Bill Ferguson
Co-Chairman and CEO of Ferguson Partners
The commercial real estate (CRE) industry thrives on outstanding leadership. The right executive can determine a company's success when navigating economic cycles or scaling operations.
The commercial real estate (CRE) industry thrives on outstanding leadership. The right executive can determine a company's success when navigating economic cycles or scaling operations. On a recent episode of the Walker Webcast, I had the privilege of speaking with Bill Ferguson, co-chairman and CEO of Ferguson Partners, about the nuances of executive search, leadership traits that define success, and hiring trends shaping our industry's future.
The importance of cultural fit in executive search
Bill has built a career on placing top executives in some of the most influential real estate firms. When asked what single factor best predicts a CEO’s success, his answer was clear: cultural fit.
“When I look at successful searches, it’s not just about experience or education; it’s about how well a leader aligns with an organization’s values and vision,” Bill explained. He shared the example of AvalonBay’s CEO transition, emphasizing how cultural alignment played a key role in that placement.
The three pillars of leadership: Humility, integrity, and generosity
Bill believes the best leaders embody humility, integrity, and generosity.
- Humility: Strong leaders listen, question, and acknowledge they don’t have all the answers.
- Integrity: A leader’s character defines their credibility. Bill emphasized that “gray is not a good color” when making ethical decisions.
- Generosity: Great leadership involves giving back, whether through mentorship, philanthropy, or supporting the next generation.
Hiring trends: Is commercial real estate turning the corner?
After two challenging years, hiring activity in CRE is picking up. Bill noted that in Ferguson Partners’ latest survey, 47 percent of firms plan to increase hiring in 2025, up from 37 percent last year. More importantly, the focus is shifting from defensive hires (like asset management and CFO roles) to offensive hires in capital raising and deployment—a strong signal that the market is stabilizing.
Additionally, firms paying full target bonuses are better positioned to retain talent. Bill warned that companies failing to adjust compensation could struggle with retention as hiring accelerates.
The impact of AI and the office return debate
Artificial intelligence is already reshaping CRE hiring. Bill pointed out that roles focused on data aggregation and analysis are at risk, while positions requiring judgment and strategic thinking remain critical.
On the topic of returning to the office, Bill sees a shift toward four-day in-office workweeks. While full-time office work may never fully return, he stressed that younger professionals benefit significantly from in-person mentorship and collaboration.
Fostering diversity in real estate
One of Bill’s most impactful initiatives is the Ferguson Center for Leadership Excellence, which helps racially and ethnically diverse students access real estate careers through financial aid, mentorship, and career placement. With $8 million raised, the foundation is making tangible strides in bringing more diverse talent into CRE.
“Many students simply don’t know about the opportunities in real estate,” Bill said. “We’re opening their eyes to the largest industry in the world and creating pathways to leadership.”
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Mastering the Executive Search in CRE with Bill Ferguson, Co-Chairman and CEO of Ferguson Partners
Willy Walker: Good afternoon and welcome to another Walker Webcast. I am coming in pretty hot right now from having been at the board meeting of the National Multifamily Housing Council out in Las Vegas. Bill, sorry, I haven't been able to say hello to you yet this morning. Good morning and it's nice to see you.
Bill Ferguson: Good morning, Willy. I'm happy to be with you. Thank you.
Willy Walker: I have to say, I've been here in Vegas for the past two days, and I have had literally hundreds of people walk up to me and talk about the Walker Webcast. Many people in our industry listen to it and person after person has said the quality of the guests and the information that we share on the Walker Webcast is a real gift to the industry. I guess that sums up the comments that I've gotten. I'm deeply thankful to you, Bill, for being with me today because I know what you and I talk about is going to be very relevant to many of the people here at the National Multifamily Housing Council and other people inside the commercial real estate industry, as well as people outside of the commercial real estate industry, who want to think about careers and what's going on with executive leadership and AI and DEI (if you can even say that word any more), and a bunch of other issues. I'm very much looking forward to diving into our conversation, Bill. The one other thing I will say is to acknowledge all of those people who have come up to me. It is really appreciated and very flattering that so many people have listened to the Walker Webcast and gotten so much out of it. One person walked up and said he downloaded two of the episodes on his way out to Las Vegas and all he did on the flight was listen to them. But we had Mohamed El-Erian on the webcast three weeks ago, and that webcast has been viewed by 492,000 people on YouTube. We hit an all-time high there. Linneman, who we had on two weeks ago, is over 200,000 and Ivy Zelman, who we did last week, is over 100,000.
Bill Ferguson: Depending upon you to carry it out.
