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Promoting excellence beyond state certification.

Without a sound program for nurturing talent, even the most successful organization will atrophy and collapse. As Peter Drucker notes in The Practice of Management, "The prosperity if not the survival of any business depends on the performances of its managers of tomorrow." (1)

Regardless of size, the key to an appraisal organization's profitable growth is structured professional development with the aim of exceeding the minimum standards required by state certification. In this article, a tested, workable, professional development program that can be profitably adapted by most companies is presented.

Institutional Training

Programs

A brief historical survey of appraisal training programs may be useful. After World War II, life insurance companies were the foremost providers of on-the-job appraisal training. In the early 1950s, for example, the Equitable Life Assurance Society of the United States launched its City Mortgage Department Training Program.

The basic subjects covered in their two-year curriculum included appraisal, financial analysis, market studies, and real estate law. Practical experience and evening studies were supplemented by semiannual, eight-hour written examinations.

The success of the highly regarded training program during the 1950s and 1960s contributed to its own demise in succeeding years, however. Lack of retention was the problem. A study of 315 trainees who entered Equitable's training program during its first two decades revealed that, for every four persons who entered the program, one was lost during training, another left within two years after graduation, while the third quit before the tenth year of employment. (2)

With rigid salary structures lagging behind inflation, insurance companies lost many employees during the real estate boom of the mid-1970s. Your appraisers increasingly left for greener pastures soon after completion of training. Finally, the old training programs were dismantled as a result of low retention.

Notwithstanding the retention problem, however, the basic elements of such institutional training programs remain valid. Courses in appraisal, investment analysis, market studies, and real estate law are still basic to the business. This fact is reflected in the core courses offered through the Master of Science in Real Estate degree program at New York University, for example, which include real estate accounting and taxation, economic analysis for real estate investment, and real estate finance.

Two years of on-the-job training supplemented by evening study is a sensible program. The question of how such a program will be provided still remains, however.

PROFESSIONAL

DEVELOPMENT PROGRAM

FOR SMALLER

ORGANIZATIONS

In the 1980s, when large institutions viewed the MBA degree as a substitute for appraiser education, the responsibility for such training shifted to smaller organizations such as consulting firms. It soon became apparent, however, that a wide-ranging assortment of real estate seminars was no substitute for structured training.

This became shockingly apparent to the author while at a consulting firm where a struggling young staff appraiser was floundering. Instead of deriving value conclusions, the appraiser persistently produced endless spreadsheets. After a little probing, a dark hole was discovered in his education. Despite a law degree and two years in the business supplemented by several real estate courses of his own choosing, he had never been exposed to a single hour of formal appraisal instruction.

To address the obvious need, a professional development program was designed in 1979 for this young professional as well as for three co-workers. There was little prospect of professional advancement for these individuals without structured training; they were in dead-end jobs at the time.

JOB DESCRIPTIONS

Before the program is outlined and the long-term results are reported, a framework of basic job descriptions will be presented.

Research associate

This is an entry-level position for persons with demonstrated writing skills and an aptitude for mathematical analysis. The position requires the flexibility to perform a broad range of market study and appraisal tasks under the close supervision of more experienced professionals.

Special circumstances may lead to the employment of persons with diverse previous academic preparation and work experience. Therefore, in addition to work assignments, a research associate must make a definite commitment to complete a program of foundational studies (at company expense but on personal time) possibly including, but not necessarily limited to, accounting, algebra, appraisal, economics, market studies, real estate principles, and real estate law.

Associate

An advanced position for individuals who have completed basic academic preparation and related work experience, it requires, in addition to good writing skills, that associates be proficient at market study and appraisal tasks with a minimum of supervision.

Associates are encouraged to pursue professional credentials in a work-related field. To this end, the company customarily authorizes yearly associate attendance (on company time and company expense) at an educational course such as those sponsored by the Appraisal Institute.

