leaders will have to lead differently in the future
About Bill Ferguson:
William J. Ferguson serves as Chairman and CEO of Ferguson Partners. Mr. Ferguson conducts senior management recruiting assignments, with a specialization in president/Chief Executive Officer searches and recruiting assignments for Boards of Trustees/Directors. He also conducts CEO succession planning assignments and facilitates public company Board assessments and senior management assessments..
Michael Brooks (REALPAC): Hello, everyone, thanks for listening and welcome to REALtalk, the show that brings you unique insights from leaders in Canadian and international commercial real estate. I’m Michael Brooks, CEO of REALPAC.
Carolyn Lane (REALPAC): Thanks very much, Michael. My name is Carolyn Lane and I’m CEO of REALPAC and I’m here in Toronto. Joining me today in Chicago is Bill Ferguson, Chairman and CEO of Ferguson Partners. I had the privilege of knowing Bill for over ten years and of working closely with him and his team at Ferguson Partners to deliver our highly regarded annual Canadian Real Estate Compensation Survey, our Sentiment Survey and several other thought pieces. Bill regularly conducts senior management recruiting assignments with a specialization in president, CEO and board searches. He also conducts the succession planning assignments and facilitates public company board assessments and senior management assessments. Bill holds a bachelor’s degree from Harvard University, where he was a member of Phi Beta Kappa and an MBA in marketing from the Wharton Graduate School of Business. Welcome, Bill.
Bill Ferguson (Ferguson Partners): Carolyn, thank you very much. Appreciate the opportunity and very much appreciate in value our partnership with REALPAC.
Carolyn Lane (REALPAC): Thank you. Likewise. So Bill, let’s get right to it. In 2012 you wrote and REALPAC published the book titled Market Discipline: The Competitive Advantage – Lessons from Canada’s Real Estate Leaders. At that time, you conducted one on one interviews with some of the most notable people in the Canadian commercial real estate industry. Now, I don’t know where you find the time, but you’ve just released a new book focused on leaders in the US titled The Test is Now Upon Us with a focus on the defining qualities of leadership through crisis. So you looked at the real estate industry and a number of other industries in that book, and I’m just curious what compelled you to take on another book and what were the drivers behind prompting you to write it?
Bill Ferguson (Ferguson Partners): Well, once again, Carolyn, thank you for the thank you for the opportunity. My most recent book, The Test is Now Upon Us is my fifth book and probably my capstone book about leadership in the industry. And it is my first kind of global look at leadership, both leadership in the industry, which we broadly defined as real assets, hospitality and health care services, and comparing the leadership skills of the great leaders in the sectors we serve versus leaders in other sectors. So we included leaders in other business sectors. We looked at leaders in government, we looked at leaders in the military and even leaders in science. So we tried to look at leaders across all generations and we tried to identify the leadership traits which made them successful. And then we tried to tie those leadership traits in alignment alongside of leaders in our industry. And let me start by kind of talking about something which a lot of people don’t realize, and that’s that the real estate industry, I think, in the United States, in North America and in the world is the largest industry of any across all industries. And what drives the size of the business, clearly in the states and beyond is inclusion in the single family business. So whether that’s the residential mortgage business, the homebuilding business, a business today, which is very much on fire, which is the single family home rental business, but when you include the commercial and the residential business, the real estate industry is the largest industry in the world.
Bill Ferguson (Ferguson Partners): So it’s been a fascinating incubator. When I when I look back, having started my career 40 years ago, there’s been a metamorphosis running from basically firms that were regional to global, private to public and entrepreneurial, institutional. And so it’s been a fascinating incubator, especially since most people in our industry start as entrepreneurial dealmakers at a very small proportion of those people ultimately rise to the CEO spot, whether it’s a Bruce Flatt at Brookfield, a John Gray at Blackstone or whoever it might be. It’s an extraordinarily small number of people who really have the skill set to start as a dealmaker and ultimately to become a CEO. And then the last point I would make is we’re at a very interesting time right now because you have a tremendous amount of generational change, transition from one leadership group, typically the baby boomers into the next generation of leadership. So studying leadership traits and attributes I think is very important as succession committees of boards and others really try to assess that next generation of leadership and appoint a new CEO.
