Managing Expectations or Expecting Management?

I often write and speak about the delicate balance of managing real estate service providers. Having been on both the client and service-provider side of outsourcing, I have a fairly good perspective on the issue. On one hand, too tight a rein by the client on the provider can stifle a relationship and impact creativity. On the other hand, it is obvious that leaving too much control to the service provider can result in unbridled costs and uneven performance. In past columns, I've discussed using comprehensive key-performance metrics, a thorough scope-of-service document, a well-written contract and other practical tools to set clear expectations on both sides of what are acceptable behaviors, performance goals and financial results.

Most service providers have good tools for this, and I've certainly been able to measure how our tools create value for our clients. But, in recent conversations with my colleagues on both sides of the outsourcing picture, I've begun to sense something new is challenging many corporate real estate departments and rendering some of these tools less effective. That 'something' is tied to how corporate real estate groups are organized and managed and the expectations these new structures are creating.

Managing Expectations. On the client side, old CRE command-and-control structures are giving way to more team-based organizations, and the typical reward systems for specific behaviors based on hierarchy are disappearing. Deep real estate skill sets are being forced to widen; tenure and seniority are less apt to factor into promotion and realignment; and the allocation of resources is more need-based than project-based. Teams can morph as participants and contributors come and go. The question of accountability is too often on senior management's lips.

The downside to this flattening structure is that more managers are taking the role of player-coach. Without a hierarchical structure in place, there is more confusion than ever in these teams regarding roles and responsibilities. The hierarchical org chart of the 80s and 90s has given way to an org chart that looks more like a spider's web.

Behaviorally, this results in expectations being mismanaged. Corporate real estate staffers expect more guidance from their player-coach management and, likewise, the player-coach managers expect more performance and commitment from their staffers. Unless these two groups adapt to the new environment in which they are operating, performance will suffer greatly no matter how well goals are undergirded by specific measurement tools. Obviously, the CRE player-coaches must let go of the old command-and-control mindset, and teammates must become more entrepreneurial and self-directed. At the extremes, staff-level employees can feel either paralyzed or ungrounded by this type of team atmosphere. Likewise, managers can feel as if their ability to direct is diminished, so at the extremes they will either abdicate responsibility or wait too long and then step in too late to re-direct the team.

Expecting Management. Enter the service provider. Because of the leadership vacuum, immediately, the service provider is sucked into the management role. This is not an explicit directive but one borne out of necessity due to the underlying change dynamic in the client's CRE organization. This is troublesome to me as a service provider in two ways. First, because of the apparent lack of client management focus and senior management's call for accountability, I could wear the scapegoat uniform rather quickly unless I'm knocking 'em out of the park the minute I arrive. Second, as with most service providers, I am certainly not prepared to come in to the relationship as the client's management. Mind you, I certainly could be, if that was the plan and that is how the team was structured. Many times, we are hired to replace a client's entire CRE organization – but that is usually by design, not default. Typically, we partner with the client and maintain an advisory role. It is a constant searching for the balance between driver and facilitator of process.

So the question for this month is: are you managing expectations or expecting management from your service provider? When you have the answer to this, you'll know better how to answer the question of who is accountable.

Based in Anaheim, CA, Vik Bangia (vik.bangia@cbre.com) is a managing director in CB Richard Ellis' global corporate services organization.