Willy Walker: It's all great. Bill, let me do a quick intro so people know you're extremely impressive in your background, and then you and I can dive into a number of the topics that I rattled off at the top of the call. Bill Ferguson is co-chairman and chief executive officer of Ferguson Partners. Ferguson has ten offices around the globe and conducts over 200 executive searches per year. Bill specializes in chief executive officer searches and board recruitment, particularly in the commercial real estate industry. In 2022, Mr. Ferguson launched the Ferguson Center for Leadership Excellence, the CLE. The foundation's program helps racially and ethnically diverse students by offering tuition and financial assistance, mentoring and coaching, and the opportunity to earn undergraduate degrees and secure promising careers in real estate and related sectors. Before founding Ferguson Partners, Bill was a managing director with Russell Reynolds Associates, where he co-managed the firm's national real estate practice. Bill went to Harvard College and earned an MBA from Wharton and is an executive in residence at NYU and a fellow at UVA's Batten School of Leadership and Public Policy. Bill also did a podcast series called MasterMinds: Lessons and Leadership with our mutual friend Peter Linneman, and I was honored to be one of the CEOs Bill and Peter had on as a guest. Bill, as I looked at your website and read the testimonials from companies like Waterton Partners Group, Nuveen, Blackstone, and AvalonBay, it’s very clear that (A) your firm has an incredible reputation in our industry, and (B) you've worked on some of the most significant and high profile searches that our industry has ever undertaken, particularly as the industry has become more institutionalized. I don't expect you to divulge any names here, but just from a background, what's the best search and the worst search you've ever worked on?
Bill Ferguson: Willy, there are no worst searches. They're only best served, as you should know. But anyway, we're very blessed. I started the firm 35 years ago and I am as old as I look. I think our differentiator is the fact that we are focused on high-quality work. It starts with me. And for people in the firm, they know this all too well. I am extraordinarily focused day in and day out on doing great quality work. All the searches have positive outcomes, but I would say recruiting Ben for AvalonBay has been particularly gratifying. Ben, as you know, came out of Seritage. Tim Norton was an extraordinarily wonderful mentor to him and gave him the support that he needed coming into the company. Be mindful of the fact that AvalonBay had never recruited anybody into the C-suite, no less, ultimately to become a CEO successor. And Ben has done a great job. He stepped up. He didn't know the asset class that well, especially urban multifamily, coming from Seritage and before that Vornado, and Brookfield before that. But he was a perfect cultural fit. Investors have embraced him. The board's embraced him, and it's been a very special outcome. I'm indebted to Tim, to the board, and the bond of the team for everything that they've accomplished.
Willy Walker: It's interesting, I was talking to Ben, and one of the things that I've always been so impressed about with him is his understanding of the culture of AvalonBay and the culture that was instilled by Dick Michaud, and understanding how that culture went from him to Norton, and that he's now inherited that. And I do think one of the questions I have for you, Bill, is this. When you think about recruiting CEOs into firms and you look at their educational experience or their education, if you think about their work experience, if you think about their personal skills, and then you think about their network, obviously all of those are important to giving someone the capability to step into a job as big and as robust as the one that ended. But as you think back on executive searches, if you only could look at one of those factors, which one would be the one that would give you the best sense of whether the person is going to be capable of the job? Is it education? Is it in the background? Is it on personality traits, their character? Or is it on their network and the people they know?
Bill Ferguson: Yeah, I would have to say, Willy, it’s based upon cultural fit. I can remember the first time that Tim and I talked because Tim and Ed Walter were doing the search at AvalonBay. I can remember the first time I talked to Tim and the first thing that came out of his mouth was, “he's a great cultural fit.” Ben really wasn't all that well-known among the investors. Seritage was not a company that was covered by a lot of the major investors. When Ben was announced, a lot of people didn't know him all that well, like they know a lot of the other REIT executives. But that goes to show you how important culture is. We do a lot of work for private families. A third of the richest families in this country made their money in real estate. And when I'm bringing in a new CEO, especially a non-family member to run a family business, the one thing that all candidates need to understand is the culture. They need to understand that ultimately they may not be making the final decisions on every facet of the business. And for anybody who has a problem with that, Willy, that just doesn't work. Cultural fit is very important across private and public, I would say, hands down.
Willy Walker: A quote from you is that leadership is all about humility, integrity, and generosity. Why those three nouns?
Bill Ferguson: Once again, that's been my experience over the 40 years I've been in the business, Willy. Humility is so important in leadership. And you know this. You're a CEO and you personify all of these characteristics. Somebody who is humble and doesn't take themselves too seriously and thinks to question other people, solicit their opinions or whatever, is so important. Because if you become somebody who's too ego-driven, you start doing things on your own without other people's input and you suffer the consequences. Integrity is what it's all about. For any strong, capable CEO, integrity is going to be the backbone of who they are. But gray is not a good color. I don't care if you're raising capital for MLPs or you're in the public markets. That's a full stop for sure. And lastly, generosity is important, Willy. It's an acknowledgment that you've reached a certain point in your professional career, and you recognize there are other people out there who could benefit from what you could do. When I'm interviewing people, understanding their backgrounds is figuring out what's important to them. If they're involved meaningfully in 1 or 2 philanthropic exercises, it makes a big difference to me, because leadership is all about acknowledging that everybody's not on the same plane and on the same page. And for somebody to be willing to spend some time out of a very busy life to give back is extraordinary.
