Last week, I began a discussion on the possibility of real estate companies focusing their recruiting efforts on the large demographic of young people who are either unemployed or underemployed.  

At the end of the discussion, I posed the question of whether you, as a real estate owner or hiring manager, believe it is worth it to focus a significant portion of your recruiting effort on this group of candidates.  I received some great comments back. 

There seems to be a small group of our readers who are legitimately excited about engaging, hiring, training, and mentoring young people toward success.  However, there are many others who are not so hopeful.  I’ve heard many polite, but weak-hearted responses among many of the managers whom I’ve met with in-person over the last several months…typically along the lines of…”I see what you’re saying, Ben” or “That’s interesting information.”  But in their eyes, there is no passion toward truly pursuing these types of candidates.   

In an overarching sense, I suspect that this lack of passion is rooted in the resistance that every human being naturally feels toward change.  The specific reasons this particular change in hiring focus would not be good for your company or office probably varies significantly.  

Rather than trying to identify and address those underlying causes, I think it may be more helpful to address some of the common myths that exist regarding young candidates.  In doing so, I believe that some of the resistance that you feel may dissolve in the face of the potential and opportunity that young candidates bring to the table.

Myth #1:  Young people are not motivated.  If you flip through the channels during primetime, it does seem that young people (especially young men) are often portrayed as unmotivated or focused on the wrong things.  Or maybe you know someone personally who has an adult child living at home, who spends way too much time playing video games and surfing the web.  Your concerns have some validity.

However, I encourage you to look at statistics that quantify the issue before you disregard this whole demographic slice of society.  Most economists agree that about 3% of the population is unemployable (i.e. they can’t keep a job) at any given time.  When I was in the military, we used to call these folks the “sick, lame, and lazy.”  This would amount to four to five million workers in the U.S. who are deemed “unemployable.”

Even if all 3% of these unemployables were in the above mentioned (young) group (and they’re not), 15 million employable candidates would remain in the pool.  Just selecting the most motivated 10% of this group, could replace the number of real estate agents 55 and older, three times over.  The numbers are simply too large to make the generalization that this whole demographic group is unmotivated.  There are several million young, educated, and motivated candidates who could not only do the job, but dwarf the motivation level of many of your current agents.  

Myth 2:  Young people have limited resources.  The most common complaint I hear from owners and hiring managers is that the candidates they are interviewing do not have the financial backing (start-up money, ability to go without income for awhile, etc.) to start a career in real estate.

The tendency is to focus on the individual candidate as we wring our hands over this problem:  If a candidate doesn’t have the financial ability to start a real estate career, disregard that person and find someone who does…  This is a great plan until you realize there is a very limited number of financially stable candidates available.  If you do happen to find one of these rare beings, you’ll quickly notice they have other options outside of real estate.  

I encourage you to take one step back.  While most everyone has financial challenges, who has the highest probability of solving their financial problems as they start a real estate business?  I would argue that it is young people, for the simple fact that they do not have the expenses and responsibilities of a middle-aged person.  If they are living with their parents–no spouse, no kids, and limited monthly expenses–it is much easier to survive a startup period.

In addition, an adult child living at home has a much better chance of overcoming the financial obstacles than someone on their own.  Why?  Quite often, these candidates have motivated parents.  Getting junior out of the house and established in a career of their own is not only a priority for many parents, it is quite often something they are willing to put some finances towards.

3.  Young people do not have a large enough network (sphere of influence) to be successful.  One of the comments I got back from a top performing hiring manager in one of the midwest markets sheds some light on this issue:

“I truly believe that this group of candidates has a lot to offer to our industry for a number of reasons.  [One of the important reasons is that] they are in the age group that has many friends of their own that will be entering the housing market, if not themselves, as well.”

I once read that railroad executives of the late 19th century never imagined that that their competitors would one day be metal tubes that flew thousands of feet in the air, without the need for steel tracks and other infrastructure.  Nor did real estate agents, even 20 years ago, imagine that a person could sit in their house and have free access to hundreds of millions of other people both in their neighborhoods and around the world, through the internet and social networks.  What’s even more strange is that we call these people friends!

