*Article originally appeared on National Mortgage Professional Magazine.
by Beth O’Brien, President and CEO
As the CEO of a $1 Billion company, I have many constituents – from equity and bond investors to customers and employees. Yet despite their many demands, the management issue that consumes most of my thought capital is not fund raising or client management but leadership. Specifically, how as an organization can we grow effective leaders of the business? Training managers is relatively easy. There is usually a well-defined process and a set of specific skills. You can usually distill most of it to a process flow diagram. Developing leaders is more complex.
Why do I care so much about leadership? Because it is the key to scale. Without it, the organization can never grow beyond what one person can comfortably manage. Another way to think about it is: if management is the necessary blocking and tackling, leadership is the innovation and idea generation. You can never break through the spot you are in without the vision that leaders bring. I believe organizational growth is dependent on the organization’s ability to attract and grow leaders, not just managers. This is especially true in a newer company or with a new product like Single Family Rental (SFR) finance.
If you are the CEO of a Fortune 500 company and you need a new leader for a business line or you want to launch a new product, you can retain a recruiter to specifically look for the leadership qualities you want. Maybe you can find the exact blueprint with someone who has done it before. Maybe you run a great selection process and the person you drop in from the outside is effective from day one and the product gets launched on time and under budget. Or maybe not.
Most of us don’t have the luxury of an expensive search and I would suggest it’s not always the best approach for the organization. Although a lot of literature on the subject says leadership is hard to teach, if you change your mindset, I think it can be done. Rather than trying to teach leadership, learn to coach for leadership and I think the results will astound you. Identify the leadership qualities your business needs and learn to allow your employees to develop into great leaders by emphasizing growth in those characteristics.
To me, these are the five most important leadership qualities for my business and ideas to grow them:
1. Appropriate Risk Engagement
To coach these skills out of employees, first focus on whether the organization is blocking any of these attributes. The path to take risk and own the outcome is not always available to the employee. Even if you think it is, they may not know it. The culture needs to support it. You can support a culture of appropriate risk by giving people transparency on the numbers, allowing for mid-stream changes to a roll out and by allowing parallel projects and testing. Encourage dialog. Make sure it is two-way.
Challenge yourself to support innovation by not being afraid of being wrong. Then measure the outcome quickly so that if you need to change course you can. A great example of this process are some of the social media ideas we have had. Every once in a while, one of us has a great idea and we follow up on it right away. However, sometimes we are wrong and the lead data or click through numbers just don’t show improvement. The key is to keep generating new ideas and then run with the ones that work. Don’t let the flops stop the ideas from coming. And parallel test. A Facebook flop could be LinkedIn gold.
2. Complete Ownership
Complete ownership is sometimes the most difficult for some managers but they can’t lead without it. An effective leader has a holistic view of her business or business line and never hides behind the answer that some things are beyond her control. None of us control everything that affects our businesses but we need to adjust to them anyway.
True leaders control what they can but mostly manage through the things they can’t. If you run operations, you may not control production but you do have the ability to impact the customer experience; you are probably the best situated to help marketing understand the client’s needs because you know what problems you are solving and you control efficiency of all the product processes. If you are in Capital Markets, you don’t control interest rates but you own the capital formation process and adjust pricing and structure to adapt to market conditions.
Vision is what comes from total ownership and then taking a step back. If you are allowed truly to own your business, taking risks and making mistakes, you will come up with some great ideas. Then you will see things in a whole new light. Then you will begin to expand your vision. You will see the trends and you will focus on not just where the business is going but where it can go. You will learn from your mistakes.
We could look at single family rental loans as a one-off response to institutions entering the housing market in the downturn or we could take a step back and see rental housing as a structural part of the US housing stock without a bespoke financial product. You might have a different vison of what you are building if you are thinking more broadly and see the market as not just owner occupants and apartment dwellers but a whole continuum of affordable housing around the country.
4. Clear Communication Skills
You can have a great vision and be willing to take risks and own outcomes but if you don’t communicate it clearly, no one will follow. The greatest leaders are great communicators. This is perhaps the most straightforward area for coaching. Make sure your next round of leaders is constantly challenged on clear written communication, using data to communicate ideas and presenting internally and externally. We make sure our business leaders drive our due diligence sessions when third parties come to the office. It’s a process to make sure people know they can drive and that we trust them to drive.
I have even taken to stepping out casually when a business line is presenting to make sure the leader has the complete floor and that no one is deferring to me. Showing the depth of the bench is the strongest sign of leadership you can give. To scale, leadership needs to flow through the organization not just sit at the top. The other important opportunity to grow leadership in this business is to make sure your leaders present at conferences, are the stars of the webinars and become known as the industry experts. The person touching the client can often be the clearest voice on the problem your product is solving. If an organization has only one face, it is not developing any leaders.
5. Personal Brand Awareness
The combination of these attributes will contribute to the individual developing his own personal brand. Your team members are empowered to take risk and so they bring their ideas to work on a regular basis. They own the outcome so you are willing to let them try new things. They develop a vision for the market and the products that don’t stop at the status quo.
They articulate that vision in a way that we understand and we come on board with them. Then they start to think of themselves as the industry expert you helped them become. Now you have home grown leaders and your business can scale.
CoreVest is a leading provider of financing solutions to residential real estate investors. We provide attractive long-term debt products for stabilized rental portfolios as well as credit lines for new acquisitions. For more information about how CoreVest can help grow your rental and rehab business, please call 844.223.2231 or submit our contact form.