Willy Walker: First of all, we will talk about it later but talk about generosity. You have been extremely generous with both your treasure and your time. And we'll talk about that later in this conversation. But if anyone leads by example, it is you. When you talked about that, Bill, it made me think about getting a mandate for a certain search. Given how well you know the industry and the major players in the industry, it would be my assumption that as you're sitting there getting the mandate, you sit there and say, “My top five people for this job would be this person, this person, this person, this person.” And you've done a short list even though I'm certain that your team goes and does a very wide search of saying, “Who are the people from both in the industry and outside of the industry that could have the capabilities to do this.” But I'm more interested in the next phase of it to the extent that, let's just say you have come up with five finalists who you're really doing the work on. During their meeting with the board, they're meeting potentially with the person who's stepping down from the role. How good are you at predicting which one of those five finalists is going to actually get the job, in the sense that you sit there and obviously you've got the decision is being made by the board or by the number of committees or by the person who's in the seat today who's bringing in their successor. You can have a lot of influence on who you recommend. But at the end of the day, it's their decision. But I’m curious. As you've gone through your career, you'll sit there and say, “I got five, but I'm pretty darn sure that number two on this list is the one who's going to actually get the job.” Is that a pretty consistent thing, given your experience? Is it really that you're putting the five, and these searches go in lots of different directions and end up potentially having someone on the list who you think is a very obviously capable person, or they wouldn't be on the list in the first place, but not the person you thought was going to get the job?
Bill Ferguson: There's a reason I don't gamble. Well, I guess I'm really not terribly good at these things, for sure. But what I like to do with the client is to once again go back and revisit this, and that's got to be driven by the strategy. At the end of the day, the next CEO has to be qualified to effectuate the strategy articulated by the leadership team and, in essence, supported by the board. I work with the succession committee and really look at the strengths and weaknesses of each of the candidates. You find that eventually through that discussion, one rises to the top. You take into account all the considerations. For instance, in Ben's case, he was a sitting public company CEO. A lot of our clients were doing a public company CEO search and prefer to see somebody who has checked that box for sure. Now, Seritage and AvalonBay are remarkably different relative to size and property expertise or whatever. But having somebody who's stepped into that role, who's run an organization, who can interface with the board is an important step. Many step-up candidates can, but many step-up candidates can’t, for sure. I try to make it very much of a mutual decision. If I feel the committee is heading in a direction that doesn't make a lot of sense, I'll question them on why they're thinking about this and not thinking about that. But at the end of the day, it really has to be their decision. You know me pretty well. If I feel they're heading in the wrong direction, I'll ask them to come back and readdress. Usually, it's a very good outcome. The other thing that I think distinguishes us in the industry is that we can reference people very well. When I was referencing that, “Okay, I can go to Mike Fascitelli, who used to work at Vornado and I can say, Mike, this is the role. What do you think?” I can go to Rick Clark, who at the time was working at Brookfield and I can say, “Rick, what do you think?” When I'm going into these situations, I have real firm confirmation relative to the capabilities of these people. And I rely upon that because we use the whole gang assessment methodology. Our leadership consultants will assess the finalists. Our recruiters actually do our long psychometric on semifinalists. Testing is great, but it's just one piece of it. There's nothing better than having the network that we have and being able to turn to people whose judgment we trust to work side-by-side with these candidates and give me honest feedback, full stop.
Willy Walker: Understanding that a CEO search has all of those component parts that you just talked about and a lot of reference checking, a lot of interviews, interview after interview with members of maybe a non-government committee, with yourself, with your colleagues, all sorts of people to try and figure out whether this person is the right person for the job, I was curious if there's either a line of questioning or potentially a specific question that you have found that has given you insight into people that you go back to every time. In other words, you pull me in, and you say, “Hey, Willy, we're looking for somebody here.” You know me very well and you could reference me probably way too well, given the number of mutual friends the two of us have. But if we were sitting there and you were trying to understand whether I was the proper person for the job and, understanding that every job is specific and distinct, is there a line of questioning that reveals to you either the true character, the true intellect, or the true personality of a candidate?
Bill Ferguson: Yeah. You know the question I always like to ask candidates early on in the process is why they're interested. That says a lot about a candidate because, first of all, it says they've done their homework and they understand the company well. Ideally, they understand what the role is all about, because people who are talented do their homework. As I like to tell a lot of good candidates, “Your life is not going to be about having decisions to make. It's going to be about making the right decisions.” It's very important to me that somebody has been thoughtful about why they're interested. And then secondly, as part of that question, I like to get some feedback from them on how they assess their own qualifications and where they assess their strengths. Where are the places where they're going to have to develop and whatever? A lot of it, at the end of the day, is about self-awareness and really spending time with somebody and saying, “okay, let's really talk this through because for your sake, for my sake, and for the client's sake we clearly, clearly want to do everything we can to make the right decision.”
Willy Walker: I've been grinning the whole time. You've been giving me that response, Bill, because as you do, I interview a lot of people. I believe one of the most important pieces of advice I give to particularly entry to mid-career people is that I meet very talented people who would come into my office, sit there, and expect me to ask them all the questions, as if it's a one-way street, got to show up, answer the questions. What I consistently say, particularly to those people who, to your point, are very talented and might have opportunities continuously coming at them is, “tell me why you want to work for me. Why do you want to work at Walker & Dunlop? What is unique about Walker & Dunlop versus the competitive firms that make you want to be here?” Because to get in the room to meet with me, you've clearly passed a lot of hurdles to say you're qualified to do the job. My questions aren't going to say whether you're good or bad for Walker & Dunlop. It's really to tell me why you want to work here. I find it so interesting and insightful about your point of saying, “Why do you want to do this?” And I find many people feel they need to be responding rather than articulating what they want to do.
