WorkPuzzle

Is Searching For Stars Worth the Price? Part 2

Hopefully, you had the opportunity to read the blog that Dave highlighted earlier this week.  At the end of his posting, you may have noticed he referenced a “Part 2” to Bill Taylor’s original essay.  I found the follow-up article even more helpful than the original.  There is something about having to defend your ideas under hostile fire that causes the cream to rise to the top.    

Since digesting both articles amounts to a lot of reading, I thought it might be helpful to summarize a few of the main points and relate the specific ideas to the real estate industry.

1.   The “smart” take from the “strong.”  Traditionally, the strong take from the weak.  This is particularly true in the real estate industry.  If you’re fortunate enough to have a strong brand or even a multi-generational track record of success, you’ve probably been able to leverage that strength to defeat weak competitors and keep new opponents from gaining traction.  

Will this trend continue?  Not if real estate follows the pattern that has emerged in many other industries.  Bill puts it this way :

“... the great sweep of business and innovation has increased the power of the individual and the small team over the lumbering herd.”

Lumbering herds take notice.  There are some small, nimble teams and individuals who want what you have.

2.  Some companies believe in “stars” because they don’t believe in “systems.”  Bill references an article written by Malcom Gladwell in 2002 called The Talent Myth to make his point.

“The problem with this star-studded approach is the assumption that an organization's intelligence is simply a function of the intelligence of its employees.  [Some companies] believe in stars, because they don't believe in systems.  In a way, that's understandable, because our lives are so obviously enriched by individual brilliance.  Groups don't write great novels, and a committee didn't come up with the theory of relativity.

But companies work by different rules.  They don't just create; they execute and compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star."

With regard to real estate... Looking ahead, those companies that are able to make “the system the star” will have a distinct advantage over those which continue to depend upon the talent of individual contributors.

3.  Follow IBM’s example.  Just because a company is large and prominent, does not mean they’re destined for failure (or success).  IBM has lasted for more than 100 years because it has recreated itself as technology, culture, and business has changed again and again.

“It's worth noting that the debate over this post takes place during IBM's centennial celebration.  Now, I'm excited by the rise of Facebook, the IPO of LinkedIn, and all the latest successes from the startup world.  It's great stuff.  But for IBM to celebrate its 100th anniversary as a company, to remain, despite wave after wave of disruptive technological change, as a world-shaping force for solving big problems and making a big difference — that's truly something to admire.

IBM has stayed in the game for a century because it understands that groups are as important as individuals…  [As young IBM employees] report for duty, they get immersed in a system that emphasizes group cohesion over me-first individual achievement.  Great companies, great organizations of all kinds, are about how everyone works together as well as how each person does his or her work.  Winning [companies] are more than just a collection of talented individuals.”

Many of Tidemark’s clients are the most successful and prominent real estate companies in the country (some of these companies are even older than IBM).  And many of these companies are in the midst of a profound struggle to recreate themselves in the face of changing marketing conditions, new technologies, and high-energy competitors.

Don’t give up the fight to make this transition.  Become, once again, the IBM of your community...

---

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

Is Searching for Stars Worth the Price?

Earlier this month I began to follow some controversy around a blog written by Bill Taylor (founder of FastCompany) for Harvard Business Review called Great People are Overated. 

While I agree with what he had to say, many did not.  In fact, those who didn't agree, spoke their opinions in hostile form.  So, I'd be interested in what you all have to say.  The real estate industry is an interesting arena to hold this debate, as we are all too familiar with a percentage of "star" agents who have the tendency to occasionally wield their power.  What price to the company, company values, and a sense of team work, do we actually sacrifice?

I was especially drawn to his quote, "Great teams, great companies, great organizations of all kinds are as much about character as credentials..."  I truly believe that this is the way it's supposed to be.

Here is the blog in its entirety:

"Last month, in an article in the New York Times on the ever-escalating 'war for talent' in Silicon Valley, Facebook CEO Mark Zuckerberg made a passing comment that has become the entrepreneurial equivalent of a verbal tick — something that's said all the time, almost without thinking.