Assistant vice president

This is an account manager position for production-oriented persons with established professional skills and work-related experience. In addition to technical competence, these officers must demonstrate the potential for business development as well as the supervisory skills necessary to complete entire assignments with or without assistance from others.

Although their basic professional credentials are generally in place, assistant vice presidents should also advance to the forefront of their technical disciplines by accepting such responsibilities as work-related teaching assignments and authorship of articles for publication in recognized professional and trade journals.

Vice president

This senior-level account manager position requires an individual who has established professional prominence or specialized skills distinctly valuable to company profitability. In addition to being an accomplished negotiator of new business, this officer must be an adept manager of teams able to execute the most complex assignments.

Vice presidents are encouraged to aggressively market their skills to develop new business. The company should encourage the acceptance of speaking engagements as well as active participation in professional and trade associations.

Senior vice president

An executive-level position requiring extensive administrative skills as well as the technical competence requisite for leadership, a senior vice president must also be sensitive to the need for improved staffing and equipment. Consequently, a person in this position must be aware of current employment markets to carry out recruiting duties, and be responsible for recommending appropriate salary action.

A senior vice president is responsible for aggressively promoting new business, thus speaking engagements and active participation in professional and trade associations are encouraged.

Senior vice president and chief

appraiser

This executive-level position requires technical competence and the administrative skills necessary to pursue multiple assignments in the most profitable way. In addition, a sensitivity for interpersonal relationships is essential. This executive officer is responsible for the quality control of appraisal activity and profitability.

As are vice presidents and senior vice presidents, a senior vice president and chief appraiser is responsible for promoting new business. To that end, the company encourages speaking engagements and active participation in professional and trade associations.

These job descriptions could be tailored to fit the particular needs of any firm. It is unlikely that any appraisal organization would require more than the six levels covered.

Regardless of the number of levels decided upon, it should be noted that the progression is from unskilled to skilled, from dependence to independence, and from costly to profitable.

To help a research associate develop professional skills and become profitable as quickly as possible, the Professional Development Program presented in the Appendix may be helpful. This program takes the form of an implicit contract. In exchange for making the extra effort to pursue the required studies while working full-time, and employee is promised meaningful promotion upon completion. The objective is simply to provide an avenue for transforming practical experience and textbook theory into productive ability.

THE RESULTS OF

PROFESSIONAL

DEVELOPMENT PROGRAM

Of the four who entered this program at the consulting firm mentioned previously in 1979, one left during the training period, while another left the company within two years after graduation.

The remaining two (a woman and a man) are still with the company after more than ten years; both have risen to the rank of senior vice president. Today one is an authority in the field of current value accounting. The other's views on real estate and the economy are read nationwide; he is also adjunct associate professor in New York University's Master of Science in Real Estate degree program.

Of the fourteen professionals who were on staff when these two embarked on the professional development program, only these two have remained through the present. While the role of compensation and recognition cannot be ignored, the professional development program appears to have stimulated their retention.

The investment in their professional development has thus paid handsome returns to the company, the profession, and the individuals. This reflects Drucker's point that "Manager development (is) a threefold responsibility: to the enterprise, to society, to the individual." (3)

Clearly, the attempt to maintain professional excellence should not be limited to state certification. To meet the threefold responsibility noted by Drucker, a structured professional development program can set the stage for appraisers to surpass minimum standards by a significant margin.

(1) Peter F. Drucker, The Practice of Management, (New York: Harper & Brothers, 1954), 182.

(2) The single identifiable characteristic of the 25% retained by the company after ten years was that they were hired at age 29 or greater.

(3) Drucker, 182.

Edgar M. Madsem, MAI, founded the firm of Madsen Appraisal Associates in 1983. He received a BS degree in urban land economics from the University of Illinois and is adjunct assistant professor of real estate at New York University where he teachers in the Master of Science in Rea Estate degree program.
COPYRIGHT 1992 The Appraisal Institute
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes appendix
Author:Madsen, Edgar B.
Publication:Appraisal Journal
Date:Jan 1, 1992
Words:1578
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