Bill Ferguson: The other thing, too, is that it gives you a better indication of who they are. Because anytime anybody goes into a situation, you like people to be prepared, and you like them to be respectful of your time. Whether it's a job interview or anything else, they're pursuing a life. If they're going in thoughtfully and they're being honest with themselves, there is always a better conclusion for sure. Now, the other thing I will tell you, too, Willy, is that when we get done with a CEO search, we're adamant about doing onboarding. Usually, if something goes awry in the first six months, often it's a very innocent mistake. I'll give you an example. We were doing a search for a privately held family-controlled business out in San Francisco with the office business. We recruited somebody as a CEO who had never worked in a family business before, which is obviously not ideal. But at the end of the day, you've got to pick the right candidate. One day one of the G4 calls him and he couldn't take the call, but he wanted to be respectful of the person. Interestingly enough, he had his assistant call back the G4 and said, “So-and-so is busy, we'll get back to you shortly. But he can't get back to you right now.” Well, this G4 was so upset that the new CEO didn't want to take the time to call him back and to understand what was going on. All of a sudden, we had something going on that was viral, and it went to the G2s, the G3s, the G4s, the G5s. If we hadn't been on board and dealt with both the client and the candidate every month, that could have spiraled out of control to the point where the person would have lost all their credibility and would have been let go from the company. And that's where onboarding is so critical for a CEO coming in. There are a lot of things you're learning very quickly in a public company. You get to deal with the investors, with the analysts, with the board, with your leadership team, the strategy of the business, whatever. There's so much to understand and appreciate without having somebody by your side like us, who knows you well, knows the company well, and checks in on a regular basis. It's amazing how many things we've discovered that we've headed off of the pass. It's a big part of what we do and what we have conviction around.
Willy Walker: You talked about an incident where the tenure as CEO might have been, if you will, prematurely ended had that onboarding process not been handled the way it was. The abridged tenure of a public company's CEO is 7.4 years. Having been CEO of a publicly traded company now for 15 years, I've been lobbying the CEO of the company for 18 years. But I've been in a public company for 15 years. I feel very long in the tooth. But my question to you is, “7.4 years? Is that because they've accomplished all they need to accomplish? Because they got into the seat before retirement age and said, “That's it.” Because the jobs are so demanding that they can't put up with year 8. Why do you think it's 7.4?”
Bill Ferguson: I'd be interested to know what you expected the number to be? Did you expect it to be 10 or 5 or what?
Willy Walker: I thought it would be a little bit longer. But again, because a lot of the CEOs I know in the real estate industry are in the seat for a longer period of time than 7.4 years. But it's good if you will flip back. I think the other piece to it is I think it obviously does depend on both the size and scale of the enterprise that you're running. If you're constantly on airplanes flying around the globe, that will wear you out pretty quickly if you've got a global operation to run rather than a domestic operation to run. Or industries that are in constant change, technology being one that is a faster-moving industry. No offense to anyone in the commercial real estate industry, but that's a faster-moving industry than commercial real estate. That wear and tear of constantly being on the cutting edge, the bleeding edge of technology requires potentially a different skill set. If you don't know anything about AI and you are really good at the last wave of technology, whether it was cellular telephony or whatever else, now all of a sudden we're at AI. If you don't have that skill set as CEO of one of the big tech firms, unfortunately, your skill set doesn't match the needs today. Because I've been in the seat for as long as I have, I sort of said, “Wow, that seems short.” And yet, at the same time, as you flip the question back on me, there are a lot of demands on people who sit in these seats.
Bill Ferguson: First of all, if I knew you were open to considering a career change, I would have called you before that. It's good to know. I just hope none of your directors are listening to the podcast, for sure. Secondly, as many of the Ferguson partners, people who are watching this podcast would say, “I am not the right one to comment on anything that’s technologically driven.” I'll stay with our industry for sure. But I would say one of the biggest issues, which quite honestly is shortening the tenure of public company CEOs, Willy, like yourself, you can call it transparency, the lack of privacy, whatever you want to call it. We live in a society today between the Internet and the telephones, whatever you want to call it, as far as taking pictures, movies, whatever. The right to privacy for public company executives, in particular CEOs, is very stressful. And once again, it can be misinterpreted. But, as I said, McKinsey does a study every year about public company succession candidates. For the first time, I think probably since they started the survey, the interest level of those succession candidates to step into a public company CEO spot has decreased. What that says to you, to me, to anybody, is it is really hard to have any private time or to do anything at all that somehow might be misinterpreted. I'll give you an example. You probably remember this. The United Airlines CEO was flying from New York to Denver. He flew privately at Teterboro. Somebody came upon that and it went viral. And this is a guy, like all the airline CEOs, who is advocating we all get to fly more because it is the tail end of the Cold War. There might have been a very legitimate reason why he flew privately. But it went viral. The board had to deal with it. The investors had to deal with it. And it wasn't a good outcome. But for all we know, it wasn't anything that he did that was inappropriate. And that's the world we live in today. And I think a lot of public company executives, a lot of public company CEOs say, “Is it really worth it now?” If you look at the tenure in our industry on the private side, the tenure is longer at both rates and even further extended in the private sector for sure. A lot of this is the public company issues.
Willy Walker: Do CEOs get paid too much?
