- Oct 01, 2012
Many apartment companies went through some painful downsizing during the recession. Economic uncertainty and turmoil in the financial markets sidelined acquisition and new construction activity, forcing many firms to scale back their forces. However, demographic shifts and changes in consumer preferences continued to drive demand for rental homes even as the industry contracted.
Now the economy is in recovery, and the industry is scrambling to ramp up to meet that growing apartment demand. This means more jobs, which is welcome news, but it also means apartment firm executives have to be more strategic about both talent retention and recruitment to fully benefit from the market’s upside.
According to recently released results from the 2012 National Multi Housing Council (NMHC) Compensation Survey, most apartment firms expect market conditions to continue to improve through the year, with 78 percent of respondents anticipating that their companies will perform better financially in 2012 than 2011.
But a market upswing creates human resource challenges for apartment industry executives. Years of slow job growth and high unemployment kept top talent from job-hopping, while providing apartment firms with access to a large pool of young and motivated workers hungry for jobs. An increasingly healthy apartment industry means many apartment firms will pursue top talent to help them grow their operations, making the landscape more competitive when it comes to both retaining and recruiting top talent. In fact, 79 percent of survey respondents listed retaining high performers as their first or second most important concern in 2012.
A key tool in retaining talent is a motivating compensation plan. Jeremy Banoff, senior managing director with FPL Associates, NMHC’s partner on the compensation survey, says, “An effective compensation plan design is based on three components, or the three Bs: back-test, balance and behavior.” Balancing all three can help apartment firms design compensation plans that can be effective in a cyclical industry and increasingly competitive market.
■ Back-test: Executives should take a thorough look at the company’s incentive program goals, evaluating the criteria against the company’s historical results versus a single year’s
performance. This look-back helps determine whether the operational goals are achievable under different market conditions and can establish clearer definitions of achievement.
■ Balance: To get a better picture of performance vis-à-vis market conditions, executives should include multiple types of goals in an incentive plan. In fact, plans that have some combination of absolute and relative performance measures—as well as annual and multi-year provisions—can help ensure that no matter what’s happening in the market, there will be motivating factors for employees.
■ Behavior: Some incentive programs can motivate employees in ways that encourage excessive risk taking or inadvertently drive the wrong type of performance. Executives should assess whether there could be bad business implications from such incentives and fix them to ensure that performance goals align with intended behaviors.
While survey results showed that talent retention was a top challenge in the year ahead, the vast majority of survey respondents also indicated that they were actively seeking fresh talent to fill new positions. Nearly nine out of 10 apartment firm respondents stated that they had already started hiring or had plans to hire this year. This compares to the 65 percent who added staff last year, reflecting improving market conditions. Firms that added staff last year increased their total number of employees by an average of 11 percent, with maintenance, leasing and property management positions being in the highest demand.
However, social media and advancements in web and mobile technologies have turned the recruitment process inside out. At the most recent NMHC Human Resources Forum, Jamie Womack, vice president of corporate marketing and branding for Career Builder, said today’s recruitment process is as much about potential hires evaluating the companies as it is about companies assessing potential hires.
Roughly 70 percent of job seekers check social media channels to get more information on a company, making it vital for firms to establish a strong social media presence. Facebook, Twitter and blogs are still the social media of choice, but Womack encourages participation on Twitter and blogs because the level of user engagement is higher than on Facebook. A Twitter follower is five times more likely than a Facebook user to apply for a job posting, she says.
Moreover, mobile is increasingly important, according to Womack. Although just 14 percent of all job searches are done via mobile phones today, Womack says that statistic is changing rapidly as mobile technology become more powerful and accessible. Already three-quarters of all social media users are accessing their accounts on mobile devices.
As apartment firms look to develop more effective strategies and programs to both retain and recruit the best talent, it’s critical to have industry benchmarks. NMHC’s 2012 survey provides extensive data from 93 major apartment firms, accounting for more than 50,000 employees, and detailed analysis of industry hiring practices—including salary, variable pay and total compensation for nearly 100 industry positions.
Rick Haughey is vice president of property operations and technology for the National Multi Housing Council (NMHC) in Washington, D.C.