Capital has long been recognized as essential to the commercial real estate industry. If you're a developer, REIT, or asset manager, you'd better find a way to attract it, even with the current market conditions. What you're probably assuming here is that I'm referring to financial capital, that is, various forms of debt and equity. i haven't.
Instead, my immediate concern is: human Capital: Professionals hired by CRE operations to carry out tasks for the viability, resiliency, and growth of the company. So in an era filled with his three-letter acronyms like KPI, ROI, ESG, and (wait for it) DEI, we should add his MPT as a professional talent management method.
MPT refers to Modern Portfolio Theory, a model pioneered by financial economist Harry Markowitz about 70 years ago. The theory was imported from the field of finance and is understood to suggest that financial assets such as stocks and bonds should not be selected based on return or risk alone. Rather, to optimize the return on financial capital, one must consider how a single stock will perform in conjunction with other portfolio assets.
One particular insight of MPT is therefore relevant to the seemingly unrelated market for human capital. Diversification is to your financial portfolio what diversity is to your organization. Diversification tells Wall Street asset managers that different performance characteristics of stocks are valuable to the overall portfolio. Similarly, diversity means recognizing the value of having different people with different perspectives – experts who bring different strengths in different market situations. Note that the two terms share a root word. Various.
So, just as foreign stocks are essential for portfolio construction, so too are foreign perspectives for project and management teams.they can catalyze Optimal organizational performance.
please think about it. How optimal was the American economy in the early decades of the 20th century, when corporate workplaces imposed an embargo on female professional talent? Has this country created as much wealth as possible at a time when people face barriers to accessing many professions, including commercial real estate, due to disabilities?
Of course, the American economy led the world in the post-World War II world order. But how much stronger would the economy be without these de facto embargoes? Therefore, just as MPT aims to optimize portfolio returns, DEI, when properly implemented, aims to optimize a company's long-term performance. And businesses, especially service organizations, are essentially portfolios of human capital.
Extending this thought experiment, what if when you hear the term “DEI” you focus on the concept of “portfolio management” rather than “political correctness”? Both terms have the same number of syllables. It's easy to hold and verbalize in the same way.What if you made a conscious decision to counter the current widespread criticism that suggests hiring and promoting diverse candidates is inherently suboptimal or unjust? What if you decided to MPT? What will happen? Also Do you mean “professional human resource management”?
The CRE sector will face a variety of challenges in the coming years. These include the adaptive reuse of aging warehouses and offices in urban areas, the evolution of malls with alternative uses and tenants, the negotiation of public-private partnerships in diverse municipalities, and the continuing and pressing need for affordable services. housing. Thus, just as a diversified stock portfolio may be more robust in responding to financial market shocks, different perspectives and backgrounds (i.e., diversity) may make management teams more robust in adapting to external pressures. There is a gender. Shouldn't the staff of the country's REITs and securities companies include people with diverse skills and relationships who will reap future dividends in the future “growth stock”, or post-millennial market?
Markowitz's Nobel Prize theory remained obscure for nearly a decade before Wall Street embraced it. Despite some prominent criticisms, this still shapes much thinking about the management of financial assets.
Ironically, DEI was celebrated at the beginning of the decade, only to face a reversal of acceptance in many quarters. Nevertheless, as with modern portfolio theory, that doesn’t mean the model is useless. It just means that certain asset managers (i.e., human capital) may have made mistakes and misused it in the past.
Therefore, viewing human capital in the same way as financial capital is simply an example of cross-disciplinary thinking. When you think about DEI, you need to think about human capital. When you think about human capital, you need to think about MPT. history suggests Economies benefit from undiscovered growth talent from underrepresented populations.
Lamont Blackstone is a commercial real estate consultant, urban redevelopment expert, and acting executive director of Project REAP, a national organization dedicated to diversifying the CRE talent pool.
