The hidden risks for real-estate companies

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Category: Properties

11 Mar 2014

 

Written by Amor Maclang

RISK and crisis preparation is a crucial element that should never be missed in any marketing initiative, particularly for businesses belonging to the real-estate sector.

In the mere course of fulfilling your business mandates as developers, real-estate firms practically expose themselves to various risks that pose huge threats to your business in terms of your efforts to build a positive reputation and ensure business continuity. Issues and situations such as tree balling; the concept of adaptive reuse; preparing to go public (IPO); an “innocent” advertisement that was misinterpreted; working with foreign architects and designers; dealing with indigenous communities; property zoning; or even eyeing to build brands and lure investors to conflict-stricken areas like the Mindanao region all involve risks that, if left unaddressed, can likely escalate into full-blown crises that put businesses in peril.

There are three things you can do to address all these dilemmas. (1) You can choose to eliminate these problems right from the beginning; (2) Mitigate the impact; or (3) Prepare for risks by crafting your strategic plan. That is the most important thing that should be spelled out.

Risks, issues and crisis are a part of doing business. As I have mentioned countless times in the past, the public doesn’t judge you by what happens; it’s how you respond to a situation that forms the lasting impression. Tree balling, for example, is a necessary initiative developers often resort to, especially if you are preparing to develop a network of roads to and from a soon-to-rise property. Over the years, we have heard about a few instances about public protests carried out by environmental groups and concerned citizens against developers who have decided to continue with their tree-balling work.

In the case of local developers tying up with foreign architects and designers or those adopting a foreign concept to sell a local property, the situation can rouse the ire of local stakeholders—architect groups, homegrown artists and many others more—who may be wondering why they are not good enough to deserve your patronage. They are likely to wonder about this loudly—and publicly, too—thus possibly fueling a reputation that you are not pro-Filipino.

Ayala Land has done an exceptional job in managing this kind of situation. How exactly do they do it? For one, they work with multiple architects for various projects—an equal mix of local and international
talent—that strengthen their support for the expertise of Filipino professionals while also getting inspiration from foreign practices. Additionally, they refrain from overly communicating this fact to the point that it (the international appeal) becomes their actual selling advantage.

What can other developers learn from these two scenarios? These are perfect examples that highlight the value of providing proper context behind business decisions. As developers, you have a choice whether to completely eliminate the risk of being the center of a public outcry by completely stopping to ball trees or mitigate it by proceeding to do the same but reinforcing your business decision with a reforestation advocacy. Identify possible scenarios and pertinent stakeholders and prepare communications for each to help you deal with the situation when the need arises.

Crisis is a question of “when,” not “if.” There are a lot of people in the Philippines who believe that thinking about possible crisis scenarios might actually cause them to occur. Logically speaking, one must conclude that not thinking about crisis scenarios will prevent them from ever happening. And, sadly, that kind of thinking does not hold any dependable truth with it.

In a crisis situation, remember that facts will always be your best ally. Do not try to complicate the situation by making up stories just to cover up your ass. State the facts as they are and do not justify any wrongdoing, if there are any. Stick to the plan and craft your message based on the communications that you have set in place. Do not throw yourself into the lion’s den without a solid branding and reputational strategy because you risk losing your business and hurting your reputation by not arming yourself against the vulnerabilities of your industry.

Conduct a rapid assessment and war-room exercise of various business scenarios relevant to your operations, how things can escalate, or plans to de-escalate before you make your final decision. Establish an image as a thought leader that looks out for the welfare of the immediate community proactively. Map your stakeholders—it can be the local government, the local business community, or the local insurgents, even—because it is not just your customers who define what a good business means to you as a developer. Engage them and communicate how you intend to respond to their needs.

At the end of the day, in a reputation economy, you may be a well-oiled machine but how people perceive you and how they perceive how you conduct your business counts as much as the actual product or experience you sell. Remember that sale will benefit you only once. A mismanaged crisis can hurt your chances forever.