The Indianapolis Professional Forum was my 21st as a member and marks the start of my year as chair of IAMC’s board of directors. I look forward to serving you.
The Forum, by the way, was up to the usual high IAMC standards. My thanks to the Indianapolis local organizing committee, sponsors, presenters and staff for their excellent work on this conference.
As incoming chair, I’ve been thinking about the IAMC organization. We’ve grown steadily in our 14 years of existence. We’ve launched new programs and expanded into Europe, Latin America and Asia. We’re on a financially sound footing. We’ve achieved an amazing level of success.
Even so, we’re not particularly agile. But we might conclude the same about many US and global companies, to a lesser or greater degree.
Why is agility touted as a key to long-term business success? First, the business and competitive environments change, and sometimes quickly. What served an organization well last year may be ineffective this year. For example, in the 1990s Eastman Kodak failed to make the crucial pivot from film to digital photography. They changed too slowly. They were not agile. On this point, recalling his days in the Texas oil industry, George W. Bush said, “You can’t do today’s job with yesterday’s methods and be in business tomorrow.”
Second, agility ensures the best use of resources. Few organizations have all the financial capital needed to do everything they’d like at the time of their choosing. Those that change too slowly may end up spending scarce cash doing pointless work. Peter Drucker famously noted, “There is nothing so useless as doing efficiently that which should not be done at all.” Another management expert makes the point this way: “Simplicity — the art of maximizing the amount of work not done — is essential.” Agile organizations are better able to focus on work that’s in their strategic interests and to avoid the other kind.
Third, agility enables an organization to focus on customer needs. Otherwise, the focus stays on what the customer needed six months, a year or more ago. I couldn’t say this better than Steve Denning in a recent Forbes article: “In agile [organizations], the role of the manager is to enable those doing the work to contribute their full talents and capabilities to generate value for customers and eliminate any impediments that may be getting in the way.”
At its October 8th board of directors meeting, IAMC took bold steps to become more agile. We went from 15 committees down to eight. These are organized into three intuitively tasked councils: Events & Programs, Membership and Operations.
This will be good for the members (our primary customers) in several ways. The new, compact organization will improve the flow of information to the board and enable it to act more quickly in the members’ behalf. In fact, responsiveness should improve at all levels. Further, expect better support by event and research programming for member recruitment and retention.
I’m excited about the new structure, which will be communicated to you in detail in the coming weeks.Russell Burton
This article is excerpted from a Mar. 13, 2016, IAMC New Orleans Professional Forum Health & Science Industry Group program. It was moderated by Gig Codiga, Associate Director, CRE, Genentech, Inc. Gordon Hurrell, Director, Real Estate & Facilities, Alexion Pharmaceuticals, was the presenter. Wilson Economic Development Council sponsored the session.
Mergers and acquisitions are increasingly common in the health and science industries, with implications for corporate real estate related to office and lab space. Corporate real estate (CRE) professionals should seize the opportunity to be proactive and help shape plans, and to consider exit plans.
Mergers and acquisitions present significant challenges for CRE.
In the pharmaceutical and life science industries, mergers and acquisitions are increasingly common as few new drugs are home grown by big pharma companies. Most new products are purchased from smaller biopharma companies or developed in collaboration with universities.
Common challenges associated with mergers and acquisitions include these:
Among best practices related to mergers and acquisitions are:
Large corporate campuses have pros and cons.
Some executives have a mindset of wanting to construct a large campus of 3 million sq. ft. (278,700 sq. m.) or even larger. Corporate campuses can have advantages of centralizing an organization’s talent, serving as a location that a company can occupy and grow on for years, and fostering a company’s culture and a sense of collaboration. However, the business strategy and technology might change, rendering a campus outdated or obsolete. Large campuses also can be inflexible, difficult to repurpose, and difficult to exit.
This article is excerpted from a Sept. 27, 2015, IAMC Cleveland Professional Forum program featuring the panel of Charles Moll Jr., Esq., Winston & Strawn; Rory O’Conor, O’Conor Associates; and Thomas Wilhelmy, Esq., Fredrickson & Byron. The moderator was Bill Jenkins, VP, Real Estate & Facilities – Americas, Thermo Fisher Scientific.
Executives at Thermo Fisher Scientific asked how the company’s Corporate Real Estate (CRE) department could add value to the company quickly. An analysis with its accountants revealed untapped potential related to taxes. Bill Jenkins said, “We were leaving dollars on the table with real estate property taxes as well as personal property taxes.” Over 11 years, the company has been able to save about $1 million a year. The CRE department can save the company millions of dollars by ensuring the real estate and property taxes are fair and accurate. That requires regularly reviewing assessments and the evidence that supports the assessment value.
A quick test
As a rule of thumb, in the United States the average property tax rate is around two percent of net book value. With this in mind, O’Conor encouraged CRE representatives to work with accountants to assess if their company’s property taxes exceed this percentage. O’Conor said some states — such as Texas, Colorado and Illinois — permit retroactive refunds even if a business didn’t immediately appeal an assessment.
State laws vary greatly
It is important CRE departments know how property assessments are set in every state in which the company has real estate, and how and why property assessments can change. This knowledge allows a company to intervene early to try to avoid an assessment that may be too high. Wilhelmy said, “If I know why an assessor is doing what he or she is doing, I can better persuade them this is not an issue they want to go toe-to-toe on, that we can prove their assessment is incorrect.”
Identify property features that affect assessments
Start by knowing the effective tax rate for every jurisdiction where your company has property. It is also important to know how assessors are calculating value, such as based on the cost of the property, sales of comparable properties, or the amount the property would lease for in the market. Be ready to show any omissions or problems in the assessor’s assumptions.
Set an appeal strategy early
Property taxes are based on a property’s assessed value. Therefore, in appealing property taxes, a company must be prepared to answer why the assessor’s value is too high and what the correct value should be. Before making an appeal, first determine what the company believes the appropriate assessed value should be. This will allow the company to determine the cost and potential benefit of an appeal. Since an appeal can take years, in most cases the benefit must be significant before deciding to proceed.
In one case, the cost of an appeal for one property for a few years was between 110 percent and 120 percent of the tax savings for two years. But once everything was settled for all years and all nine properties using benchmarks established in the case, the cost was only 8 percent to 9 percent of the tax savings.
Wilhelmy advised that by taking the long view, a company might make a very different decision about whether a property tax appeal is worth it. It would have been very easy to throw in the towel and say, “We can’t spend $110 to save $100 dollars,” but maybe you’re willing to spend $8 to save $100. Wilhelmy said, “You’re not just dealing with a single year for a single property. For most of my clients, we’re dealing with multiple years and multiple properties, and quite probably, multiple jurisdictions.”
Avoid issues with personal property taxes, such as these: