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CEOs Address Labor Concerns

March 2020

The tight labor market leads to some new solutions, including self-guided tours.

Rick Graf has been in the apartment industry for more than 40 years. Yet in all that time in the business, he says, it has never been harder to find good talent than it is right now.

That has left the CEO of Dallas-based Pinnacle (which was recently purchased by Cushman and Wakefield) seeking solutions.

"We're looking at how we bring new people into our business, how we keep them and all those types of things. Labor is the No. 1 issue for us," he says.

At least, Graf isn't alone. "Everybody in the industry is scrambling to figure out how to solve a host of labor issues ranging from a lack of available labor to a lack of experience and skill levels required for ever-increasingly complicated building structures," says Greg Mutz, CEO of Chicago-based AMLI Residential.

The first line of defense for industry executives is keeping the employees they have happy and engaged through strong compensation, benefits and training. But after that, companies are looking at how to utilize technology to supplement those employees.

The Right Culture

Of course, in today's environment, companies need to offer competitive pay and benefits to attract and retain the best and brightest. In doing so, they expect to spend more.

"We expect pressure on payroll costs as the unemployment rate continues to be very low, and hiring and retaining great talent is challenging given the strength of the economy," says Sue Ansel, CEO of Atlanta-based Gables Residential.

Graf has seen significant payroll increases in both maintenance and leasing. While he thinks pay obviously plays a larger role in retention, creating a culture where people want to work, feel valued and have no reason to leave may be even more valuable.

"Having an organization that really offers some upward mobility is important," Graf says. "People want to know what the opportunity for growth and advancement is. And we try to provide that."

Communication is also a focus at Pinnacle. Graf wants to communicate better with his associates and make them feel more a part of the team.

"How can we encourage their input and ideas about how we can better run the company," Graf says. "We have 4,500 team members. We have a lot of bright people out there that have a lot of good ideas."

Eric Bolton, CEO of Memphis-based MAA, says that his company is trying to look at all of its training and go beyond the process of teaching policies and procedures to explain why the procedures it developed exist. "One of the things we've increasingly found is the more that we can get our folks to understand the why and the purpose," the more they can help the company improve those procedures, he says. "They understand what we're trying to achieve at the corporate level, and then we give them the encouragement and the mechanisms to offer up ideas."

And connections spawned by this kind of exchange between employee and company can improve retention, says Bolton.

"The commitments and the efforts that we put into training and developing go a long way toward helping them develop their own careers with our company," Bolton says. "I think it also goes a long way toward helping them build a connection to the company through the efforts that we make in training."

Gables is also focused on training. "To retain and grow talent, we continually focus on training and strengthening our workforce with structured learning plans delivered through custom learning plans, which include custom mixed media and instructor-led training, and is coordinated through an integrated learning management system," Ansel says.

At Morgan Properties, based in King of Prussia, Pa., competitive benefits and training go hand in hand. "We will continue to offer as well as provide career advancement opportunities through Morgan University, our company-wide training program," says Jason Morgan, Principal of Morgan Properties. . Morgan University offers training throughout each employee's career at Morgan Properties, including the professional development programs, property management trainee programs, Morgan Mentors program and more—"all of which help to foster passionate, involved team members," he says.

Tech Solutions

When the subjects of technology investment and the labor force come up, inevitably the discussion turns to how companies are using tech to trim payroll costs. But that isn't always so.

Throughout 2019 and into 2020, Gables has been investing in a human capital management system. The company's aim: to create a more efficient, integrated associate experience that is more easily accessible and able to drive performance using data ad key performance indicators. Ansel says, "A key component in this effort is the consolidation of various human capital-related systems to Workday, which now drives our recruiting, onboarding, timekeeping, payroll, compensation, benefits, training, talent management and succession-planning programs."

But companies are also looking at tech, including Artificial Intelligence (AI), as a way to create more efficiencies. "We've spent a lot of time trying to figure out how we [can] improve productivity," Mutz says. "We're asking, how can we reduce the amount of people it takes to manage, lease and maintain a high-quality apartment community? And how can we use automation and AI in some way to help address our challenges?"

When it comes to saving costs, Mutz admits that everything is on the table. AMLI has looked at a number of solutions. "But nothing is easy and every potential solution raises several problems, and every solution carries potential unintended consequences," Mutz says.

For AMLI, which is a developer, technology also offers significant potential benefits. AMLI has evaluated modular building but doesn't think it will accommodate all of the architectural touches that cities are demanding. "I think at some point the industry will move in that direction, but right now we can't make modular work with high-end, mid-rise and high-rise product," Mutz says.

Self-guided tours are another often-cited solution (or at least partial solution to the labor squeeze). MAA is looking at self-guided tours, but Bolton says they need to be part of a bigger technology package. "It really starts with introducing the smart home technology onto the platform and throughout our portfolio," Bolton says. "That technology and flexibility really start to open up a lot of other opportunities, including self-guided tours."

Bolton thinks this technology will eventually allow MAA to become efficient onsite. "Ultimately, it does have implications for staffing levels," he says. "I think over the next two or three years we're going to continue to see the industry transforming in a lot of ways because of all this new technology."

Mutz sees potential with self-guided tours but says AMLI hasn't been able to make this type of leasing work yet. "People like to talk to people [leasing agents] and ask questions," he says.

Self-guided tours can also raise security issues, according to Mutz. "You have to have cameras everywhere," he says. "You don't know who is going to go somewhere they shouldn't be. But having said that, AMLI and the industry are likely moving toward greater use of self-guided tours. The younger the prospect, the better received the concept is. The older the prospect and the higher the rent, the less well-received the concept is."

In some cases, the AMLI CEO says, companies are doing a mini-guided tour, where the leasing agent talks to the prospective residents, qualifies them and gives them a code to access the apartment home. "We're experimenting with it, but so far we haven't adopted this approach in any significant size. We are still beta testing how best to accomplish what the market wants," Mutz says.

Once apartment firms become more comfortable with these new technologies, they do have the potential to improve margins. "Everyone is trying to figure out how best to mix technology together with a high-quality personal touch to achieve the sweet spot where both performance and expense reduction are maximized," Mutz adds.