Pace vs. price; finished lots in the pipeline; subs on schedule and on budget; a customer segmentation and relationship management program, and a system of plans of processes for projects to measure and manage it all. That kind of focus, and continued progress on the jobs front--which we'll hear more about from the Labor Department later this week--may make for a solid second half of 2015 for many home building organizations. And it will be for some.
So, while the data points stack up generally to the good vs. the bad right now, it may be as good a time as ever (although probably never is a good time) to poke one of home building and residential development's raw nerves.
Management and strategic leadership diversity.
Here's the situation. White men, to a disproportionate degree, built home building and residential development's known domestic empires, and they continue to reign in the vast majority of powerful, c-suite positions. The giants of the industry through the decades have been men, mostly, of Western European descent. Nothing wrong with that. The blend of ancestral construction practices, technologies, management proficiencies, and, to a considerable degree, family business succession plans, have tended to preserve more senior-level roles for Western Europe-descended males than any other demographic class of human being.
Why would there be a need to alter such a fundamental piece of how home builders meet new home development's needs and opportunities? If it's not broken, don't fix it. Organizations--especially ones that have at their core a critical male-bastion dimension of heavy physical labor and job site culture--that have grown up and succeeded generation after generation, serving people of all stripes, colors, creeds, and ancestral heritages probably stand at least a fair chance at succeeding again, no?
So, why perturb the status quo, and suggest that the way it's always been is asking for trouble? Why stir the pot and say two ridiculously presumptuous things, considering I never ran a home building company. The thing is, 1) without more c-suite diversity, a company's priorities, resources, ideas, and solutions are likely to fall radically out of step with an infinitely more complex and fast-changing customer universe; and 2) without a diversified board of directors that exert a genuine capacity to challenge operational programs and strategies, management will very likely risk falling equally out of step with an infinitely more complex and fast-changing capital universe.
Does the fact that women and people of color are so woefully unrepresented among named executives of public home building companies, and the fact that so many regional and single-market private home building companies don't have a diverse board of directors bother anybody today? It should.
A home building operation--small, medium, and large--resembles nothing so much as an intricate time system of money, land assets, products and materials, labor, other services, permits, and, ultimately, revenue.
Clearly, two questions have arisen in the past several years in the wake of the Great Recession that have never had to be asked since the time women entered the workforce in droves in the 1960s and 1970s, forever changing household economics. One question is this--given structural, secular changes to industries and our economy--does homeownership equate to the value to a young adult household today that it had done for 80 years prior?
And two, will investment--equity or debt--flow to companies that lack a holistic panel of challengers and advisory resources that a fully-empowered, diverse board of directors represents?
This Harvard Business Review perspective looks at the gender pay disparity issue from the standpoint of behavioral economics, negotiation skills, and math. But what progressive home building and development company executives might better do is to look at their enterprise--small or large--in the way that 33-year-old Airbnb architect and ceo Brian Chesky maps his challenge. Fortune's Leigh "End-of-the-Suburbs" Gallagher profiles Chesky in the latest issue, quoting him as follows:
"I really have two jobs: The first job is, I have to worry about everything below the waterline; anything that can sink the ship.” He points to the scribbled line of waves that cuts the boat in half, and below that, two holes with water rushing in.
“Beyond that,” he continues, “I have to focus on two to three areas that I’m deeply passionate about—that aren’t below the waterline but that I focus on because I can add unique value, I’m truly passionate about them, and they can truly transform the company if they go well.” The three areas he’s picked: product, brand, and culture. “I’m pretty hands-on with those three,” he says. “And with the others I really try to empower leaders and get involved only when there are holes below the waterline.”
Chesky's c-suite are the ones to whom he entrusts dealing with the issues below the waterline. Mind you, Airbnb is seeking a new round of funding of $1 billion, would would value the company at $24 billion, bigger, Gallagher reports, than the $21 billion valuation of Marriott.
So, the questions are, do home builders have a team of c-suite executives who can keep those holes from sinking the ship, especially with the cultural demographics of households and the new geography of jobs in flux as they are?
It's time to diversify the c-suite among publicly traded home builders; and it's time for every private production home builder to put together a legitimately structured, empowered board of directors.