'Someone who is exceptional in their role is not just a little better than someone who is pretty good,' he argued when asked why he was willing to pay $47 million to acquire FriendFeed, a price that translated to about $4 million per employee...'They are 100 times better.'

Zuckerberg's casual calculation reminded me of a conversation with Marc Andreessen, the legendary co-founder of Netscape, and now one of Silicon Valley's most high-profile venture capitalists.  'The gap between what a highly productive person can do and what an average person can do is getting bigger and bigger,' he told Polly LaBarre and me for our book, Mavericks at Work. 'Five great programmers can completely outperform 1,000 mediocre programmers.'

Now, I admire what Mark Zuckerberg has built, and I consider Marc Andreessen without peer as an entrepreneur and a thinker, but do we take seriously what these two Silicon Valley giants claim about talent?

If you are building a company, would you prefer one standout person over one hundred pretty good people?

If you were launching a technology or developing a product, would you rather have five great engineers rather than 1,000 average engineers?

Have we become so culturally invested in the allure of the Free Agent, the lone wolf, the techno-rebel with a cause, that we are prepared to shower millions of dollars (maybe tens of millions) on a small number of superstars rather than a well-assembled team that may not dazzle with individual brilliance, but overwhelms with collective capability?

Isn't that what we see time and again with athletic competition, perhaps the closest thing we have these days to the frenzied competition in Silicon Valley? I spent Father's Day at Fenway Park, as the Red Sox hosted the Stanley Cup champion Boston Bruins to celebrate their victory.  Nobody would suggest the Bruins had the best individual players in the NHL — throughout the year, the stars of the Vancouver Canucks shone much more brightly.  But it was the Bruins' work as a team, a collective show of commitment and determination, that won the day.  And what won on the ice won on the hardwood as well — LeBron James vs. the Dallas Mavericks, anyone?...

Yes, a big part of the transformation of business over the last 20 years has been a pendulum swing in the logic of success.  The strong no longer take from the weak; the smart take from the strong.  From an organizational and competitive standpoint, raw power, brand incumbency, and sheer size, have lost their luster as sources of success.

But it's possible for the pendulum to swing too far in the other direction.  The latest trend in Silicon Valley, and the subject of the New York Times article in which Mark Zuckerberg explained his talent calculus, is called 'acqhiring' — shelling out big bucks to acquire a company, not to buy a product or a piece of technology, but to hire a few (or even one) software programmer or engineer who will arrive at the acquiring company and make a huge impact.  Facebook, according to the Times, is the pioneer of this new phenomenon, acquiring a slew of companies, killing their products, but keeping their developers.

Star-gazing entrepreneurs who are reluctant to look to sports for lessons in the limits of individual talent might instead look to Wall Street, and the research of Harvard Business School professor Boris Groysberg, captured in Chasing Stars.

Here's how Groysberg's publisher distills his insights:  'After examining the careers of more than 1,000 star analysts at Wall Street investment banks, and conducting more than two hundred frank interviews, Groysberg comes to a striking conclusion:  star analysts who change firms suffer an immediate and lasting decline in performance.  Their earlier excellence appears to have depended heavily on their former firms' general and proprietary resources, organizational cultures, networks, and colleagues.  There are a few exceptions, such as stars that move with their teams and stars that switch to better firms.  Female stars also perform better after changing jobs than their male counterparts do.  But most stars who switch firms turn out to be meteors, quickly losing luster in their new settings.'

I'm certainly not suggesting that leaders who are growing companies or building teams should settle for mediocrity.  But I am suggesting that there is more to long-term performance than the excellence of your individual players.  Great teams, great companies, great organizations of all kinds are as much about character as credentials, about what makes people tick as much as what they know.  Most of business life isn't really a choice between one great person and 100 pretty good people, but if that is the choice, I'm not sure I'd make the same choice as Mark Zuckerberg — especially if those 100 pretty good people work great as a team."

If you want to read Part II of this article here is the link:  http://blogs.hbr.org/taylor/2011/06/great_people_are_overrated_par.html

---

Editor's Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, a Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.

If the Traditional Web Shrinks, Will Real Estate Become Social Again?