Bill Ferguson: That's a loaded question, Willy, for sure. I'll get Jeremy Banoff and Katie Gaynor on the line with me and they can cover whatever I'm probably going to say incorrectly. It reminds me of the whole Elon Musk situation. His task, most people felt, was outrageous. But as Jeremy would tell you, if you really studied the amount of shareholder value that he created, he was probably worth close to that amount of money. The problem he had was the credibility on the government side. He didn't have a board that was terribly well respected. The COP committee that he had didn't go through the right process. That was the issue there. But when you look at what he asked for, that number really wasn't all that outrageous, for sure. I think you really have to go back and try COP to shareholder value. If in fact, at the end of the day, those two don't correlate, then I think you do have a problem. But if they do, the reality is that's how public company executives get paid.
Willy Walker: Let me double-click on that for one second more. I guess the way to ask that question another way is this, if you're buying a stock of a company, forget the real estate sector, whatever, outside of it, it's Bill buying a stock for his own personal portfolio. You're analyzing and you say, “I like the company because of X, Y, and Z.” How much of a weighting do you put on executive leadership? You're sitting there saying this company looks like it's got some whiz-bang technology, and it's got some great market position. If they're a marketing firm, a technology firm, or an entertainment firm, let's say that they are one of the best in your analysis of whether you're going to invest in them. They obviously have to have the ability to make money and continue to grow. But how much of a weighting do you put on executive leadership?
Bill Ferguson: A tremendous amount, for sure. I'm not going to name names, but there was an airline this last quarter that surprisingly lost money and a couple of the competitors made a lot of money. What is that about? I don't know the full details, but if your competitors are doing well and making money, you really have to ask yourself the question of what leadership is doing on the other side. Now, there might be a legitimate reason for it, Willy, but there may not be.
Willy Walker: I watched the interview with that CEO on CNBC and I will only say that the answers to the questions were not exactly that strong as it relates to hanging with us. We got it turned around in time after having watched the CEO of United Airlines on record earnings, the record stock price and everything at United really cranking along right now. Other than the fact that Delta was ranked the number one airline in the United States last year by consumers and not United, United actually, I think was 3 or 4 in the rankings. But surely from an operational and financial standpoint, United's doing really well these days.
Bill Ferguson: Right. What Delta's figured out is that it's all about the customers. If you fly Delta, full stop, you really feel like you're being treated. I boarded late one day and the flight attendant came by and gave me 5000 miles. I've never had that happen ever on any other airline, for sure. They really have cracked the code relative to customer service. Leslie Hale, who's the CEO of RLJ Lodging Trust, who's profiled in my book, is on the board of Delta and so forth. It's nice to see one of our own get on the board of a public company like that. But I really do think that Delta differentiates itself because of its customer service, and that gets back to the CEO.
Willy Walker: You want to talk about a CEO held on to employees through the pandemic! If anyone listening to this has the ability on a Delta flight to look at their on-flight entertainment and on their screen, go to it and go through the documentaries. There's a documentary on what Delta did during the pandemic. You want to talk about an exercise in leadership, how he led the airline through very challenging times, and why the flight attendants, pilots, mechanics, and gate agents at Delta Airlines will lay down for that company, it's because when times were tough, they did the right thing.
Bill Ferguson: Yeah. It's really quite something.
Willy Walker: Let's shift for a moment, Bill, to the commercial real estate industry and the survey that Ferguson did as it relates to hiring and what that should tell us all about, potentially, the year to come. Then a couple of other things as it relates to capital. You not only do executive searches, but you also get sentiment surveys as it relates to how much higher you're going to do. Fortunately for 2025, your survey of 170 public and private companies says that 47% of respondents said that they were going to pick up their hiring in 2025 from 2024, and that's up from 37% last year. As you go back and look at that survey data, Bill, think about that as being a predictor of an uptick in the overall economic activity in our sector. Is that a good indicator or is that sometimes a false positive?
Bill Ferguson: Willy, you never know. But I've been in this business longer than any human being should. I have seen certain trends for sure. And I would tell you at ‘23 and ‘24 for our firm and, I think, the industry in particular is as challenging as I've ever seen. They were challenging because of the capital availability as rates shot up at the beginning of 2023 and then post-COVID, a lot of the property sector slowed down. During COVID, interestingly enough, and none of us knew what to expect, our business hit record levels. When you look at where interest rates were and the exodus to the suburbs, every property type was on fire except for office. These last two years have been very difficult, I would say. Once again, this is a U.S. base, not global. But I would say starting at the beginning of November, we have seen a sharp increase in the volume of searches. People are making decisions for hire which is probably as good an indicator as you're going to find relative to their optimism about the future. What's even more interesting, Willy, is we've gone from defense to offense. In ‘23 and ‘24, it was all about cash flow and value. Asset management was at a premium. CFOs would have a premium. But when you look at the hiring statistics now, it's about searches that involve capital raising and capital deployment. I will tell you, having practiced this art as long as I have in this industry, that if we see three months of sustained activity, it’s usually a pretty good precursor of what's to come. We see it about 3 to 6 months before we acknowledge it. If you really believe in looking back at history, I'm thinking that at the end of March plus or minus, the industry might be saying, “You know what?” I'm not talking about a 360 range, but at least a 180-degree change where people are saying, “You know what, we're raising capital, investing capital, the debt markets are better and, you know, we're going forward,” Now, Europe and Asia are different. We have a presence in both Europe and Asia, and Europe is going through some difficult times. Parts of Asia, too, whether it's China, Korea, or whatever. But in the U.S., we are becoming increasingly optimistic that things are turning in the U.S. in 2025.
