‘IT IS during hard times that the best qualities are developed - including perseverance, diligence, professionalism and the ability to think out of the box,’ says CB Richard Ellis Singapore managing director Pauline Goh. Thus she instils courage into her younger staff, telling them not to be afraid of a downturn.
‘Under the current climate, where downsizing and job cuts seem to be buzz words, we tell our staff that we’re in this together and the leaders will walk the talk and lead by example.’
‘We’ve been through economic downturns, during the Asian financial crisis and in 2001 and we’re well equipped to ride out this current storm. Senior management recently met and agreed to take a 15 to 20 per cent pay cut if necessary.’
Ms Goh has not implemented the cuts yet as the company’s revenue and profits this year are expected to almost match last year’s record performance, thanks to a strong first half. ‘But it shows the willingness and readiness of our leaders to do the right thing as a cohesive team, and also to lead by example.’
So far this year, CBRE achieved a 65 per cent market share for brokering property investment sales deals (these include The Atrium @ Orchard, Singapore Power Building, Hitachi Tower and 71 Robinson Road sold for a total of over $3 billion).
Its office leasing team has done more than 60 per cent of major deals (involving more than 30,000 sq ft) year to date.
Ms Goh declined to give details of the company’s financial performance in Singapore beyond saying that full-year 2007 revenue grew 82 per cent and net profit jumped 133 per cent over the preceding year.
During the Asian financial crisis in 1998 and 2001 property slowdowns, in what was then still not a widely practised initiative in Singapore, senior management led the way with pay cuts, taking the biggest hit of 20 per cent. The company managed to avoid retrenchments. Ms Goh hopes CBRE can repeat this act this time round.
The total remuneration bill makes up the biggest chunk (about 70 per cent in a good year like 2007) of the firm’s total business cost here.
However, what greatly aids CBRE’s ability to manage staffing costs in a downturn is that the variable component (comprising commissions and bonuses) makes up a significant portion of total remuneration bill. In a good year, this can be more than 50 per cent. ‘As the variable component is very much dependent on our property transaction volumes, that in itself is a moderating factor which works better in a downturn,’ Ms Goh explains in an interview with BT at CBRE’s office at Six Battery Road.
The first thing CBRE typically does when faced with a downturn is to see whether it can shave off discretionary spending, ‘because after staff cost, which is a big chunk of our total cost, there’s rental - and I’m really glad to say that we are in the right stage of the rental cycle - the other item is travel and entertainment’.
The firm took a decision in the third quarter of this year to cut its travel and entertainment expenditure by 75 per cent to 1.5 per cent of total cost. Ms Goh let on that CBRE’s rental lease will be up for renewal in two years. This is when most market watchers expect added pressure on office rents from the completion of significant new supply.
The group has a total headcount of about 370 in Singapore, of which about 44 per cent work at the headoffice and the remaining are site-based staff dedicated to clients. Ms Goh emphasises that ‘we’ve always been very selective in our hiring and been relatively operationally lean’.
‘As a result, when times get tough, like in the Asian financial crisis, it was so difficult for us to draw a line separating the bottom 10 per cent of performers from the rest, and saying: ‘OK, let’s get rid of them’. How we prefer to do things - and this is how we have been doing it - is we want to identify the poor performers regularly and exit them when the market is better. It could be that the person was a poor performer because he or she was a bad fit for us. But they could be a better fit elsewhere.’
Asked just how much leeway the Singapore operation of New York Stock Exchange-listed CB Richard Ellis Group has in avoiding job cuts, Ms Goh replies: ‘While other companies (elsewhere) within the group may decide to go for a headcount cut, in Singapore, if we decide that that’s not the way to go, there’s leeway for us, provided the end-game is the same. We achieve the same results.’
The silver lining from this downturn is that it has created an opportunity for CBRE to look around and hire good people. ‘We are actually talking to people. If we can find the right people, we will. But, of course, we want to be very, very careful,’ explains the 50-year-old mother of four children, aged between 13 and 18 years.
Asked how CBRE staff are motivated, she cites awards like Asia Circle of Excellence at the regional level as well as Excellence Awards at the local level. Having worked in CBRE for 25 years, Ms Goh believes in fostering team spirit and camaraderie. Recently the company held a food and heritage hunt around the island. ‘Each time we organise something like this, I’m gratified by the energy and strong team spirit of our staff. A highly motivated team is half the battle won.’
Source : Business Times - 6 Dec 2008
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