I came across an article this week written by Ben Elowitz that is worth sharing.  Elowitz is the co-founder of Blue Nile, a publically-traded online jewelry retailer, and now heads a media company called Wetpaint.

In the article, Elowitz comments on recent data which demonstrates that the internet (ie. the traditional web) has peaked and is now shrinking.  Here is the data he presents in the article: 

“When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore.  And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period.

We’ve known that social is growing lightning fast – notably, Facebook consumption, which grew by 69 percent; but now it’s clear that Facebook is not growing in addition to the Web.  Rather, it’s actually taking consumption away from the publishers who compete on the rest of the Web.

And just what is the rest of the Web?

I have been calling it the ‘document Web,’ based on how Google and other Web architectures view its pages as documents, linked together.  But increasingly, it might as well be called the ‘searchable Web’ since it’s accessed predominantly as a reference, and navigated primarily via search.”

So, if the traditional web is shrinking, what is growing?  As the chart shows, Facebook has continued to increase in scope and influence.  In addition, the use of mobile access technologies and video (as opposed to text and graphics used in the searchable web) also continue to proliferate.

What does this mean for the real estate industry?  I think it is ironic that the real estate industry began and flourished for many years by being social...not social in a digital sense, but rather the “good old days” of having actual friends, business associates, and trusted network contacts that comprised a legitimate sphere of influence.

As long as information flow was restricted, this traditional social business system worked well.  In fact, some of the most successful pioneers in the real estate world were the true innovators who learned to leverage and scale this social way of doing business.  This was no easy task.  It took real talent, skill, and business acumen to build and operate real estate companies that had hundreds (or sometimes thousands) of agents.

But, over the last decade, the traditional social business system has started to erode.  The erosion probably started with the creation of the MLS, but it was truly powered by what Elowitz calls the “searchable web.”  With large databases becoming accessible to the public via search technology, the pendulum started to swing from a socially-powered business model, to a decidedly data-driven (or transactional) framework.  If the consumers have the data and can use that data to gain knowledge, the value of the social connection is diminished.

To most of you, the description above is not news.  You’re well aware that the real estate business framework has changed.  The question now is what to do about it.  How do you successfully compete in this new environment?

Elowitz is making the point that you probably don’t need to worry about it.  The “searchable web” has peaked and will surprisingly swing back to where the real estate industry originally started—a social business system.

“Something larger is afoot, and it’s not about science or technology.  Rather, as human beings, we have changed how we fit the Internet into our lives.  And the nature of the Web is changing to match.  The old searchable Web is crashing; while the new connected, social Web is lifting off.

In the last year, Facebook’s share of users’ time online grew from one out of every 13 minutes of use nationwide, to one out of every eight.  In aggregate, that means the document Web was down more than half a billion hours of use (that’s more than 800 lifetimes) this March, versus last March.  And in financial terms, that represents a lost opportunity of $2.2 billion in advertising inventory that didn’t exist this year.

The change in the Web’s direction is a clear indication to me that we aren’t just in the midst of a boom for new interaction modes, but rather a generational overhaul of the Internet.

What replaces the declining searchable Web is a new and “fully connected” digital life.  You may have heard this before.  After all, the promise of the Web was to connect pages with hyperlinks.  Well, this time, 'connected' means much more.  It means the Web connects us, as people, to each one of the individuals who’s online; and those connections, ultimately, extend from one of us to all of us.”

The real estate industry grew, flourished, and became one of the largest influencers in the United States economy by understanding the power of the social business model.  So, here's a question for you:  Will it happen again?  It’s a new set of tools and technologies this time around, but many of the fundamental things about human nature remain unchanged...

---

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

Do You Need a Good Book for the 4th of July Weekend?

I subscribe to several services that provide summaries of the latest books.  Usually the summaries do not provide enough information to satisfy the need I have to completely understand a topic, but they do provide some insight regarding whether a book is worth the time commitment to read.