Willy Walker: As I think about the executive searches that you and your partners at Ferguson are doing, I think about someone who's either just getting out of college, graduate school, or someone who is in the middle ranks at whether it's a development firm, an owner operator firm, a services firm, a lending firm, some piece of the commercial real estate ecosystem. If you were to give him or her some advice as it relates to the most important skill set to gain to get on the radar screen of Ferguson Partners–in other words, they're sitting there saying, “In ten years, I want to be on that radar screen that says that when they need to go and the hiring is going up by 47% versus 37%, I want to be one of those people who is in that mix to get that next executive job”–what would you recommend to him or her?
Bill Ferguson: I guess, Willy, what I would recommend are a couple of things. One is to go to an organization that is big and where you can be well-trained. And that could be a big private equity firm. It could be an investment bank. The advantage of the investment banking world is it does teach you a wide range of functional skills, but it also gives you exposure to a lot of different types of transactions. If you go to work for an investor, you may not get as much variety, whether it's an IPO, a debt issuance, M&A or whatever it might be. But the most important thing you should do is to try to find an organization that is well-respected and where you'll be trained. In probably about your seventh year, you will have a better idea of who you are. There may be a point like I was in my career where I said, “You know what, I'm going to go out and try something nobody else has done. And you know what? If it doesn't work, I can always go back to where it was.” But that's usually the moment of epiphany where the entrepreneurs self-select out and they'll either go to a more entrepreneurial firm or in some cases they'll start their own firm. But there are some people who won't. There are some people who will stay with that organization. As long as they continue to grow and get promoted, they may be there for 30 years. If there's a ceiling that they weren't aware of all of a sudden, they've encountered and they can go to another big firm, for sure. But that's, by far, the safest bet and it gives you the most flexibility until you really get to know who you are. The one thing that I'm amazed about is that so many parents very early on in a son's life and a daughter's life, whatever, say “What are you going to do?” You know what? They don't really have to know what they want to do because chances are they're not really ready to make that decision. You need to grow up. You need to live your life. You need to understand who you are and so forth. My recommendation is to find a place where you can be well-trained, get a better understanding of who you are, and then make an educated decision. It's a lot easier than hopping from here to there, wherever. At some point in time that can be pretty disconcerting.
Willy Walker: As I think about that advice, Bill, which I think is fantastic, it makes me think a little bit about the number of companies that have come out of Trammell Crow. I was meeting with Mill Creek. Mill Creek is one of the spin-outs of Trammell Crow alums. And there are many more. What do you think it was about Trammell Crow, either from a size scale learning or culture standpoint that made that company such an incubator for today's many successful spinouts or startups that came out of Trammell Crow?
Bill Ferguson: Yeah, a couple of things. One is they were very careful in their hiring practices. If you look at a lot of the Trammell Crow people back in the day, they all were well-educated and there was a process in place where they did hire people. And it was a process that was pretty much followed around the country, which is crazy because this was a very entrepreneurial business. They all had local partners and they all ran their businesses. And quite honestly, they did very well. But they were fairly disciplined in the people they hired. Then what they did was they really allowed people to self-actualize. They made them entrepreneurs at a very early stage in their life. They gave them a lot of responsibility. And for those who really knew what to do with it, they were very successful. The problem was that they didn't have enough of a governor. On the overall business, when people got highly leveraged, it became a problem. Because as you know better than I do, the development business is cyclical. The reality was that they had some difficulties. But what's interesting is that I'll never forget the day when CB bought Trammell Crow. Everybody said, “Oh, my God, you guys overpaid for that. Massively overpaid for it.” Look at him. Look at who's running CB today, Bob Sulentic. Where did he come from? He came from Trammell Crow. Look at Danny Queenan. He's running well. He's running all the principal businesses or most of them. Guess where he came from? He came from Trammell Crow. Back to your earlier point, it really does depend on where somebody was trained and their leadership skills. I'll give you another example of this which anybody who graduated from Morgan Stanley who's on your webcast will appreciate. We have a wonderful gentleman who writes IP for us once a quarter. And we said to him, “You know what? He can go out and interview a number of the Morgan Stanley alumni and try to figure out why so many of them are running companies today.” What was it about Morgan Stanley? Now, there are other companies that have spawned great leaders, too. But when you look at Owen Thomas, when you look at Michael Levy, when you look at Colin Connolly, you look at Amy Price of BGO, you look at Sonny Kalsi of BGO, you say, “What was it that made all of these people successful?” You know what it was. It was interesting. There were a couple of different things. First of all, back in the day, when they all reported to Stanley, they weren't silent. They worked on debt. They worked on investment banking deals and they worked on private equity deals. They had a much richer development and understanding of what was going on in the business. And the other thing is, they all developed a tremendously strong bond. They helped each other, whatever. They've all gone to different places. But if you talk to them today and understand exactly who's doing business with whom and whatever, they all continue to have these relationships in the partnerships. But I was curious to see what led to that. And believe me, they have an alumni gathering every year in New York and 300 people show up. It's amazing. But it does go to show you that there are certain cultures and they hired right and everything else to develop leadership, for sure.
