Real estate – putting people at the heart of business
04 Oct 2018
A successful construction project has always been one that is designed well, built on time and on budget. Most importantly, it should bring healthy returns for investors. Real estate by this definition has never really had much to do with people.
But times have changed. The sector increasingly sees that to maximise returns, projects must focus more on the human factor. This means both those who create buildings and the end consumers who ultimately use them.
Research findings – people lead to growth
Recent research we carried out found that, as one might expect, the real estate industry is far more focused than other sectors on investing in operating profit (45% against 34%) and far less interested in investment in people (16% v 24%). So far, so traditional.
Yet paradoxically, the same research also finds real estate more likely than other sectors (29% against 26%) to recognise its purpose as being customer-centric. This is good news: according to our Planning for growth research, the UK’s most growth-driven companies count purpose as a top factor when it comes to growing, and 43% of those growth generators we spoke to believed purpose helped them take the business to the next level1.
How people’s real estate needs changed
Why might this change of focus be required in real estate? Consumers’ and businesses’ needs are certainly more complex than in the past; some people need spaces where they can live and work; others need office space with areas that allow them to work individually or in groups, as well as speak to clients in person or remotely using the latest technology.
Technological advances, too, are driving the requirements of large commercial space. As a result of this flexibility, people expect more from their buildings to help them achieve their aims. The kind of facilities and amenities that buyers want have to be designed and planned in from the start. This could include being able to seamlessly manage future cabling upgrades (post-5G internet) or make advance provision for future sustainable energy supply (including electric car-charging or advanced battery power and storage).
The once uniform rigidity of the mass commute, with everyone doing 9-5 in a city office block, is diminishing. Planners, architects, construction firms – the whole real estate sector – can only truly provide for this change by putting people at the centre of decision-making. There is a need to think about what they will want now and in the future.
How the workforce needs in real estate have changed
Traditionally, a growing headcount was the measure of success in real estate, as manpower requirements went up with each new build commissioned. But the latest engineering developments being employed require fewer people on sites. This is particularly the case with modular construction, where building parts are prefabricated for standardisation and time efficiency.
The new workforce will need a more diverse range of skills as the industry heads in this direction, with the ability to use cloud-based programs to access plans and monitor progress in real time. As the human element moves away from the site towards the factory and office, so too will recruitment need an improved focus on training for these new tasks. People will increasingly need to have soft skills, rather than the traditional manual training associated with the industry.
People and sustainability – an area for growth
Thanks to the internet and a more robust approach to narrative corporate reporting around sustainability, successful businesses are increasingly transparent and subject to the scrutiny of the outside world. Customers, investors, regulatory bodies, and the general public have the power to research, compare and contrast real estate companies’ actions, looking far beyond the bottom line.
So, as well as practical training, real estate companies will need to keep a check on other sustainability issues affecting people. This includes the way they treat staff and set working practices, having full awareness of who is feeding into supply chains, and being mindful of how the company integrates with and helps the community. There are encouraging signs that real estate firms are taking more of an interest in this area.
Willmott Dixon created construction industry workshops for 32,000 students and a programme of mock job interviews within the community to give them an insight into future careers. And, when staff were encouraged to participate in the community programme, 80% did so.
"Sometimes it is easy to take things for granted or get bogged down in the statistics but it is the stories of real people that have managed to gain skills, careers and opportunities that they would not have had that mean the most to me.
"We have a purpose beyond profit and as the fifth generation to lead Willmott Dixon, I am proud of the difference we are able to make to people’s lives. The aim is always to make a difference and about 1% of our people's time is spent away from the 'day job' taking part in activities that enrich the lives of those less fortunate.”
Standing still is not an option
To continue to be good developers, real estate businesses will need to have more than just awareness of products from now on. They will need to know how to make sure their products remain a good fit for clients, and take responsibility for the sustainability of how those products are produced. Investors will continue to demand returns, and rightly so.
But the real estate businesses that struggle will be the ones not adapting to the changing needs of people and practice – focusing purely on the bottom line will not do. In working with our clients, we aim to help them see the bigger picture around people.
To discuss any of the issues raised within this article please contact Richard Hagley.
Purpose in business means having the ability to look beyond the hard financial results and take bold decisions that drive growth. It means constantly measuring whether the business is living up to its purpose, asking customers what they think and if their needs are being met. Read more about leveraging the power of purpose for growth.