Survival of the fittest Featured

8:00pm EDT August 26, 2007

In Michael P. Glimcher’s world, there are just two constants: change and communication.

Glimcher is president, CEO and trustee of Glimcher Realty Trust, a Columbus-based real estate trust with a portfolio of thousands of retail tenants nationwide. Its ranks include a who’s who of American department store legends, like Nordstrom and Macy’s, and mega bookseller Barnes & Noble.

The company specializes in ownership, management, acquisition and development of enclosed regional and super-regional malls, many of them located in the country’s top-growing metropolitan statistical areas.

Understanding which new retail development concept is coming out, means finding new customers who are on the front end of growth and taking advantage of industry trends.

“The experience we can deliver to the customer is really critical — it’s a great balance between left and right brain,” Glimcher says.

Change is built into every step of Glimcher’s business process. Keeping his customers’ customers in mind means applying innovation, and the only way to do that is to create a culture where people aren’t afraid to try something new.

When Glimcher took the reins of the company, he started looking at ways of refining the company’s scope and becoming more efficient.

In mid-2005, the company owned 41 properties in 18 states, aggregating 24.4 million square feet of gross leasable area. Two years later, Glimcher had trimmed the quantity to a total of 29 properties in 16 states aggregating approximately 24.3 million square feet of gross leasable area.

Refocusing the business has done little to change Glimcher Realty’s square footage but has made big changes to the kind of property it owns.

“We had over 100 community centers at one point, now we have four — it was a matter of refocusing the business,” Glimcher says. “We’re really focused on mall-type properties now. We sold a lot of older legacy, small community center assets. We want to grow, but it’s not about growing in size but growing in quality — enhanced quality in a huge way. We’re really focused on quality. We always want to upgrade the quality of our assets, of the team. We operate under the thesis ‘Quality Matters.’ How can we constantly upgrade ourselves and our access to capital, assets, teams? It’s what we talk about all the time; it’s what we live.”

Preparing for change

Reshaping an organization that could adapt to those kinds of changes meant making changes in personnel. There was a lot of talent with longevity and tenure in the organization — and room for adding on.

“At the point I really took over, I recruited,” he says. “We had a core team, people who had been there 10 to 15 years. We also recruited in long-term talent, quite a bit of it, and several people with good public company real estate experience. It was time for people with outside experience we could learn from.

“It’s always good to get a fresh set of eyes and different experience on board. Sometimes when you bring in new people, you get more out of the people you have — their vantage point changes.”

Effecting personnel changes in an organization with 1,000 employees requires a delicate balancing act.

“I think history matters, and people who have been here and been dedicated are important,” he says. “It’s more art than science — it’s intuitive, and organizations need fresh ideas and new people looking at things from time to time.”

The effort to bring in new blood paid off. “We’ve had some great achievement in our core properties since we’ve made these changes,” he says. “You can debate whether it’s cause and effect or just that we’re performing better as a company, but it’s proven to be effective, with higher occupancy, higher sales, an enhanced environment in the corporate office and in the field.”

Change comes with a price tag, and those resistant to growth and evolution missed the boat at Glimcher Realty Trust. Some of those employees with longer tenure were unwilling or unable to adapt — and adaptability is a key characteristic in such an evolving industry.

“We’re going to evolve and change,” Glimcher says. “People who wanted to stand still really said they wanted to go backward. Part of evolving is that not everyone makes it. It’s a tough thing, but it’s a reality.”

Communication

The one constant, change, has made the other constant, communication, necessary.

Glimcher uses everything from a company intranet to town-hall-type meetings in which nothing is off limits. Some want to submit their ideas anonymously through e-mail or by phone, and the company obliges and provides all sorts of different avenues of communication because people communicate differently.

Glimcher says communicating change effectively means keeping the channels open for a free flow of opinion.

“My style is to be incredibly open,” he says. “I like to create situations where anyone in the organization can feel comfortable sharing anything with the most senior people in the company. We try to be incredibly accessible and open.”

Being open to suggestions from any level of the company can help you be more effective.