One of these services is called 800-CEO-READ.  This week, this company republished a book list called Amazon's Best of 2011...So Far.  In the business category, here are the top ten books: 

 

    

    

 

• Onward: How Starbucks Fought for Its Life without Losing Its Soul by Howard Schultz, Rodale Press
• Enchantment: The Art of Changing Hearts, Minds, and Actions by Guy Kawasaki, Portfolio
• Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization by David Logan, John King & Halee Fischer-Wright, Harper Paperbacks (the paperback release of the authors’ 2008 book)
• In The Plex: How Google Thinks, Works, and Shapes Our Lives by Steven Levy, Simon & Schuster
• Poke the Box by Seth Godin, The Domino Project – Powered by Amazon
• Disciplined Dreaming: A Proven System to Drive Breakthrough Creativity by Josh Linkner, Jossey-Bass
• We First: How Brands and Consumers Use Social Media to Build a Better World by Simon Mainwaring, Palgrave MacMillan
• The Thank You Economy by Gary Vaynerchuk, HarperBusiness
• Beyond Wealth: The Road Map to a Rich Life by Alexander Green, John Wiley & Sons
• Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin, John Wiley & Sons

Hopefully, one of these books will tweak your interest and you can pick up a copy before you head out for your Fourth of July weekend.  Enjoy. 

---

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

Is the Real Estate Industry Killing You?

Most of our readers have experienced a great deal of stress over the last few years. Figuring out how to first survive, and then somehow thrive has probably added at least a few gray hairs to your head.

Along those lines, I’m wondering how the market is affecting your health?  In a recent update, Dr. Martin Seligman describes with powerful evidence why the impact will be very different on some of you than on others, depending on your level of optimism:

“In the mid-1980s, 120 men from San Francisco had their first heart attacks, and they served as the untreated control group in the massive Multiple Risk Factor Intervention Trial (acronymic MR FIT) study.  This study disappointed many psychologists and cardiologists by ultimately finding no effect on CVD (Cardio Vascular disease) by training to change these men’s personalities from type A (aggressive, time urgent, and hostile) to type B (easy going).  The 120 untreated controls, however, were of great interest to Gregory Buchanan, then a graduate student at Penn, and to me because so much was known about their first heart attacks: extent of damage to the heart, blood pressure, cholesterol, body mass, and lifestyle—all the traditional risk factors for cardiovascular disease.  In addition, the men were all interviewed about their lives:  family, job, and hobbies.  We took every single 'because' statement from each of their videotaped interviews and coded it for optimism and pessimism.

Within eight and a half years, half the men had died of a second heart attack, and we opened the sealed envelope.  Could we predict who would have a second heart attack?  None of the usual risk factors predicted death:  not blood pressure, not cholesterol, not even how extensive the damage was from the first heart attack.  Only optimism, eight and a half years earlier, predicted a second heart attack; of the sixteen most pessimistic men, fifteen died.  Of the sixteen most optimistic men, only five died.

This finding has been repeatedly confirmed in larger studies of cardiovascular disease, using varied measures of optimism”

There are many more studies like this if you’d like to read more of the book... Seligman goes on to describe that many guessed, wrongly it turns out,  that these studies must have been measuring depression in the pessimists and that is what killed them.  But read on…

“Is depression the real culprit?  Pessimism, in general, correlates pretty highly with depression, and depression, in many studies, also correlates with cardiovascular disease.  So you might wonder if the lethal effect of pessimism works by increasing depression.  The answer seems to be no, since optimism and pessimism exerted their effects even when depression was held constant statistically.

All studies of optimism and CVD converge on the conclusion that optimism is strongly related to protection from cardiovascular disease.  This holds even correcting for all the traditional risk factors such as obesity, smoking, excessive alcohol use, high cholesterol, and hypertension.  It even holds correcting for depression, correcting for perceived stress, and correcting for momentary positive emotions.  It holds over different ways of measuring optimism.  Most importantly, the effect is bipolar, with high optimism protecting people compared to the average level of optimism and pessimism, and pessimism hurting people compared to the average. 

