Social capital and informal networks in real estate project management

Social Capital

Applying Concepts of Social Capital to a Real-World Situation: A Personal Managerial Case Study

Organization Overview

I recently held a managerial position at a commercial real estate firm working on many projects of different scale and potential profitability. The organization had a fairly simple if extensive formal structure, with a direct chain of command that did not include an abundance of redundancies. At the same time, there was a great conscious reliance on the informal structures of the company, and often the official chain of command was bypassed altogether due to common practice and a knowledge of individuals' areas of expertise, interest, and skill. The informality of the company's structure was more evident in certain departments than in others, and at times this led to difficulties in inter-team projects.

Given the complex nature of many of the real estate transactions in which the firm was engaged, most projects required a great deal of inter-team cooperation and coordination; achieving this was quite often more easily said than done. The informality that was highly prevalent in certain departments was far less so in others, and though the organization as a whole ran on a more informal basis communications between different departmental teams could become difficult in the early stages of a project, when knowledge of different individual proclivities and the structures of other departments had not yet been established. Ultimately, project success often depended on a sole individual's knowledge of the right individuals to speak to about specific project elements, and their ability and willingness to communicate.

The Case

A major project I was placed in charge of involved the development of an existing shopping centre into a larger retail structure, and the various elements of this project involved the company's development team, its marketing team, the asset management team, and a few other departments were also tangentially involved. From the above description of the problems typically experienced in this organization, it should be fairly clear that communications ended up being a major problem in the progress and completion of this project. The standard interdepartmental communications problems experienced in the organization were exacerbated by two other prominent factors in this particular project, however.

The first of these was my lack of time with the company. A recent arrival, this was my first major project and it cam before I really knew many people at the company or how the various formal and informal structures actually functioned. This left me with very few places to turn to when problems arose, and issues were not dealt with as efficiently as they could have been. I was having trouble obtaining certain necessary authorizations from the city for the planned expansion of the retail structure, and could not get clear answers or definitive actions from the development team personnel that I would engage with. At the same time, the marketing department seemed to be having trouble generating interest in the project, which was beginning to cause doubts amongst senior management as to the viability of the project as a whole. Deadlines were being missed, and going through formal channels was not yielding the results I needed.

This leads to the second major exacerbating issue of this particular case of communications problems within the company: the extreme informality of the development department. In addition to two managers and a director, the department had many young graduates and an urban planner that had been with the company for years but that everyone all but ignored because they didn't really know what it was he did. As it would turn out, of course, this individual was key in actually getting things done, as he knew almost everyone in the company in all of the departments, and was also well-networked with certain city officials and clerks. His formal status in the company remains something of a mystery, but informally he was the man successful project leaders went to in order to learn whom to speak to about what, to make introductions expanding the project leader's own network amongst relevant company and city individuals, and sometimes to do the necessary communicating itself.

Recommendations

The organization as well as future project leaders would receive a great deal of benefit from making the urban planner's position in the company more formally known and established. A formalization of the leadership of the development department as a whole is required to make the department more efficient and responsive; distinguishing the managers' roles and ensuring that the director is able to coordinate and oversee the multiple projects the department is working on at any one time would enable project leaders to receive efficient coordination and communication through official channels. Making the urban planner more officially a coordinator of project elements would also assist in this regard. It is not only in the company's formal structures that changes should be made, however; the under-utilization of the company's informal structures was also a major problem in this case.

Networking and the building of social capital is a major key to managerial success, and this was an area in which I failed to achieve and progress in the desired manner. Rather than actively engaging in networking, I took lunch with the same people every day -- most of them were approximately my same age and they were all relatively new in the company, as well. More extensive networking efforts on my part, including semi-formal visits to individual members of the project I was leading, would have created more effective communications between myself and all departments on the project, and would also have brought my awareness to the personal units of functionality that existed within the company. These personal and individual changes are also much more easily accomplished than changes to an organization's formal structure, and they are ultimately far more useful as an extensive network and large amount of social capital is essential for a variety of reasons regardless of the formal structures and personal titles under which informal structures exist.

Conclusion

It was through a failure of the company's formal structures as well as my own connection and awareness of the company's informal structures that the problem in this case was allowed to grow. Ultimately, the company functions quite well with its informal structures, so it was mostly up to me to network and find the solution. A more active engagement in building my social capital at the firm would have led me to this solution much sooner.