Running a business is, without a doubt, a challenge filled with rewards and extreme moments of frustrations. Behemoth companies with deep pockets have access to a plethora of resources—whether it’s marketing, lead generation or technology—to keep their business thriving, while many smaller outfits find themselves at the roundtable mulling over new strategies to keep up with the Joneses. How can smaller companies successfully compete against larger players? The answer is quite simple…invest in your most valuable asset: your employees.
Steadfast is a $5.5 billion company, and by comparison to some of its industry peers, falls in the mid-sized category. But size is merely a number on paper and is not indicative of a company’s overall performance. What makes the difference is the corporate culture. And culture starts at the top.
Environment is key to an employee’s psyche. The degree to which a company achieves success is highly influenced by its culture. In recent years, there has been a lot of buzz about happy employees being more productive, creative and collaborative. And in fact, a recent study by the University of Warwick found that happy employees were 12% more productive compared to their unhappy counterparts who proved to be 10% less productive. Implementing a dynamic corporate culture will keep your team happy, energized and inspired to do well, which will bode well for your bottom-line—regardless of your size.
Corporate culture encompasses many different aspects. Steadfast employs a unique culture that facilitates focus, discipline, creativity, and most importantly, collaboration. It blends an entrepreneurial spirit with elements of an institutional pedigree, which has allowed Steadfast to thrive in a challenging market. In 2015, Steadfast acquired 24 properties for nearly $1 billion, an impressive accomplishment that placed us near the top of the list for the third straight year as one of the nation’s largest acquirers of apartments.
Creating an entrepreneurial culture is essential. The structure empowers employees to share insights and ideas, and collaborate for the future. As a result, employees feel like they are part of the process, which leads to a stronger team environment and increased productivity. But being too entrepreneurial can also be risky as it may lead to lack of focus and direction. In contrast, implementing a 100% institutionalized culture tends to foster a silo mentality, which makes employees feel excluded, not part of the team and therefore less motivated. It is important to have a harmonious balance of both to ensure a greater buy-in and a definitive decision-making process.
Diversity is another aspect critical to a healthy corporate culture. While women make up 59% of the U.S. workforce, the commercial real estate space in which Steadfast operates has followed other male-dominated industries with men sometimes outnumbering women at a 4:1 clip. Steadfast has broken that trend and currently has 46% female employees, of which nearly ¼ are executives or senior-level managers. What we have found is that having a good balance of male and female employees on the top level helps Steadfast better plan and execute strategies and ideas. This is because men and women approach situations differently. It’s in our DNA.
Women are more collaborative, empathetic and are not afraid to question the status quo—traits that embody the entrepreneurial culture. A woman’s compassionate nature and consensus-building approach enhances her ability to build relationships, which makes clients, business partners and employees feel understood and valued. Some studies have even shown that a company will outperform their peers within three years of a woman joining its leadership team.
Men on the other hand, are more process-driven and goal-focused—characteristics of the institutional culture. Their leadership style tends to be more direct with quick action and execution, and is crucial to keep up with an ever-changing business environment. In order to run a successful company and remain competitive, you need to have both men and women in positions of power.
I am a firm believer that a healthy corporate culture can be the difference in your company. I believe it because I know it works.
When Steadfast broke into the non-traded REIT sphere, we went against the grain. Our strategy was unconventional to that of our competitors’, many whom were much larger and more sophisticated than us. We focused on investing in moderate-income multifamily properties in secondary markets, while others shopped around for Class A properties in bustling primary markets. We felt confident in our strategy, and by fostering a corporate culture that encompassed both entrepreneurism and institutionalism, we had full support and commitment of our team to launch into a new space. And boy, was that the right call. While the primary markets like New York and Los Angeles were poker hot with activity, Steadfast was quietly working in Middle America. The economy has since shifted in favor of Steadfast’s strategy, resulting in tremendous growth for us. Competitors have taken note and are now chasing our same strategy but are facing high barriers to entry challenges, while we’ve been ahead of the curve.
Corporate culture is how you stay competitive. The stronger your team, the stronger your ability to withstand a new strategic risk. If we didn’t have the buy-in from our employees, coupled with the strong leadership of our executive team, Steadfast could have possibly missed out on a great business opportunity.
Ella Shaw Neyland serves as President and affiliated director of Steadfast Apartment REIT, as well as President and an affiliated director of Steadfast Income REIT, positions she has held since October 2012. Ms. Neyland has considerable experience in real estate investment, development and finance.