Willy Walker: Yeah. I think the one other thing to keep in mind on that, Bill, is if you will, vintage. You and I both went to business school. If I look at my class and other classes either are five years ahead or behind me, there is something about leadership opportunities, particularly for the C-suite, that there is a moment in time where you can hit that window or not hit that window, and then it's sort of locked out for a period of time. When I think about the leaders of private equity firms, for instance, they were the founders of all these private equity firms. Then the Henry Kravis’s of the world and the David Rubenstein’s of this world said, “Okay, it's now time for me to step back and someone else step in.” Unless you had the training and were in that cohort of probably a band of 5 to 10 years max, and Bill said, “You're not going to get that job.” Then once it goes to that next generation, it's there for the next 10 to 20 years and you're not going to get a bite at that apple unless you go out and do it on your own.” I think cohort does have something to do with it, that there's that mix in a Trammell Crow or a Morgan Stanley of not only the breeding ground, not only the smarts. But also there's a certain time where the opportunity presented for all those people for Morgan Stanley to go out and take leadership roles because they were in that time frame or age with experience to be able to go take them.
Bill Ferguson: Yeah. It's anything in life. That's a little bit of serendipity. A little bit of luck, the right place, and the right time. No question about that for sure.
Willy Walker: One of the stats that your Ferguson survey came up with was bonuses. Many pay bonuses in mid-February. Most companies finish the year, do their books, and then do their allocations to bonuses. I was interested, Bill, in your survey of 170 public and private companies. 61% of the private firms and 53% of the public companies that use target-based bonus systems are going to pay between 95% and 105% of budgeted bonuses for 2024 at the beginning of 2025. I hear that number. It feels about right to me in the sense that we are still working through the great tightening, particularly on the ownership side. People haven't really quite yet been able to get on the front foot. The fact is that 61% of private firms and 53% of public firms are going to pay target bonuses this year. Given your comment as it relates to hiring stepping up and some companies getting back on the front foot, how much of a liability is that to the 39% of private firms and the 47% of public firms that aren't paying full bonuses?
Bill Ferguson: It's a very astute question, Willy. Clearly, if the hiring environment picks up like we're predicting it will, companies are going to have to start making sure that they're paying their people competitively. Full stop. Because when you look at ‘23, and ‘24, even though these people are being paid at target, if you look at compensation over the last ten years, the bonuses for ‘23 and ‘24 are going to be at the bottom end of that range as opposed to the top end of the range because it was a tough pickup. Nobody did terribly well in ‘23 and ‘24. We shouldn't misinterpret the target for a significant bonus award for sure. And a lot of promotions are underwater to come in at ‘23, ‘24. These companies are going into 2025 having been very conservative and rightfully so. But you've got to recognize when the hiring environment picks up, you need to make sure you're doing all you can to remain competitive. In essence, make sure to make decisions on compensation that ultimately are going to allow you to retain your people. There are going to be consequences for companies that don't acknowledge that we're going into a different turning cycle.
Willy Walker: Outside of compensation, Bill, onto other very important questions on AI and the influence it's having on entry-level positions. Not that you all do a lot of research there, but what’s the impact on staffing at the middle level of companies? Are you seeing downward pressure there? Then the other question is back to the office. It's the big question that lots of people have been talking about as it relates to how companies manage acquiring people back in the office or allowing them to continue to work on a flexible work schedule. What are you seeing as it relates to that being either a driver of performance and people like Jamie Dimon saying, “Get back in the office or you don't have a job,” or others who say, “You know what, we're going to play this a little bit softer and allow people to maintain the flexibility in their work schedule.”
Bill Ferguson: I would say, first of all, on the AI point, Willy, I think it's going to affect any industry. It's going to impact the positions of our situations where judgment is not all that critical. For any position that requires the aggregation analysis of data, those opportunities are going to be at risk, full stop. On the back-to-work issue, I would say culture matters, full stop. Now, are we going to go back to five days a week? In most parts of the country, I would be surprised. We may end up going back to four days a week for sure. Because especially for our younger people, they need to be around the more senior people ultimately to learn a lot of what goes on, what decisions are made in the office for sure. I do think that we will get back at a minimum, probably four days a week. It was so funny because I was talking to some of our people here and I said, “What do you think?” They said, “People really weren't around here, Bill, a lot on Fridays anyway.” I said, “What? I was there every Friday and had part of the summer.” I think if companies max out or average out at four days a week, that's probably as good as we're going to get. But we'll see. Clearly the trend at least in New York, and we'll see if it spreads to other cities, is heading in that direction.
Willy Walker: It's interesting on that one. I was thinking about it the other day as it relates to the professional services industry, broadly speaking, which you and I both are in. I do think that because there's this sense that we're paying for a lot of office space and therefore we have to utilize it. It's sitting there and you look at the rent check and you say, “Why am I paying for all the space if everyone isn't using it?” But I was thinking about the consulting firms, Bill, and I think that in financial services or research or other things before the pandemic, everyone was in the office and you were used to seeing them. But I think about the consulting firms like McKinsey or Bain who, by the way, have exceptionally tight, strong cultures, the consultants are at client offices Monday through Thursday and then fly back home to their home office and come together in their San Francisco office, and their D.C. office on Fridays and see one another. Clearly they go out in teams and work in client offices. But I was pushing my own thinking a little bit by saying, “McKinsey and Bain are fantastic companies that have had very sustainable business models. They don't have everyone in the office, not only one, not only four days a week. They have them one day a week and have been able to sustain that for decades.” I think to some degree, as people face this issue, it's important to remember that one size doesn't fit all. To your point, it really does depend on the culture of the firm. But clearly, some companies that have been remote for a very long period of time and, because of the way that their work goes, they can maintain and build fantastic culture.