Carolyn Lane (REALPAC): So I’m curious to know how leaders in the commercial real estate industry are similar or different from the global leaders that you interviewed across other businesses like government and military politics and art and science. And can you touch on any of the generational differences?
Bill Ferguson (Ferguson Partners): Absolutely. Well, first of all, I wouldn’t speak for Canada, but I will speak for the US. Is that our industry, meaning the real estate industry, probably more on the commercial side has had a little bit of an inferiority complex in the sense that everybody viewed people, the great deal makers, but really, were they really good leaders? And amazingly enough, as I studied the great leaders in the industry, whether it might have been a Bruce Flatt, for instance, at Brookfield or a John Gray at Blackstone or Hamid Moghadam who runs Prologis, which is, if not the largest one of the largest rates tied in the logistics space. Bill Marriott, who ran Marriott Corporation for number of years and on and on, the leaders in our industry actually fared very well and quite honestly had many of the leadership attributes that we found common outside the industry. So really no reason to have any kind of inferiority complex. The leaders in our business have stepped up and have stood nicely on their own and have stood the test of time for sure.
Carolyn Lane (REALPAC): Are there any generational differences between the leadership styles?
Bill Ferguson (Ferguson Partners): Well, I think I think what you find, Carolyn, is that all these companies continue to grow. And so the issue of growth and of managing through crisis, which is what we’re doing right now with the pandemic, really test leaders probably more than they’ve ever been tested. So the next generation of leadership, some of whom have stepped into the role today, including John Gray and Bruce Flatt and others, have had, I think, more of a challenge just given the scope of the businesses that are running the complexity of these global businesses. And you overlay that with a crisis like a pandemic. And to some degree, you’ve got a perfect storm. And so they have, I think, been required to step up and really to exhibit leadership skills probably above and beyond to some degree, what my generation has experienced anyway.
Carolyn Lane (REALPAC): Right. So what are some of the common leadership traits highlighted in the book and how should they factor into the company’s succession planning approach?
Bill Ferguson (Ferguson Partners): Well, I think to answer the second question first, Carolyn, I think it’s very important for the next generation of leadership to be assessed around these attributes. And what’s interesting is when you when you really pull back the onion and study these leaders, it is all about the people. It’s about hiring the right people, developing the right people and empowering them for sure. And in our industry, historically, everybody’s attributed leadership to people who can buy assets at the right point in the cycle for sure. But when you really study why these leaders are great leaders, it does come back to their ability to really leverage their IQ. So I’ll cover a couple of leadership attributes that I feel really stood out and we can discuss them as as appropriate. But the first leadership attribute, which is common among both leaders I studied in the industry and outside, is this whole issue of integrity. And I would say John Gray at Blackstone is pretty much the epitome of this issue of integrity. And it’s interesting because it comes right after the post Trump presidency for sure. But one thing that John Gray echoes time and time again is the golden rule. He treats people as he wants to be treated, whether it’s people he’s doing business with, whether it’s his partners, whether it’s regional, state, federal government, whether it’s his people. He treats everybody with honesty, with forthrightness. And it’s not a question of being nice necessarily, but it’s really a question of being honest and candid and supportive, I think, for sure.
Bill Ferguson (Ferguson Partners): So clearly, this issue of integrity permeates everything that John does and most of the great leaders do for sure. The second attribute, which I think is noteworthy is, is this is this issue around passion. If you study Bill Marriott, for instance, Bill, when he was CEO of Marriott, literally would go out and visit hundreds of properties and he wouldn’t pull the sneak attack and he wouldn’t go up to his people and say, well, why aren’t you making the beds right, whatever. But he would go and listen to the customers and he would try to understand what they were thinking about what was working and what wasn’t. And as a result, to try to be supportive of his people who try to say, you know, these are the types of things we’re doing well and these are the types of things we should be thinking about in the future. But he had a passion for the business. He woke up every morning. Was excited by it and literally walked the walk the assets, and that’s something that I found pretty much across everybody I interviewed and studied, whether they be in real estate or outside of real estate. They had the passion for sure. I would say the next trade that was common was this whole issue of innovation. And when you look at a Stuart Miller, for instance, who’s running the biggest homebuilding company in the US in our homes, or Bob Johnson, who in essence kind of started Black Entertainment Network, I mean, who ever would have thought that there would be a channel dedicated to black entertainment? And Bob took it on and really built it to a significant business and so forth.