Why optimists are less vulnerable to disease:  How might optimism work to make people less vulnerable and pessimism to make people more vulnerable to cardiovascular disease?  The possibilities divide into three large categories:

1. Optimists take action and have healthier lifestyles.  Optimists believe that their actions matter, whereas pessimists believe they are helpless and nothing they do will matter.  Optimists try, while pessimists lapse into passive helplessness.  Optimists therefore act on medical advice readily…they also take action to avoid bad events, whereas pessimists are passive.
2. Social support.  The more friends and the more love in your life, the less illness.  George Vaillant found that people who have one person whom they would be comfortable calling at three in the morning to tell their troubles, were healthier.  John Cacioppo found that lonely people are markedly less healthy than sociable people.  In an experiment, participants read a script over the phone to strangers—reading in either a depressed voice or a cheerful voice.  The strangers hang up on the pessimist sooner than on the optimist.
3. Biological mechanisms.  There are a variety of plausible biological paths.  One is the immune system.  Judy Rodin, Leslie Kamen, Charles Dwyer, and I collaborated together in 1991 and took blood from elderly optimists and pessimists, and tested the immune response.  The blood of optimists had a feistier response to threat —more infection-fighting white blood cells called T lymphocytes produced—than the pessimists.  Another potential biological path is a pathological circulatory response to repeated stress.  Pessimists give up and suffer more stress, whereas optimists cope better with stress.  Repeated episodes of stress, particularly when one is helpless, likely mobilize the stress hormone cortisol and other circulatory responses that induce or exacerbate damage to the walls of blood vessels and promote atherosclerosis.  Repeated episodes of stress and helplessness might set off a cascade of processes involving higher cortisol and lower levels of the neurotransmitters known as catecholamines, leading to long-lasting inflammation.  Greater inflammation is implicated in atherosclerosis, and women who score low in feelings of mastery and high in depression have been shown to have worse calcification of the major artery, the trunk-like aorta."

My hope is that at least some of you have discovered a great deal about yourself during this challenging time in our little piece of history.  If you’re an optimist, there are additional perks to come, if they haven’t already.  There's plenty of research that says you'll experience success.  So continue to work hard.

For those pessimists, you might benefit from reading Dr. Seligman's book, Learned Optimism: How to Change Your Mind and Your Life, or read the main source of this article:  Flourish: A Visionary New Understanding of Happiness and Well-Being.

---

Editor's Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, a Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.

Help me Build a Survey for Managers

Hello everyone.  We write and frequently speak on the topics that concern managers of real estate offices.  However, it occurred to us that it's due time we discover an effective way to receive your input about the pertinent issues that exist in your field of work.

We've chosen to obtain this valuable information about the current challenges real estate professionals face by designing a survey, intended to gather relevant information regarding the management of real estate offices.

But, I need your help...  We would like as many of you as possible (Managers, Agents, GM's, Directors, C-Levels, Owners...and anyone I left out) to respond to me through my email davidm@tidemarkonline.com and post questions that you feel should be considered for the survey.  We'd like the questions to be formulated in such a way that they can be answered in varying degrees.

For example:

Managers in our company are given clear performance objectives.
This can be answered (1) VERY TRUE, (2) SOMEWHAT TRUE, (3) INCONSISTENTLY, or (4) NEVER.

Or...

I spend the following percentage of time Recruiting:
(1) 1-5%, (2) around 10%, (3) More than 20%, or (4) NONE

Get creative.  What do you really want to know about your fellow managers, nationwide?  You can ask anything.  I'll keep this post brief so that you can spend some time considering some questions, click my email address, and then send them over.

ALSO-- I guarantee that the source of all questions will be anonymous, unless you indicate that you would like for us to let others know you were helpful in building this survey.

When we're done building it, we'll send the link out to take the survey, and let you all know the results once they're compiled.

Thank you for your time,

Dave

---

Editor's Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, a Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.

Gender Differences in Caffeine and Coping with Stress

Before and during your next important meeting or negotiation, should you drink caffeine or water?  According to a recent study reported by BPS Research Digest, the answer to this question depends on whether you are female or male.  The study compares the performance of men working in pairs, to women working in pairs.  The researchers varied whether their subjects drank caffeinated or decaffeinated coffee, while exposing them to performance pressure.  Here's what they found:

"If a meeting becomes stressful, does it help, or make things worse, if team members drink lots of coffee?  A study by Lindsay St. Claire and colleagues that set out to answer this question has uncovered an unexpected sex difference.  For two men collaborating or negotiating under stressful circumstances, caffeine consumption was bad news, undermining their performance and confidence.  By contrast, for pairs of women, drinking caffeine often had a beneficial effect on these same factors.  The researchers can't be sure, but they think the differential effect of caffeine on men and women may have to do with the fact that women tend to respond to stress in a collaborative, mutually protective style (known as 'tend and befriend'), whereas men usually exhibit a fight or flight response."

