Why there are so few property experts on the board? Read Barry’s CoStar’s Guest Column to view the article in full or read below.
Writing for CoStar Barry suggests ways to break through barriers.
When I was growing up as a surveyor, I was always surprised that boards of companies, whether public or private, did not have more property expert directors. Why ? Well, it seemed to me that, simplistically, a corporate balance sheet really only has three basic components : money (cash, debt, equity), goodwill and assets. For most companies, the fixed assets are the properties that they own or lease. Without such expert real estate knowledge right at the top of the company, how can the right strategic property decisions be made, and how can the board best determine where, when and how to buy, lease or occupy property from which to trade, or in which to invest.
Let me give you an example. Several years ago, I was asked to lead the real estate due diligence for a company said to have some 650 outlets in the UK. When I asked to speak to the main board director responsible, I was told that such a person did not exist. All property matters were handled by the Company Secretary (who was not a board member). The Company Secretary explained that, whilst properties were important, as the company could not trade without them, he had lots of other work to do and property always fell down his pecking order of urgency, not least because the only thing he knew about property was that he had bought and sold his home several times. He did, though, have a solution in place. He had instructed one of the national firms of “surveyors” to help him.
The more I dug, though, the deeper his hole became. The firm of surveyors were really property managers who were dabbling in a range of real estate issues for which they were not really qualified and, worse, the company had only contracted for half a day a week for the suveyors to work on all 650 properties. Wholly insufficient, of course, as that works out at more than 12 properties to consider, every week, in just three and a half hours, and each property would only get considered once a year! When one adds into the mix a search role for new properties, all in the same half day for the same fee, it becomes clear that the company gave their properties very little credence as an asset of their business.
In fact, we ended up discovering that they had responsibilities, and liabilities, for more than 1700 leased properties, trading or assigned, across seven European countries, with all the cross-border jurisdictional issues that situation heralded. If this company had real estatequalified, or even just property-savvy, board members, this hopeless and irresponsible financial and practical outcome probably would not have occurred.
In my view, it is incumbent on property professionals, interested in corporate leadership, to find a way to break through this glass ceiling onto corporate boards, alongside accountants, lawyers, financiers and entrepreneurs. Whilst it may seem a clumsy comparison, it is now well known that women have broken through their own corporate glass ceiling in increasing numbers across our top 350 listed companies. As a working example for property professionals, women have done so by being demonstrably capable, expertly qualified, and quietly (rather than brashly) confident in their own abilities. Women like Deborah Meaden (of Dragons Den fame); Dee Forbes, Managing Director, Discovery Networks UK & Western Europe (manages 18 brands with 270m subscribers); Dame Fiona Reynolds, Director General, The National Trust; Rachel Clacher, Director, Moneypenny (one of the UK’s largest independent employers); and, of course, Liz Peace, at the BPF.
It is about experience, yes, but also about corporate expertise. If that means a post-qualification, mature student approach to further business education, then so be it. That is why, even though I already hold an independent director role on a public company quoted on the NYSE, I am attending a course for extant and aspirant non-executive directors at Cranfield University this Autumn, simply to improve my knowledge, understanding and relevant competence.
I can begin to hear the tinkling of glass all around me.