Bill Ferguson (Ferguson Partners): And so this issue of innovation, of learning, on asking the question, why was another attribute that we found typical among leaders both inside and outside of our industry? And I would say the last one, Carolyn, and it’s based on is this issue of leaders being independent thinkers almost to the point of being controversial. And probably the most controversial leader that we have here in the United States is Sam Zell, who founded Equity Office, Equity Residential, Equity Lifestyle Equity International. I mean, Sam was behind the securitization wave that now led us to have over 150-200 REITs. He was the one who thought about taking these private companies public and really allowing them to have strong balance sheets and allowing institutional investors to be owners. His affectionate nickname is The Grave Dancer. And what Sam is famous for is buying assets at the right point in the cycle, at the right price and really adding value and writing them up the curve. And that’s exactly what he did a number of times. So this idea of being an independent thinker, of bordering on being controversial, this is what leaders are paid to do. And the great leaders clearly have that as a very important attribute as well.
Carolyn Lane (REALPAC): Fantastic. So passion, integrity, innovation, independent, controversial thinking are all great attributes. I’d add humility and generosity, which is right behind you there. So what was the most surprising takeaway from your leadership research? Is there a mistake that leaders typically make when leading their people, especially during crises?
Bill Ferguson (Ferguson Partners): Yeah, you know what was interesting? It surprised me, to be frank, was this whole focus on EQ. It was all about the people that really are in your organization and are really making a contribution. I didn’t think for a minute that it would be as pervasive across all the leaders we interviewed, across the sectors that we serve. This whole idea of once again identifying people, the right people, recruiting them, developing them and ultimately empowering them for sure. I mean, all these leaders, you can tell we’re never too far away from their businesses. They knew the details, but you know what? They never micromanaged. And that’s really an art that a lot of leaders can kind of pursue because they unfortunately jump into the REIT micromanagement side of things, which a lot of entrepreneurs do. And that’s why they don’t grow out of building a company only to a certain size for sure. The mistake that I found a lot of leaders made, and it was both in our industry and outside our industry, is thinking too short term, whether it’s a quarter to quarter public company performance or whatever it is. I mean, the leaders that I interviewed clearly took their time. They were strategic and they understood they needed to invest in businesses to grow. And if the businesses did return the kind of financial performance during the first quarter, the first two quarters the entire year, as long as they were laying the groundwork for a great company, that’s what they really focused on. And I think too many short sighted leaders really don’t invest for the long term and as a result, don’t build a sustainable business. Now.
Carolyn Lane (REALPAC): Good point. So how did the truly great leaders respond during covid-19 around such things like mental health or managing culture and their business execution and communication? And more importantly, how are leaders going to have to lead differently in the future? Are they going to have to lead differently in the future? And if so, how?
Bill Ferguson (Ferguson Partners): Good question. Which is really the test is upon us is all about how leaders respond to crises. And in this case, it was the crisis, the pandemic. What I saw among the great leaders is we, in essence, have gone through now 16 months of the pandemic is that they really focused on their people and the health of their people. And it was all about both physical health and mental health. We’ve gone through extraordinarily stressful time and unfortunately, we just haven’t been able to interact. And there are situations all over the world that we’ve had with our people where you’ve got a dual career couple both trying to do everything they can remotely. And then you may have kids at home and kids who are not going to school. And all of the challenges that that home life and work life intersection have cost, to be frank. And so I found that the great leaders have kind of taken a step back and at least for the first nine months of the pandemic, we’re totally focused on how do we take care of our people, in essence, and try to give them the support and the flexibility they need not only to help us run the businesses, but also to, in essence, got to keep their families as a common unit and really think about how they nurture their families in a time of tremendous stress, because it was new to all of us for sure. And I think the other thing, great thing that leaders did was that they focused on ways to enhance communication and technology, I think stepped up and played a very key and important role in allowing CEOs to, in essence, try to run their businesses.