More research is definitely needed to confirm these results.  But, I believe these researchers are onto something.  So, to be safe, I know what I'm going to do... I'm going to personally limit my caffeine intake when attending potentially stressful meetings.  What does this mean for you and your agents?  If there is a chance that these findings can be generalized to all negotiations, it might make sense to at least let your agents know about this research.....and in the next meeting, instead of labeling your coffee "Decaf" or "Caffeinated," perhaps label them "Male" and "Female."

---

Editor's Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, a Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.

The 20 Million Candidates You're Missing--Part 2

Last week, I began a discussion on the possibility of real estate companies focusing their recruiting efforts on the large demographic of young people who are either unemployed or underemployed.  

At the end of the discussion, I posed the question of whether you, as a real estate owner or hiring manager, believe it is worth it to focus a significant portion of your recruiting effort on this group of candidates.  I received some great comments back. 

There seems to be a small group of our readers who are legitimately excited about engaging, hiring, training, and mentoring young people toward success.  However, there are many others who are not so hopeful.  I've heard many polite, but weak-hearted responses among many of the managers whom I've met with in-person over the last several months...typically along the lines of..."I see what you're saying, Ben" or "That's interesting information."  But in their eyes, there is no passion toward truly pursuing these types of candidates.   

In an overarching sense, I suspect that this lack of passion is rooted in the resistance that every human being naturally feels toward change.  The specific reasons this particular change in hiring focus would not be good for your company or office probably varies significantly.  

Rather than trying to identify and address those underlying causes, I think it may be more helpful to address some of the common myths that exist regarding young candidates.  In doing so, I believe that some of the resistance that you feel may dissolve in the face of the potential and opportunity that young candidates bring to the table.

Myth #1:  Young people are not motivated.  If you flip through the channels during primetime, it does seem that young people (especially young men) are often portrayed as unmotivated or focused on the wrong things.  Or maybe you know someone personally who has an adult child living at home, who spends way too much time playing video games and surfing the web.  Your concerns have some validity.

However, I encourage you to look at statistics that quantify the issue before you disregard this whole demographic slice of society.  Most economists agree that about 3% of the population is unemployable (i.e. they can't keep a job) at any given time.  When I was in the military, we used to call these folks the "sick, lame, and lazy."  This would amount to four to five million workers in the U.S. who are deemed "unemployable."

Even if all 3% of these unemployables were in the above mentioned (young) group (and they're not), 15 million employable candidates would remain in the pool.  Just selecting the most motivated 10% of this group, could replace the number of real estate agents 55 and older, three times over.  The numbers are simply too large to make the generalization that this whole demographic group is unmotivated.  There are several million young, educated, and motivated candidates who could not only do the job, but dwarf the motivation level of many of your current agents.  

Myth 2:  Young people have limited resources.  The most common complaint I hear from owners and hiring managers is that the candidates they are interviewing do not have the financial backing (start-up money, ability to go without income for awhile, etc.) to start a career in real estate.

The tendency is to focus on the individual candidate as we wring our hands over this problem:  If a candidate doesn't have the financial ability to start a real estate career, disregard that person and find someone who does...  This is a great plan until you realize there is a very limited number of financially stable candidates available.  If you do happen to find one of these rare beings, you'll quickly notice they have other options outside of real estate.  

I encourage you to take one step back.  While most everyone has financial challenges, who has the highest probability of solving their financial problems as they start a real estate business?  I would argue that it is young people, for the simple fact that they do not have the expenses and responsibilities of a middle-aged person.  If they are living with their parents--no spouse, no kids, and limited monthly expenses--it is much easier to survive a startup period.

