It's no secret: The real estate market is hot, and employee salaries are even hotter. While that's good news for employees, the raging market is only adding to employers' headaches.
"We've encountered more job-hopping in the industry," says Susan Hennessey-Morris, vice president and director of human resources for Beachwood, Ohio-based Developers Diversified Realty Corp. "The practice of staying at one organization for 10 years or more seems to be a thing of the past."
Devising ways to retain employees has become a large part of what companies do. The answer seems to lie in more compensation, improved benefits and ever-changing deferred compensation packages.
"We try to stay in the top third of the industry in our market area, and traditionally, we've stayed in that top third for all the different levels in our company," says Dale E. Scott, vice president of business development for Maitland, Fla.-based Keene Construction Co. "We try to find out what others are paying people, but that's difficult to do sometimes.
To obtain information about the competition, companies often use outside sources - data and statistics ranging from unemployment rates to compensation surveys.
"We just completed a brand-new compensation grade survey, and we've also come out with a new salary grade structure," says Kevin Soule, senior vice president of corporate administration for Chicago-based General Growth Properties. "We relied very heavily on information about the industry as a whole and used 13 separate compensation surveys that covered both the industry and Chicago."
Hennessey-Morris says her company studies industry trends, unemployment rates and economic conditions in its trade areas when compiling a new benefits and compensation package.
"Our package includes the development of a pay-for-performance salary plan along with a new health and life insurance package," she says, adding that Developers Diversified also offers an employee stock option plan.
At General Growth, Soule is hopeful that a new initiative, the cash-value-added (CVA) program, will improve the company's ability to promote and retain employees for the long haul. The program is designed to remove caps on bonuses, giving employees unlimited earning potential. Great, but what if they leave after collecting their bonus?
"If the employee exceeds 125% of his target bonus," Soule says, "the excess goes into a bank to be paid out in equal shares over a three-year period, with the first share paid in the current year."
With such attractive salary and benefits packages in the marketplace, companies must make sure they are offering neither too little nor too much. That's the case at Developers Diversified. "We are making employee retention initiatives a significant part of our business plan," Hennessey-Morris says. "We continue to monitor our salary administration to ensure that we are competitive."
Despite the aggressive retention efforts, inevitably some employees will seek greener pastures. Keene Construction has accepted the concept of "golden handcuffs," having had employees lured away.
"Companies have just come in and hired them away," Scott says, "offering them more and more until they couldn't refuse."
That's not to say that the company doesn't put up a good fight. It does, especially when faced with the possibility of losing a highly specialized employee. "We want people to think long and hard before they walk away," Scott adds.
While all positions have experienced an increase in pay over the prior year, Scott and Soule both have observed high growth in certain positions.
At Keene Construction, Scott reports major increases in salary at the levels of project manager (directs superintendent and hires subcontractors) and superintendent (handles jobs in a hands-on capacity). It's also become more difficult to hire people for these positions, even among college graduates just starting their careers.
"Whereas we used to go to the colleges to hire project managers looking for experience," he says, "now, when we get there, I don't know who's interviewing who."
Soule says the position of general manager - or mall manager, whom General Growth considers as CEO of the property - has changed the most over the 11 years he has worked for the company. The position has slowly evolved, and the quality of people recruited for general manager has been improving gradually each year.
In the past year, the position of attorney also has become harder to fill. "We've been doing a lot of chasing in terms of people trying to leave and us trying to adjust salaries," he says. "It's become a little more difficult, because of the hot external market, to actually recruit attorneys into the organization."
Soule says the redevelopment of older centers will drive up the market - and salaries - for a while longer.
But Scott says he's already seeing signs of less money flowing out to job candidates. "I don't see the rash of money being thrown at people that we saw a year ago," he says. "A year ago it was just flat crazy."