Bill Ferguson (Ferguson Partners): And I’ll take our companies as a case in point. And this is the credit’s due to the people around me. It’s not due to me. But I can honestly tell you, Carolyn, after 16 months of the pandemic, that we are closer as a leadership team than we’ve ever been before. And that’s due to people around me like Gemma Burgess and are the regional leaders around the world. Be mindful of the fact that we’ve got 11 offices around the world. 120 people, very, very difficult to keep that unit tightly knit. And Gemma did wonderful things. And the rest of the team did, too. We would have regular, obviously, conference calls on all kinds of subjects and we would involve everybody in those calls. And then we also did fun stuff. I mean, who’s ever thought about having a Halloween party or having birthday parties for people remotely? We figured out ways once again, not me, but the team in having fun as well as communicate, you know, and getting people’s advice and opinions and letting them know what’s happened. Now, I will tell you that post the nine month mark, when we recognized, at least in the US and beyond that we were blessed and starting to have vaccines coming online where we could kind of see the next stage in our evolution. I did start to hear from a lot of clients that we had to refocus on culture, and that meant getting people back together on the right time frame where people were safe and whatever, and maybe having people come in a couple of days a week at some point in time, whether that happens as of June 1st, whether it happens Labor Day or whatever.
Bill Ferguson (Ferguson Partners): But I think they recognize you cannot run a company and have a sound culture by doing it remotely five days a week. And so companies have started to make plans to bring people back and as I said, bring them back safely and on their terms to some degree for sure. But business execution was starting to suffer a little bit and so forth. And so I think what would leaders have learned? Is that going? Forward, you can be more flexible is how you run a company. We’re not going to require people to come back five days a week. We’re going to ask people probably to come back three days a week and give them those other two days to work from home and still be very involved in their family life. I think Kim, my assistant, well, she’s got a daughter who’s now riding horses. Well, Kim commutes three hours a day to the office and allowing her to stay two days at home. You know, at five o’clock when she’s done, she can go to go see her daughter with her horseback riding lessons, and that’s for sure. So I think we will now witness going forward a much more flexible work environment and allowing people to enjoy their families and to make sure that they’re making this a priority while still coming in a few days a week and getting us back into a culture routine where we can run a business and run it.
Carolyn Lane (REALPAC): Well, that’s great, as horseback riding is very important to me, so I’ll have to connect with Kim! OK, so is there anything that I didn’t ask you about your book that you want to do that you want to discuss?
Bill Ferguson (Ferguson Partners): Yeah. Thanks for asking, Carolyn. And once again, appreciate the opportunity. All the proceeds from the book are going to an organization by the name of LEAD. You can Google it and whatever. LEAD is an organization based in Atlanta and it is totally dedicated to the well-being of underprivileged youth. And not only does it help, in essence, kind of get these young people who are talented into good colleges, but it also helps them find opportunities once they’re out of out of college and kind of their first job in the workforce. And we, as a firm, as I know you are at REALPAC, hugely dedicated to DEI. And this is a generation of youth that we’re told, and I totally convinced that if you can give them support at this stage in their own growth and evolution, you can help ensure their success academically and also in the workforce. So we’re very excited to, in essence, kind of give every penny that we earn in the sale of the book to lead, and then they can make a difference in these young people’s lives. And we’re very excited about it. And we really appreciate your support and our support and others in really making this contribution to a very, very worthwhile cause. And like us, I know you and Michael are totally dedicated to diversity, equity, inclusion, not only in your organization, but across all the organizations you serve. And I think that’s going to do everybody stand them well, relative to the diversity of thought around the table makes for better business performance. So thank you for that.
Carolyn Lane (REALPAC): Yeah, absolutely. Well, Bill, it’s been a pleasure speaking with you, but I’m afraid that’s all the time that we have for now. So, once again, thank you so much for joining us and for sharing your insights. We really appreciate it.
Bill Ferguson (Ferguson Partners): Well, Carolyn, thanks all of you, for all you and Michael do for all the real estate organizations throughout Canada. And we very, very much prize our special relationship with REALPAC. So thank you for that.
Carolyn Lane (REALPAC): Likewise.
Michael Brooks (REALPAC): Well, this is Michael Brooks and that’s it for this week’s episode of REALtalk. Be sure to visit us at Realpac.ca/REALtalk and subscribe wherever you get your favorite podcast. If you have an idea for a topic or a guest, please send me an email at email@example.com. And if you like what you hear, give us a five-star rating. Thank you for listening and tune in next time.