Topping the chart Featured

8:00pm EDT July 26, 2007

When Michael Lerner holds a mirror to his organization, the reflection he sees is perhaps not that of a typical real estate developer.

“We don’t think of ourselves as homebuilders,” says Lerner, president and founder of Chicago-based MCZ Development Corp. “We think of ourselves as creators of neighborhoods.”

Founded in 1985, MCZ initially specialized in adaptive reuse projects — mostly loft renovations — and focused on creating affordable dwellings for its target demographic: young, urban professionals. By the mid-1990s, the company had found its calling, concentrating its development efforts on thinly populated sections of Chicago, such as the Fulton River District and South Branch. By rehabbing multiple buildings — offices, manufacturing sites, etc. — in a particular area, Lerner says MCZ played a large part in turning those former industrial districts into bustling urban neighborhoods.

Maintaining that momentum, however, meant utilizing a tool whose usefulness is perhaps overlooked by many leaders: the organizational chart.

Though most companies have likely, at one time or another, constructed an organizational chart, to Lerner and MCZ, the company’s chart is not just a piece a paper in a drawer somewhere.

“We believe very strongly in communication and do believe very strongly in our organizational chart,” Lerner says. “The organizational chart is a guideline that gives people comfort in working through their jobs.”

Growing MCZ to $1.6 billion in annual revenue required overcoming some pretty daunting obstacles that would put both the company and its chart to the test. In an effort to continue its growth, despite the real estate market’s now nearly decade-long recession, MCZ has shifted its focus toward smaller, developing areas of the country, a move that, while profitable, has spread its personnel across the country, creating communication and job responsibility challenges.

With the help of MCZ’s well-defined and strictly obeyed organizational chart, Lerner has helped avoid the pitfalls of communication breakdown, has helped keep morale high and has helped continue his company’s success through a less-than-ideal market.

“This is a pretty simple business,” Lerner says. “Every move that someone makes has some implication to someone else. Everybody has to be on the same page or nothing gets done.”

Building the chart

“The biggest job of a leader is to choose products correctly,” Lerner says. “In a booming market, you can make a lot of mistakes. In a market that’s a little more reasonable and a little less robust, you need to be more careful, and everybody just takes more responsibility for what they do.”

Taking a higher level of responsibility requires a team in which everyone is on the same page and, of course, team members who can handle responsibility and the authority to make decisions. To ensure these two conditions are satisfied in his organization, Lerner calls upon MCZ’s organizational chart, which was developed in part by requesting that every single employee describe the role each felt he or she played in the company.

“When we created our organizational chart, we asked the current employees what exactly they thought their jobs were,” Lerner says. “It’s really important to get that kind of feedback from the employee rather than telling them what their job is at any given time. You start to understand why they’re not doing what you thought they should have done, or, conversely, why they’re doing something wrong.”

As with most organizational charts, within each of the departments that constitute MCZ, the chart defines the proper channels of communication that need to be followed to keep information flowing efficiently up and down the company.

“It helps people figure out who they need to talk to in the organization,” Lerner says. “Obviously at the top of the organization are myself and my two partners. Everything eventually ends up at us, but it drops down immediately to four vice presidents: marketing, operations, construction and sales. Below that, for instance, every contract administrator will report somehow to the director of marketing, and through that director of marketing, it will work its way up to the vice president of marketing. It’s both an uplink and a downlink because the director of marketing will also be talking about how he wants things marketed.”

Because of the chart — but especially because of the employees’ input in creating it — Lerner says every employee at MCZ is aware of his or her responsibilities, has the authority to make decisions within his or her role and has the opportunity to suggest changes that will contribute to the greater good of the company.

“We’ve chosen these people to do these jobs, we think a lot of them, and we want to know what they think,” Lerner says. “We give everybody the opportunity to grind their axes, and they have a lot of room to suggest how things should work.”

Additionally, Lerner says that in creating the chart, it allowed his management team to get a better idea of where each employee sees himself or herself within the organization.

“As you hire people, they tend to gravitate toward the things they do best,” Lerner says. “It was helpful for us to ask people what they thought their jobs were, and it helped us decide what they were most comfortable doing. We get a better sense of where people are in the organization.”

Fostering communication

At MCZ, the channels of communication created by its organizational chart are not just one-way streets. They instead serve as both a means for front-line employees to relay crucial information to management and for managers to disseminate consistent directives to subordinates.

“We train everybody to do things the same way,” Lerner says. “The message is consistent from the top down, and we’re very anxious to hear what people say from the bottom up, and we will make modifications based on that.”

To help maintain that consistency, regardless of whether information is traveling up or down the corporate hierarchy, Lerner says it is important that no level of the chart is bypassed — even by the CEO. As a result, objectives are clearly defined and communication is simple.

“We’re very disciplined to where someone like myself, as the president of a company, will not go down and talk to a marketing director in a different market without going through the proper channels,” Lerner says. “It helps the communication. Our goal is to not short-circuit our organizational chart by overriding it by, for instance, me going down and telling a contract administrator somewhere to do something differently than the company does it somewhere else.”

As the individual who sits atop the organizational chart, Lerner says the two-way communication he stresses throughout MCZ must start with him. As such, and despite that it sometimes means things are not done the way he might prefer, Lerner absorbs all the feedback he receives, both positive and negative, both internal and external, and makes the necessary adjustments. Additionally, obeying the proper lines of communication allows the departments in his organization to share vital information effectively and without interruption.

“The sales agent who is talking to the client is the one who is going to come back to the project sales director and say, ‘This is what’s happening, this is what my people are looking for, this is where they come from, and this is where they heard about our product,’” Lerner says. “That information we want our sales agents to be telling us immediately. The sales agent will tell the sales director and that director will go to our marketing director and say, ‘This is what is happening to us in Orlando. People are looking for this type of product, this type of financing.’ We want this style of communication to be in place always.”

Granting empowerment

Like many organizations, Lerner says MCZ relies heavily on the ability of its front-line employees to react quickly to changing situations and make decisions without first having to contact a manager or superior.

“We empower a lot of people here,” Lerner says. “We’re a national company, and we’re in the real estate development business, so there are a lot of decisions that need to be made on the ground in different locations. We rely a lot on people making decisions independently in the field, and it’s very important that we empower and support these people.”

Granting that empowerment, however, is not without risk. “You run the risk when you give people that authority that they’re going to make a mistake,” Lerner says. “People are human, and people make a lot of mistakes, but if they make a mistake and they’re not willing to own up to it, it becomes a problem.”

While Lerner accepts that giving employees empowerment also means that mishaps are inevitable, he says there are mistakes that are acceptable and those that are not. Because MCZ’s organizational chart was developed with each employee’s input, everyone in his organization owns his or her responsibilities and cannot place blame elsewhere. As a result, performance improves.

“The organizational chart makes it easier for them to do their jobs because they know their roles,” Lerner says. “But it also makes it easier to identify when people are falling down in their jobs. They really have no one else to blame for what’s not going right in their particular job.”

HOW TO REACH: MCZ Development Corp., (312) 573-1122 or www.mczdevelopment.com