Bill Ferguson: The other thing we have to think about, too, Willy, which people don't lose sight of, is that this generation of parents is much different than the generations before. When I was raising my son, for instance, I was encouraging him all over the Midwest all weekend to play at baseball tournaments or taking my daughter to soccer tournaments or whatever. The life that these parents lead now with their kids from age six to the time they get through high school is so demanding that it requires a partnership between husband and wife, spouse, whatever you want to call it. That's much different than when I was growing up, for sure. My son was basically home. We're happy to go to the driving range or the ballpark or whatever. But I wasn't going to O'Hare Airport on Saturday morning. I was going to fly to Kansas City and come back Sunday night after he played five baseball games. That's something that we need to think about running companies. This generation of parents has a familial obligation which I think is much different than prior generations.
Willy Walker: I want to end, Bill, on your foundation and the work you're doing to try and provide opportunities for wildly underrepresented people in commercial real estate. I was walking through the halls of the Aria here in Las Vegas yesterday. It is filled with a bunch of white males in blue blazers. As one of them, I am appreciative of all of my colleagues in the industry. But it is the diversity that has not gotten to this industry to the degree that it has to many others. Our mutual friend Arne Sorenson passed away literally prematurely from cancer. He was one of the great leaders, and one of the great people. You want to go back to what you talked about as it relates to the three nouns on leadership that you put forth. If anyone embodied those three, it's Arne. But the Marriott family made their gift to Howard University. Then, if you will, you piggyback on top of that, setting up your foundation and working very hard to basically educate people on a career in commercial real estate. Getting talented people into our industry is not necessarily much more than saying, “There is an opportunity here for you to go and build a fantastic career, make significant amounts of money, and contribute to your community, and to your world by choosing commercial real estate.” I've watched what you've done. I've seen how effective you've been at both raising money on your own money, as well as third-party money to go and support these programs at both historically black colleges as well as other universities. I guess the question I'd add for you, Bill, is I know you have very ambitious goals as it relates to the growth of the universities that you're touching and the number of students you bring in. And I think you want to have 30 sophomores, 30 juniors, and 30 seniors. You're getting a cohort of 90 coming out and you do the back-of-the-envelope math. That can have a huge impact on the commercial real estate industry long term. Where are you today? What's critical to you getting to where you need to be tomorrow?
Bill Ferguson: In three years, Willy, we've raised $8 million. I'm still astounded by that number. But at the end of the day, it's all about our value proposition for these kids. Arne and I used to talk about this. What happened in our industry is that all of our peers would go to Harvard, Wharton, and Stanford to pick the firms, and they would interview six diverse students in each school. Invariably those students would go to McKinsey and Goldman Sachs and Met. These CEOs had the audacity to say, “I tried.” I said, “No, you didn't. You failed because you looked at the wrong places.” Those students are not going to be students who are attracted to our industry as much as we might like to think differently. There are a few exceptions. The whole concept of our foundation is to develop these collegiate partnerships as schools that are off the radar screen. It's Arizona State, Spelman, Howard, Baruch, and DePaul. We have developed these partnerships with these colleges. Then we bring the foundation in. For the students who get accepted into the foundation, we give them tuition assistance. We give them holistic mentorship and we give them career placement. We have identified the conduit to source these students, and to your point, educate them about real estate because a lot of these students are first-generation go-to-college students. They don't have a clue about what our industry could do, Willy. We're opening their eyes to the largest industry in this country, the largest industry in the world. If you're going to address this economic divide in this country, that's the way to do it. Unfortunately, I'm not going to be around to see it. But at least we're making steps in that direction. It was all due to Arne and the Marriott family and exactly what they did at Howard. Typical of me, I just plagiarized the concept and took it in a different direction and we are where we are today. I feel very blessed. We have a wonderful team. I wrote the book, which is coming out on February 4th, Living Beyond Your Dreams, in essence, to show these kids there is a path to the top. We profile people like Tom Baltimore and David Kong, you name them. There are 24 CEOs in the book, 30 including John McClain, you just go on and on. These students who read this book, say, “You know what? These CEOs went through the same thing I did and look where they ended up.” Stay the course and never give up, and you'll turn out, hopefully, in the greatest place of your life.
Willy Walker: Bill, great conversation.
Bill Ferguson: Thank you so much.
Willy Walker: I had this conversation as much for my own information and education as I did for the people who were listening in. But I know that everyone who's listening learned a whole lot from there. Thank you, my friend. It's great to see you. Thank you for taking the time and thank you for all you do, both for our industry as well as your new endeavors with the foundation.
Bill Ferguson: Thank you, my friend. Back at you.
Willy Walker: Have a great day. Thank you, everyone, for joining us.
Bill Ferguson: Yeah. Take care. Bye bye.
Willy Walker: Take care. Bye bye.
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