In addition, an adult child living at home has a much better chance of overcoming the financial obstacles than someone on their own.  Why?  Quite often, these candidates have motivated parents.  Getting junior out of the house and established in a career of their own is not only a priority for many parents, it is quite often something they are willing to put some finances towards.

3.  Young people do not have a large enough network (sphere of influence) to be successful.  One of the comments I got back from a top performing hiring manager in one of the midwest markets sheds some light on this issue:

"I truly believe that this group of candidates has a lot to offer to our industry for a number of reasons.  [One of the important reasons is that] they are in the age group that has many friends of their own that will be entering the housing market, if not themselves, as well."

I once read that railroad executives of the late 19th century never imagined that that their competitors would one day be metal tubes that flew thousands of feet in the air, without the need for steel tracks and other infrastructure.  Nor did real estate agents, even 20 years ago, imagine that a person could sit in their house and have free access to hundreds of millions of other people both in their neighborhoods and around the world, through the internet and social networks.  What's even more strange is that we call these people friends!

Here's the point:  Young people develop and maintain relationships differently than the generation before them.  Although it may seem strange, many of them have access to huge networks, and they are just learning how to leverage those relationships for business purposes.  You're going to need these individuals to help you transition into your own version of the airplane and tap the next generation of homeowners.

Are you ready to start engaging this new group of candidates?  You may need to dip your toe in slowly at first, but once you experience a few successes, I think you'll be hooked.  Their energy, excitement, and hope for the future is contagious, and it's just what the real estate industry needs. 

---

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

The 20 Million Candidates You're Missing

Starting in 1960, the U.S. Census Bureau began tracking a statistic called Household Formations.  If you're a real estate owner or manager who has the responsibility for replacing an aging workforce over the next five to ten years, it might be a metric you want to start noticing.

In a recent article in Business Week, economists reported a little bump in consumer spending they attribute to the fact that more adult children are moving out of their parents homes and starting households on their own.  This is not the only source of new household formations, but it traditionally accounts for the major trending in this statistic (divorce stats affect this metric as well).  If kids are getting out of college and obtaining well-paying jobs, they strike out on their own and set up households.  

In the last few years, the opposite has been true.  Business Week reports:

"About 20 million adult children in the U.S. live with their parents, and most are eager to move, says Peter Francese, a demographic analyst for advertising agency Ogilvy & Mather.  'Most guys who live at home beyond some young age walk around with a great big 'L' [for "loser"] on their forehead,' Francese says.  'As more young people feel they will be able to keep a job, bingo, they're gone.'

Next year, nearly 1 million new households will be created, UBS Securities (UBS) predicts, up from the 357,000 in the year ending March 2010, the lowest number for a 12-month period on record since the Census Bureau started tracking household starts in 1960.  U.S. household formation in the three years ending March 2010 was roughly 40 percent of the long-term average, or about 500,000 annually, according to Census data."

The article goes on to spout optimism about how this economic indicator is starting to fuel consumer spending; the average person spends $1,900 on consumer goods setting up their household.  Will this change spur economic growth?  I'm not sure--it may be best to just let the prognosticators debate that issue.  I'm more interested in the 19 million adult children who are stuck living with their parents because they can't find a job.  Let's take a closer look at this data.

As the graph to the left illustrates, the number of new households is quite low.  The IHS Global Insight researchers have estimated this trend will dramatically change in the next couple years.  Let's suppose this does happen (which I doubt it will).  If nine million new households are formed over the next five years, this only reduces the backlog to 11 million adult children living with their parents.

My calculation above also assumes that there will be no new people graduating from college and moving back in with their parents.  While it may be difficult to draw a line on where a college grad crosses from "underemployment" (they have a low paying job that does not match their degree) to "employment" (they have a job that pays enough for them to move out of their parents' house), I've tried to do my best to come up with an accurate number.  Here are two (1, 2) of several articles I've read on this topic.  

I think there will be about 700,000 new college grads entering into this unemployment/underemployment state each year, for the next few years.  Taking into account those who do not have degrees who also will be finding themselves in this state, the number of new adult children who move back in with their parents will be much higher.  By the way, the average person who is considered "underemployed" makes $400/week.