Here’s the point:  Young people develop and maintain relationships differently than the generation before them.  Although it may seem strange, many of them have access to huge networks, and they are just learning how to leverage those relationships for business purposes.  You’re going to need these individuals to help you transition into your own version of the airplane and tap the next generation of homeowners.

Are you ready to start engaging this new group of candidates?  You may need to dip your toe in slowly at first, but once you experience a few successes, I think you’ll be hooked.  Their energy, excitement, and hope for the future is contagious, and it’s just what the real estate industry needs. 

Editor’s Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you’re an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the “comments” link below.

Starting in 1960, the U.S. Census Bureau began tracking a statistic called Household Formations.  If you're a real estate owner or manager who has the responsibility for replacing an aging workforce over the next five to ten years, it might be a metric you want to start noticing.

In a recent article in Business Week, economists reported a little bump in consumer spending they attribute to the fact that more adult children are moving out of their parents homes and starting households on their own.  This is not the only source of new household formations, but it traditionally accounts for the major trending in this statistic (divorce stats affect this metric as well).  If kids are getting out of college and obtaining well-paying jobs, they strike out on their own and set up households.  

In the last few years, the opposite has been true.  Business Week reports:

"About 20 million adult children in the U.S. live with their parents, and most are eager to move, says Peter Francese, a demographic analyst for advertising agency Ogilvy & Mather.  'Most guys who live at home beyond some young age walk around with a great big 'L' [for "loser"] on their forehead,' Francese says.  'As more young people feel they will be able to keep a job, bingo, they're gone.'

Next year, nearly 1 million new households will be created, UBS Securities (UBS) predicts, up from the 357,000 in the year ending March 2010, the lowest number for a 12-month period on record since the Census Bureau started tracking household starts in 1960.  U.S. household formation in the three years ending March 2010 was roughly 40 percent of the long-term average, or about 500,000 annually, according to Census data."

The article goes on to spout optimism about how this economic indicator is starting to fuel consumer spending; the average person spends $1,900 on consumer goods setting up their household.  Will this change spur economic growth?  I'm not sure–it may be best to just let the prognosticators debate that issue.  I'm more interested in the 19 million adult children who are stuck living with their parents because they can't find a job.  Let's take a closer look at this data.

As the graph to the left illustrates, the number of new households is quite low.  The IHS Global Insight researchers have estimated this trend will dramatically change in the next couple years.  Let's suppose this does happen (which I doubt it will).  If nine million new households are formed over the next five years, this only reduces the backlog to 11 million adult children living with their parents.

My calculation above also assumes that there will be no new people graduating from college and moving back in with their parents.  While it may be difficult to draw a line on where a college grad crosses from "underemployment" (they have a low paying job that does not match their degree) to "employment" (they have a job that pays enough for them to move out of their parents' house), I've tried to do my best to come up with an accurate number.  Here are two (1, 2) of several articles I've read on this topic.  

I think there will be about 700,000 new college grads entering into this unemployment/underemployment state each year, for the next few years.  Taking into account those who do not have degrees who also will be finding themselves in this state, the number of new adult children who move back in with their parents will be much higher.  By the way, the average person who is considered "underemployed" makes $400/week.

So, it's probably safe to say that the backlog of adult children who are living with their parents will not diminish quickly.  It is quite likely that this number will remain significantly above 10 million people for some time.

Here's a question for you:  Do you believe this large group of candidates could help solve the significant recruiting challenges that will face the real estate industry in the next five years?

You may comment confidentially by replying to workpuzzle@hiringcenter.net.  If you want to share your response with others, use the comment link on localhost/Mahesh/wordpress/.

In my next post, I'll discuss reader comments and provide some comments of my own. 

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.

Last week, I began a discussion regarding the emphasis that many real estate companies place on experienced agent recruiting.  There is a natural frustration that always surrounds this topic due to the underlying demographics that characterize the issue.  
 
