Financial institutions and consulting firms require deep insights to do their jobs effectively—whether for making client recommendations or analyzing their internal roster of portfolio companies. It's precisely these deep insights that create firm value.
But how do we access the correct real-time data to create actionable, data-driven insights?
Let's examine a real estate development company as an example and show you how Aura workforce analytics helps professionals gain a competitive edge.
Understanding how to obtain these insights enables superior decision-making, recommendations, and strategic planning. Let's see how we can use Aura to understand the company's organizational structure, risks, and profit drivers without having any internal company knowledge.
Deep-Dive into Real Estate Company Analysis: What Investors Need to Know
In the ever-evolving real estate industry, conducting a comprehensive real estate company analysis is critical for investors looking to make informed decisions. This process involves reviewing a company’s financial situation and understanding its market positioning, operational strengths, and growth potential. By analyzing specific characteristics, such as job growth within the company and its approach to handling lease lengths and vacancy rates across its properties, investors can better gauge the company’s resilience in the market.
Examining Functional and Organizational Efficiency
Insight: The platform allows insight into departmental staffing levels. Our example company had more personnel in the support function than average for comparable businesses. Therefore, the real estate company's support functions may be bloated relative to peers, driven primarily by accounting, finance, and legal sub-functions.
Sample next step: Evaluate whether this bloating is due to specific, context-dependent needs or if rightsizing is appropriate for cost savings. Consultants can help by conducting a thorough analysis to identify redundancies and recommend streamlined operations, potentially leading to significant cost reductions. For instance, a study by Deloitte found that companies can reduce operational costs by 30% to 60% through effective shared services and outsourcing strategies. In real estate, this might involve centralizing property management and administrative tasks to optimize resources.
Understanding Talent Depth and Educational Background
Insight: The company's workforce is highly educated compared to industry peers. Depending on your interpretation and the market, this could be a positive or negative indicator.
Sample next step: Determine whether this high level of education is viewed as a competitive advantage or if it simply contributes to higher human capital expenses. If so, consider hiring less-educated full-time employees (FTEs) to achieve cost savings without compromising performance. Property manager or sales agent roles might not require advanced degrees, allowing for more cost-effective hiring practices. From a portfolio perspective, this may indicate a lack of operational efficiency.
Employee Tenure in the Real Estate Market
Insight: Employees have less tenure at the company than industry peers.
Sample Next Step: Investigate the reasons behind the low tenure, such as attrition due to poor culture or lack of compensation and benefits incentives. This can involve launching employee surveys to gather feedback and identify areas for improvement, which can help formulate strategies to enhance employee retention. In real estate, addressing tenure issues could involve offering better career development opportunities and competitive benefits to retain talent. From a financial perspective, this lack of tenure may be a considerable factor when forecasting sales trends or evaluating management guidance.
Creating Insight into Attrition Rates
Insight: The company has consistently high attrition rates, significantly higher than those of its closest competitors.
Sample next step: Determine if the attrition was intentional, such as those actions dictated by the anomalous market of 2020. Conduct surveys with former and current employees of peer companies to understand the root causes of attrition. This feedback can guide interventions like pay raises, culture changes, and other retention strategies to reduce turnover. High turnover in real estate can disrupt client relationships and project continuity, making retention strategies critical for maintaining stability and performance.
Understanding Workforce Seniority
Insight: A higher proportion of the workforce is in senior roles than peer companies.
Sample Next Step: Determine if this higher seniority is a competitive advantage or if it contributes to the high attrition rates. It may be beneficial to reassess the organizational structure and consider promoting internal talent or hiring externally to balance the workforce distribution. Research by Gallup indicates that organizations with a higher proportion of engaged senior employees are 21% more profitable. This might involve creating a more balanced mix of senior and junior roles in real estate to foster innovation and engagement and reduce burnout among senior staff.
Key Factors in Real Estate Company Analysis
A thorough real estate company analysis requires evaluating several critical factors that directly influence a company's performance in the real estate industry. Investors need to assess the company's job growth, housing demand in the markets it operates in, and financial situation.
For instance, analyzing a real estate company's job growth trends can provide insight into its operational health and expansion capabilities. Understanding the company’s strategies for managing vacancy rates and lease lengths across its portfolio, especially in commercial real estate sectors like office buildings and shopping malls, can help investors identify whether the company is capitalizing on high-demand opportunities and maintaining competitive offers in the market.
Comparative Market Analysis: Evaluating Competitive Positioning
Comparative market analysis (CMA) is crucial for assessing individual properties and understanding a real estate company's competitive positioning. Investors can use CMA to evaluate how a company’s portfolio stacks up against its competitors regarding property values, rental rates, and occupancy levels.
This analysis helps investors determine whether the company’s properties are priced appropriately in the market and whether they are positioned to maximize returns. Accurate pricing and strategic positioning are essential for companies involved in capital-intensive developments, such as large-scale housing complexes or commercial real estate projects, to sustain growth and attract investment.
How Financial Companies Can Use This Analysis
Financial companies, such as private equity firms, can use these insights to conduct more profound analyses of their portfolio companies - in the real estate sector and beyond, as Aura is industry-agnostic. By leveraging workforce analytics, they can identify inefficiencies, optimize organizational structures, and enhance overall performance.
For instance, understanding the bloating in support functions can lead to more targeted cost-cutting measures. At the same time, insights into employee tenure and attrition can inform strategies to stabilize the workforce, ultimately driving better investment returns.
How Management Consultants Can Develop Similar Company Analysis
Management consultants can utilize platforms like Aura's Workforce Analytics to gather and analyze data quickly and efficiently. Traditional benchmarking methods can be time-consuming and labor-intensive, but with advanced analytics, consultants can provide their clients with real-time, actionable insights.
These insights can support various strategic initiatives, from optimizing organizational structures to enhancing employee retention and identifying cost-saving opportunities within the real estate industry.
Creating Valuable Insights for Your Clients and Portfolio
For financial companies and management consultants, the ability to perform deep-dive company analyses with workforce data is invaluable. Aura's Workforce Analytics platform streamlines the data collection and analysis process and provides comprehensive insights that can drive strategic decision-making.
By harnessing these tools, professionals can enhance their capabilities, deliver greater value to their clients and portfolios, and maintain a competitive edge in the market.
We're helping the next generation of managers and advisors glean intelligent, up-to-date data and transform their decision-making process. Receive a free consultation and demonstration of Aura to learn how to develop actionable company insights for your company.
