In the latest episode of The REIT Report: NAREIT's Weekly Podcast, Camille Lee and Dominic Cottone of Ferguson Partners discussed keys for succession planning in REIT leadership.
Cottone said it is imperative for any succession plan to identify the direction of the company first and the requirements of leadership to implement a strategy. Lee added that the involvement of boards of directors is important, as opposed to putting the decision in the hands of one individual. She recommended that boards establish succession committees to promote “a diverse perspective” on the hiring process.
“The board needs to be running the show on the succession event and the plan itself,” Cottone said.
Cottone also advocated that companies employ a “talent management philosophy” to promote the identification and cultivation of potential leaders within the organization. According to Cottone, approximately 60 to 70 percent of REITs promote from within.
In terms of common mistakes during succession planning, Lee said companies sometimes neglect the need for both short- and long-term plans. That’s especially important for REITs, which operate in a cyclical industry. Cottone said he encourages firms to think three to five years ahead when it comes to succession planning.
According to Cottone, research indicates that greater diversity among a company’s leadership can have a positive impact on its performance. Additionally, he noted that members of the millennial generation have shown that they are eager to join firms that “celebrate diversity.”