In short, companies currently compete for a very small pool of viable experienced agent candidates (i.e. those agents who are productive, but haven't yet crossed over into the realm of being high performers).  I believe this “productive but not prima donna” group makes up about 20% of the recruiting market of experienced agents. 
 
I made the suggestion that opening up the recruiting aperture to consider agents who are low performers in other companies, may be worth considering.  In a typical real estate company, this category of agents account for 40% to 60% of the agent population.  This amounts to a lot of candidates, who are more accessible than their more commonly pursued counterparts.
 
Before you jump into this new utopia of experienced agent recruiting with both feet, here is a disclaimer:  

Hiring failures is a risky proposition.  

In many cases, engaging these low-performing agents can quickly turn into a waste of time.  Or worse yet, the potential is there to waste resources and drag down your own productive agents if these folks fail in your company.  So, tread down this path with care and a healthy dose of cynicism.  If you believe you can save every poor performer that your competitor has created, you’re in for a big disappointment.
 
But, you may be able to save a small percentage…and a small percentage of a larger number can result in incremental recruiting successes that are worth pursuing.
 
If you decide to take on this challenge, I have an assignment for you:  You need to become a student of failure.  That’s right.  You need to become proficient at understanding why people fail. 
 
I know many of you have a bookshelf full of books on success.  But, have you ever spent time learning about failure?  A great place to start your education would be the April 2011 issue of Harvard Business Review.  In this publication, there are nine full-length articles, and seven short bios on the topic of failure.  The write-ups cover more than 60 pages ( yes, that’s 60 pages of small type).  There is a surprising amount of research that has been conducted on the topic of failure, and there is much to learn.
 
One article that I found particularly interesting highlighted the concept that not all failures are created equal—there are good failures and there are bad failures.  Being able to differentiate one from the other can be very helpful if you’re trying to figure out whom to engage in your newly expanded candidate search.
 
To document this phenomenon, HBR created a “Spectrum of Reasons for Failure.”  At one end of the spectrum, there are blameworthy failures (bad failures) and on the other end are praiseworthy failures (good failures).  Here is the list from bad to good:

• Deviance:  An individual chooses to violate a prescribed process or practice.
• Inattention:  An individual inadvertently deviates from prescribed specifications.
• Lack of Ability:  The individual does not have the skills, conditions, or training to execute the job.
• Process Inadequacy:  A competent individual adheres to a prescribed, but faulty or incomplete process.
• Task Challenge:  An individual faces a task too difficult to be executed reliably every time.
• Process Complexity:  A process composed of many elements breaks down when it encounters novel interactions.
• Uncertainty:  A lack of clarity about future events causes people to take seemly reasonable actions that produce undesired results.
• Hypothesis Testing:  An experiment conducted to prove that an idea or a design will succeed, fails.
• Exploratory Testing:  An experiment conducted to expand knowledge and investigate a possibility, leads to an undesired result.

Let’s suppose that you have the opportunity to engage one of your competitor’s agents who falls into the 40% to 60% of underperformers.  In striking up a discussion concerning “how business is going,” it would be natural to ask something like:  “Do you feel you’re meeting the original goals that you had when you decided to get into real estate?”    
 
And then as you listen to the answer and ask more open-ended questions, eventually get to the question:  “Why do you feel you have not been able to meet your goals?”  And then listen.  This is not the time to recruit and sell.  This is the time to collect information and make a determination if this person is experiencing a praiseworthy failure or a blameworthy failure.  Match the answers to the list above (after you wrap up the conversation) and then make a determination of whether this is someone worth pursuing.
 
In my next WorkPuzzle entry, I will reveal the one common trait that researchers claim is shared among those who are successful at turning failure into success.  If your candidate is lacking this trait, it’s a huge red flag!  Stay tuned…

Editor's Note:  This article was written by Ben Hess.  Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.  Comments or questions are welcome.  If you're an email subscriber, reply to this WorkPuzzle email.  If you read the blog directly from the web, you can click the "comments" link below.