Gender Gains: Why CRE Needs to Prioritize Diversity
Greater Gender Diversity = Greater Profits
Hot off the presses, Commercial Real Estate Women (CREW) just released a white paper exploring women’s role and impact in the traditionally male-dominated field of commercial real estate. “Accelerating the Advancement of Women in Commercial Real Estate” is the latest in a growing body of work that discusses the need for – and benefit of – diversity in commercial real estate.
Bottom-line benefits to inclusionary hiring and promotion practices are evident in study after study highlighting the virtues of diversity in Commercial Real Estate (CRE). Gender diversity on executive teams and boards leads to higher profits, according to research from McKinsey & Company, who reported “companies in the top 25 percent for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.”
A 2016 Peterson Institute for International Economics study found that, for profitable firms, a move from no female leaders to 30 percent representation led to a 15 percent increase in net revenue margin. Further, The National Association of Investment Companies also reports that “female representation in top management leads to an average increase of $42 million in firm value,” and that diverse firms “outperformed the median Cambridge U.S. Private Equity funds during a majority of vintage years.”
Despite these and many more compelling facts and figures to support diversity, women continue to lag behind men in the CRE sector. The data suggests that some of the reasons why include the following:
- Significantly more men earn graduate and undergraduate degrees in real estate;
- Bisnow notes that wherein men are more often promoted because of their potential, women are typically promoted based on past accomplishments;
- The effects of the so-called “mommy tax” which manifests itself in two ways. First, having a family has been shown to deter women (and specifically mothers) from taking commission-based jobs. Second, other women are never fully able to catch back up to their male peers after taking time off for maternity leave, minimizing the number of women in higher-level positions.
Commercial Real Estate is historically one of the least diverse industries, but increasingly CRE firms are looking to change that. In doing so, these firms gain a competitive advantage in many ways, a prominent example being that they become eligible for vendor selection opportunities in which cultural and diverse team composition is considered when partner firms are selected. These organizations recognize that diversity benefits an organization’s performance and success and are making it a priority now more than ever.
Exacting Change Takes a Thoughtful Approach to Hiring and Promoting
CREW’s white paper highlights several key strategies the CRE industry and individual firms can enact to generate tangible results:
- Strengthening the pipeline of women into CRE;
- Providing advancement opportunities for women from mid-level to senior executive leadership;
- Aiming for greater gender equity on corporate boards;
- Advancing women of color.
The future of the commercial real estate industry is diverse. Having benefited from keeping an eye towards the long-term, firms who eagerly embrace and support diversity as part of their culture will gain a competitive advantage.