• Special

Valdivia Guest Feature in the “FAZ”

“Hybrid Managers In Demand”
Frankfurter Allgemeine Zeitung, 22 July 2022

  • Special

By Antho­ny Baum­ruk, Part­ner, Valdivia Consult­ing GmbH.

New Require­ments for Exec­u­tives in the Real Estate Sector

Oppor­tu­ni­ty and change go togeth­er. Very few indus­tries are current­ly under­go­ing a trans­for­ma­tion compa­ra­ble to that in the German real estate sector. Investors, construc­tion compa­nies, service providers and many more feel the pres­sure grow­ing stronger and stronger. Raised inter­est rates, the conse­quences of the new geopo­lit­i­cal situ­a­tion in Europe, future-orient­ed and robust ESG strate­gies (ESG = envi­ron­men­tal, social and gover­nance) and the digi­tal trans­for­ma­tions with­in orga­ni­za­tions are but a few of the many chal­lenges that the indus­try will have to confront in the coming years. And so will its senior manage­ment. In the process, success­ful lead­er­ship will mean giving new impe­tus and lead­ing the sector into a new era.

The facts are clear: the real estate sector is of great impor­tance to Germany’s econ­o­my. Accord­ing to offi­cial statis­tics, there are approx­i­mate­ly 42 million house­holds, 489 large area shop­ping centers and more than 323,700 office build­ings. With more than 645 billion euros, the real estate indus­try contributed about 20 per cent to Germany’s total GVA (gross value added) in 2021. The build­ing sector account­ed for a third of the German CO2 emissions.

The broad­er real estate sector and its deci­sion makers on the corpo­ra­tions’ top floors, there­fore, hold a lot of econom­ic, soci­etal and social respon­si­bil­i­ty. In the next years, the market will prefer exec­u­tives with in-depth oper­a­tive knowl­edge about a vari­ety of core areas on the one hand and a wide scope of exec­u­tive level expe­ri­ence and lead­er­ship qual­i­ties on the other hand. What is more, these exec­u­tives will also need to be expe­ri­enced in setting up and steer­ing sustain­able corpo­rate process­es. Gener­al­ists but also special­ists — estab­lished exec­u­tives but also repre­sen­ta­tives of the new gener­a­tion. A type of Hybrid Manag­er is needed.

Increas­ing­ly, exec­u­tive boards and CEOs are becom­ing dynam­ic inter­dis­ci­pli­nary project managers, who have to deal with the details of special topics and, at the same time, with far-reach­ing manage­ment issues on a daily basis. Managers with profound insight into their compa­nies will be able to weigh enter­pre­neur­ial risks and oppor­tu­ni­ties in the current market peri­od much faster and, for instance, decide whether the devel­op­ment in construc­tion costs or ener­gy prices will present a real, there­fore rele­vant risk for their corpo­ra­tion. Success­ful managers should get involved in rele­vant process­es in both a speedy and precise way, yet also dele­gate a lot whilst making sure they have a funda­men­tal under­stand­ing of the dele­gat­ed processes.

Two signif­i­cant trends will have a long-term impact on the indus­try: digi­tal devel­op­ment in the enter­pris­es as well as the new ESG guide­lines. Digi­tal invest­ment tools, e‑Bilanz,[1] BIM (build­ing infor­ma­tion model­ing) are essen­tial for exec­u­tives in order to be able to make well-informed deci­sions. At the same time, all stake­hold­ers will be provid­ed with a trans­par­ent picture of the enter­prise. Intro­duc­ing a digi­tal DNA will be neces­sary as well. The indus­try is compet­ing with compa­nies featur­ing a high­er degree of digi­tal­i­sa­tion – and at a glob­al scale, too. On top of that, exec­u­tive boards have to assess numer­ous deci­sions in invest­ment and asset manage­ment process­es with regard to sustain­abil­i­ty stan­dards. ESG scor­ing or ESG compli­ance, respec­tive­ly, are a compar­a­tive­ly new field, call­ing for knowl­edge and compe­tence at top manage­ment level.

Lead­er­ship needs to be flex­i­ble and aimed at inte­gra­tion. Howev­er, exec­u­tives should also possess the deci­sive qual­i­ties to success­ful­ly navi­gate their staff through these chal­leng­ing times, now as well as in the future. Clear, trans­par­ent, real­is­tic commu­ni­ca­tion is of the essence — be it on the ’contruc­tion site,’ be it ’remote’ – and a high degree of empa­thy in order to lead the staff and, most of all, to retain them. Employ­ees need to deal with topics such as digi­tal trans­for­ma­tion or polit­i­cal change as much as their managers.

It follows that success­ful lead­ers in the real estate sector will be devel­op­ing perma­nent­ly, learn­ing more, under­stand­ing the mega­trends of the future, e.g. digi­tal­i­sa­tion or ESG, and they are able to gauge how these aspects will impact their enter­pris­es. With their wide range of expe­ri­ence and their confi­dence, they get involved in differ­ent projects at a time. As a kind of hybrid drive, they can master the new era. Crises-test­ed, solu­tion-orient­ed managers with a high degree of creativ­i­ty and resilience and a good eye for the future are at a clear advan­tage here.

[1] e-Bilanz: In Germany, busi­ness have to elec­tron­i­cal­ly trans­mit their balance sheets to the rele­vant tax office. This proce­dure is known as ’e‑Bilanz’.

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