The song “Stranger in a Strange Land” never felt truer for me than about 12 years ago when my company decided to start forming shared-services functions at the corporate level. I knew dozens of engineers, ops leaders and finance people at the division level, but this network was less relevant in the new shared-services world. Eventually I was forced to build a new external professional network, which turned out to be one of the best decisions I have made in my career.
I am an environmental engineer by training. I moved from engineering to field operations to finance by leveraging the experience of Frito-Lay co-workers. Then one day I received the proverbial knock on the door and was asked to launch a new PepsiCo industrial real estate function. With no professional experience in real estate and limited in-house knowledge to inform my work, I turned to IAMC, where I found not only great professional mentoring but life-long friends.
Let’s consider for a minute the value a professional network can deliver. It connects you to a group that is dealing with many of the same challenges you are. Some may be technical experts who can assist with a technology change. Others may have specific project experience vital to your success. And others will be senior-level managers from whom you can learn what’s expected of professional leaders. The group can give you a new perspective on your profession and maybe give you an opportunity to influence its direction. And as the industry changes, the network can give you early warning of this change and time to prepare for what’s coming.
IAMC has been all of those things for me. I can dial up or email in the neighborhood of 200 corporate real estate professionals who will reliably respond to me. I can ask staff to schedule a Flash Call with a few members who have specific experience on an issue I’m working on. The Associate membership, composed of economic developers and service providers, covers most of the geographic areas and technical skills I need to do my job. I can meet these professionals at the Professional Forums and other association events.
In my view, IAMC provides the best professional network for those of us who conduct corporate real estate in manufacturing and industrial environments, and the economic developers and service providers who support us.Russell Burton
This article is based on the Research Roundtable program at IAMC’s Tampa Professional Forum moderated by Kevin Dollhopf, vice president of worldwide real estate, Hanesbrands Inc. and featuring Jim Bechard, professor, Conestoga College. The program was sponsored by BNSF Railway Co. and Wilson Economic Development Council.
Corporate real estate (CRE) is often seen as a supporting function that helps the business achieve its mission, but doesn’t necessarily contribute additional value to the enterprise. To demonstrate adding value, CRE professionals must show the measurable business impact that comes from a specific CRE action or intervention. These actions and their impacts must be aligned with the overall business strategy and focus on areas such as growing share value, increasing employee satisfaction and decreasing risks.
Demonstrating added value requires being an aggressive leader, understanding what matters most to C-suite leaders (like sales, margins, profits and share value), and showing how corporate real estate activities help those in the C-suite achieve their business objectives.
Corporate real estate has evolved tremendously in the past 40 years.
Corporate real estate, as a defined management function, got started in the early 1980s as companies realized they had a great deal of real estate and should take a more professional approach to managing it.
In the early 2000s the emphasis shifted to managing corporate real estate even better with fewer resources. The book Facilities Management and Corporate Real Estate Management as Value Drivers by Per Anker Jensen and Theo van der Voordt shows that the goal of CRE is now adding value. The book focuses on adding and measuring value, and includes specific key performance indicators (KPIs). It is a comprehensive review of the corporate real estate profession. It talks about what CRE professionals should be doing, should not be doing, and how to measure and communicate their value.
The CRE is involved in a tremendous amount of work and activity. But CRE professionals need to understand what the CEO wants. CRE’s actions and interventions include project management, portfolio analysis, facility management, lease audits, performance reports, regulatory compliance and much more.
But in speaking with someone in the C-suite, it is unlikely they care about many of these activities. They care about the business and want to know about measures such as sales, profitability and future growth. Those in corporate real estate must be able speak to the C-suite in language that resonates.
To help them speak the language of CEOs, corporate real estate professionals should be reading the Harvard Business Review, because that’s what CEOs read. In the past 10 to 15 years, there has been just one HBR article about corporate real estate: “What Every Leader Should Know About Real Estate” from November 2009. This article had five key messages for C-suite leaders, which remain true today:
This HBR article provides insights into how the C-suite is thinking about corporate real estate.
In the traditional value chain concept, facilities are not strategic. The traditional value chain has little mention of facilities and mentions “firm infrastructure” as tactical and operational, not strategic. A 2000 article by Szigeti and Davis described physical workplaces as more valuable to support the business than for their market or financial value; their primary purpose is functionality and what is most important is not the facility but what goes on inside of it.
The challenge for CRE is to show the value-adds. Professor Bechard used the analogy of a theater. The C-suite is the audience. There is the stage with the production that everyone sees and there are backstage services that support the production. The facility is the container. The C-suite is not looking at the details of what is going on backstage; they are looking at the production. The production is the operations of the business.
In the added-value model, there is an action or intervention, managed by CRE, which has an impact that adds measurable value.
The most common CRE interventions are to make changes in the physical environment, a change in facility services, and strategic advice and planning.
When organizations undertake CRE interventions, they are typically trying to make improvements and add value along 12 parameters.
12 CRE Added-Value Parameters
Selected key parameters are:
When someone in CRE is communicating with the C-suite, it is necessary to be explicit in explaining how CRE actions translate into higher employee satisfaction. For example, a sustainable workplace that helps attract employees is a way that CRE is affecting key organizational strategies.
In the theater analogy, CRE provides back-stage services that support the organization’s primary business activities. For CRE to demonstrate value, it must measure the value that is created from its specific activities and communicate that to the C-suite.
Selected Discussion Highlights