So, it's probably safe to say that the backlog of adult children who are living with their parents will not diminish quickly.  It is quite likely that this number will remain significantly above 10 million people for some time.

Here's a question for you:  Do you believe this large group of candidates could help solve the significant recruiting challenges that will face the real estate industry in the next five years?

You may comment confidentially by replying to workpuzzle@hiringcenter.net.  If you want to share your response with others, use the comment link on www.workpuzzle.com.

In my next post, I'll discuss reader comments and provide some comments of my own. 

---

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

The Answers to Some of the Weirdest Interview Questions

As a follow-up to my latest WorkPuzzle entry, I felt that I couldn't leave you hanging, and had to include some answers in this edition.

So, here are the answers to a few of the interview questions that I found particularly clever:

1. If you were shrunk to the size of a pencil and put in a blender, how would you get out?  ANSWER:  If I was a pencil, I would not have a brain and therefore would not even be able to comprehend that I am in a blender, nor would I know that it is necessary to get out.
2. How many ridges are there around the edge of a quarter?  ANSWER:  A U.S. quarter has 119 ridges (termed "reeds" by the U.S. Mint).
3. How many basketballs can you fit in this room?  ANSWER:  One.  You did not ask what is the maximum number of basketballs you can fit in the room.
4. Out of 25 horses, pick the fastest three horses.  In each race, only five horses can run at the same time.  What is the minimum number of races required?  ANSWER:  Without timing the races, the answer would be 12.  You could have the three fastest horses run in the same race, so you need to account for that possibility.  You run five races and keep the top three finishers in each race.  You are left with 15 horses.  You run three more races and keep the top three finishers, leaving you with nine horses.  Two more races leaves you with six horses.  Take the last place finishers in each of the last two races and have them race.  The winner of this gets placed into the final race with five horses.
5. Given the numbers 1 to 1,000, what is the minimum number of guesses needed to find a specific number if you are given the hint “higher” or “lower” for each guess you make?  ANSWER:  The minimum number is 1.  You can guess it correctly the first time, or guess 2 or 999 and get it with a higher or lower hint.  So you have 3 possibilities of getting the correct answer with one guess.
6. An apple costs 20 cents, an orange costs 40 cents, and a grapefruit costs 60 cents.  How much is a pear?  ANSWER:  Due to the fact that this question is read to you, you could answer:  A 'pair' of apples would cost 40 cents, a pair of oranges would be 80 cents, and pair of grapefruit would cost $1.20.
7. You are in a dark room with no light.  You have 19 gray socks and 25 black socks.  What are the chances you will get a matching pair?  Answer:  If there were an equal number of gray and black, the answer would be .5 or 50%.  As there are six extra black socks, three pairs will have 100% match.  Thus, the answer should be 50% ++ as follows:  = {19 pairs x (50% chances) + 3 pairs x (100% chances)} / 21 Total Pairs = (900+300)/21= 1200 / 21= 57.14% chances.
8. What do wood and alcohol have in common?  Answer:  Each word contains two o's.
9. You have eight pennies.  Seven weigh the same, but one weighs less.  You also have a judge's scale.  Find the penny that weighs less in three steps.  ANSWER:  Split into two piles of four and compare the weights of the two piles.  Take the lighter pile and split that into two piles of two and compare the weights.  Take the lighter pair of pennies and compare the weights of them.
10. What’s the square root of 2000?  ANSWER:  44.72135954
11. How are M&Ms made?  Answer:  M&M's have two main components (1) hardened liquid chocolate and (2) hard candy shell.  Liquid chocolate is poured into molds and then harden.  The hard candy shell is formed by spraying on layers, each of which is allowed to dry.  The color is added to the final coat.  Each batch is a different color.

We at Tidemark had some fun with these.  So here is one more that one of our team member's spouse was asked during his Microsoft interview several years ago:

If there were three light bulbs upstairs that were each operated by three switches downstairs, how could you determine which switch operated each light, and only take one trip upstairs?

There is a solution to this scenario.  Please feel free to share your anwers...

---

Editor's Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, a Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.