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OPINION: How real estate leaders can drive change for the industry

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Governance and leadership training within the real estate industry in Canada has become a staple for directors and leadership at all levels of organized real estate. 

I have had the privilege of being an instructor for the Leadership 200 and 300 courses offered by CREA to all directors across Canada. I have always enjoyed being able to facilitate conversations for new and returning directors about all things governance. Though, I sometimes question how much of it actually gets put into practice, especially when it comes to the roles, responsibilities and fiduciary obligations of directors.  

 

Leadership vs. governance: Understanding the difference

 

First, it is important to differentiate leadership and governance in the context of a director’s responsibilities. 

I would suggest that governance is related to the decisions you make at the board table, and leadership is the influence you have beyond the table. While industry experts may have differing perspectives on traditional governance structures, I am interested in exploring the role of leadership. 

When we evaluate a leadership role in organized real estate, any leadership role, there are three areas that a leader can take into consideration as they navigate the decisions in front of them and their opportunity to influence change: the members, the organization and the industry.  

 

“The decisions you make as a director should be what is best for the organization, full stop.”

 

First, the members. Generally, the constituent that gets the most consideration and the only one of the three areas that can actually provide feedback, which results in a desire to keep them satisfied.  

Second, the organization. Based on a ruling by the Supreme Court of Canada, the legal obligation of all directors in Canada is to the organization (not the members or shareholders). The decisions you make as a director should be what is best for the organization, full stop.  

Finally, the industry. Typically given little consideration, if any at all, and rightly so. Leadership tends to think that a decision being made at their board table could not possibly have any influence on an entire industry, leaving them to ignore it in their decision-making. This is not true at all.

 

The members

 

So, let’s start with the members. This is not going to be a popular opinion, but I would suggest that leadership not make decisions based on what members want. The members’ needs and opinions are a vital component of an organization. However, it is important to recognize that leaders should not make decisions based solely on what the members want. 

The members want a decision that is going to be best for them, which might not necessarily align with what is best for the organization or the industry. Now, don’t get me wrong, get feedback, ask good questions, determine how decisions will impact the majority of members, understand why members have the opinions they do—but directors should not make leadership decisions solely based on what is most popular with the members in that the moment.  

 

The organization

 

Now let’s look at the organization. While the members are an important consideration, directors must prioritize the organization. Anyone who has had any governance training knows that the fiduciary duty is to the organization. 

Regardless of what members want, regardless of what is best for the individual, it can’t be contrary to what is best for the organization. This means that decisions made by directors should prioritize what is best for the organization as a whole, rather than what is best for any one individual within the organization. 

There have been countless times around board tables (both inside and outside of the real estate industry) where I have heard a director make a comment about how something being voted on does not work for the way they conduct their business. Or that they support a motion because it could benefit or have negligible impact. These comments should be met with an immediate course correction to question the impact on the organization, not any one person or business. 

 

The industry

 

Then there is the industry. In a recent LinkedIn post where I was sharing a REM article about technology advancements that I was interviewed for, I commented, “How do we innovate when the real estate industry is entrenched in the maintenance of legacy?” 

One answer to this question, and quite frankly, the only one that matters right now, is that leadership must be empowered to make decisions that consider the future state. Gone are the days of making decisions based on protectionism, holding onto what was and the “that’s the way we’ve always done it” mentality. Unfortunately, with so many holding onto legacy, that empowerment will never truly come. 

So, where does that leave us? Honestly, it leaves us exactly where we are. With leadership across this country making tough decisions that are contemplating where this industry is headed and looking to be strategic in their planning so we as an industry are best positioned for what’s to come. 

Whether it’s a policy or initiative at the federal, provincial or local level, these decisions are being made by our peers, leaders who are driving this industry forward. To them I say, make the decisions not based on what the members want, continue to base it on what’s best for the organization, even if the members don’t necessarily realize it. 

There will always be those who want to keep things the way they are and that’s fine. You are in a leadership position for a reason. Let’s continue to lead and do what’s best, first for our organization, and ultimately for our industry. 

 


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