Glimcher says regularly investing in the company’s portfolio to keep properties in tip-top shape means renovations, new furniture and keeping up with design trends. With dozens of properties to watch over, properties can occasionally get overlooked — and out of date.

“We had a meeting where people from the field came to the office,” Glimcher says. “And a junior person from the field spoke up and said, ‘As a company, we haven’t paid enough attention to this property. We need to step up and reinvest in this asset.’”

After the meeting, the junior manager asked Glimcher, “Are you upset I spoke up?”

He responded, “I’m not upset you spoke up — I’m only upset you didn’t speak up sooner.”

Based on the employee’s recommendation, a $10 million rein-vestment was added to the following year’s renovation budget.

“It doesn’t mean that everyone that speaks up gets $10 million,” he says. “It does mean the person had a valid concern and that I think we can generate the revenue to offset that investment.”

New blood brings in new ideas, and Glimcher welcomes infusions of both. A recent addition to the team had a suggestion after looking at the process for approving the deals that Glimcher Realty Trust deal-makers made.

“We’d always had that process,” Glimcher says. “But he thought it seemed to be slowing down deal-making because it took so long to get back to retailers with an answer. He said, ‘I think there’s a better way of doing it.’”

Sure enough, there was a bureaucratic kink in the deal pipeline that had been quietly plugging up the process for decades and was soaking up precious time that could have been profitably leased out. Upon close examination, Glimcher realized that statistics documented a majority of the deals coming in for approval eventually were proven to meet budget. Based on that one new employee’s keen observation, the process has been revamped. Now, rather than formally going through everything prior to approval, the system checks for variances — for the exception to the rule — and the process has been trimmed.

“We’ve probably cut out three-fourths of the work and have the exact same result,” he says. “Now, if transactions meet budget, they’re basically preapproved. We’ve cut weeks off. We approve deals faster, sign leases sooner, stores open sooner, and therefore, property rents sooner.”

Shaving weeks off the start dates of hundreds of leases has made a significant impact on the company’s bottom line.

“It’s not just easier and less stressful on people — it has a great economic value to it,” Glimcher says. “It’s not just about process — it’s about what the result is going to be. You get a better result with a better process and that’s the real win.”

While building on the company’s 48-year history, Glimcher has brought a new flexibility to the business mix in an effort to value individual contributions and to honor doing things the best way instead of the usual way.

“A lot of things we do as we have from the beginning,” he says. “On the other hand, we’re open-minded. If someone has a better way of doing things, we can change things tomorrow.”

This type of thinking has helped Glimcher grow from $204 million in total revenue to $309 million in total revenue in 2006.

Keeping an atmosphere where anyone can bring something to the table means improving access, and Glimcher has worked hard to do just that.

“We have an open-door policy, a first-names-basis policy,” he says. “We try to create an environment in the enterprise where everyone is equal. We try to think of ourselves as one — that everyone makes the collective whole stronger. We try to talk about it, but we also try to live it.”

Thinking of the collective benefit has led to increased ownership — and that’s another win for the company.

“We think about it in terms of property teams who live with their assets like home,” he says. “We’re not coming to property they’re looking after for us — they take ownership. If the physical plant’s not right, they want it to be right. They’re going to put things in order because it’s their home. There’s a great dynamic when people in the enterprise feel that ownership. In the field, it’s not my mall or the company’s mall — it’s their mall.”

Being publicly traded also helps. “We have many associates that own stock in the company, that have equity ownership, so it is their company,” Glimcher says.

It all goes back to the kind of ownership demonstrated by the junior manager who garnered a $10 million renovation for her property by speaking up, Glimcher says.

“The property is going to have a renovation and that talks to our openness,” he says. “She cares so much about her property that she was willing to come out of her comfort zone and take the CEO to task because she wasn’t happy with what was going on with her property. ‘Why are we not taking care of my property the way I think we should be?’ She clearly had ownership of the asset. If she didn’t, she wouldn’t have spoken up.”

HOW TO REACH: Glimcher Realty Trust, www.glimcher.com