CRE’s’ ‘Failure to Communicate’ on Succession Planning

Ferguson Partners headquarters in Chicago. (Photo: Alan Scott Walker)

CHICAGO—“What we’ve got here is failure to communicate,” warden Strother Martin famously told his charges in the 1967 prison drama Cool Hand Luke. That sentiment is also embodied in the title of a Ferguson Partners Ltd. report detailing the gap between investors and real estate organization, especially REITs, when it comes to the importance of CEO succession planning. Specifically, investors understand the need, while real estate firms lag in taking action.

“Succession planning is critical for an organization’s success and investors understand this,” says Dominic Cottone, managing director in Ferguson’s leadership consulting group. Some of the most common pitfalls with succession planning, he says, include “organizations not starting early enough, lack of planning, not having an official decision body, not choosing the appropriate successor and assuming that succession planning stops once the successor is chosen, which is not the case. This is why we thought it was important to do a deep dive analysis into this issue and provide our perspective and some proven guidelines.”