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Hudson Pacific Properties

Major Report

Brendon Burke
Alex Jarufe
Alice Lau
Derek Lavey
Morgan McGarry
Mike Shumway

Company Overview
Hudson Pacific Properties (HPP) is a Real Estate Investment Trust (REIT) that operates in
California and the Pacific Northwest of the United States. HPP is a vertically integrated company
that handles all aspects of the commercial real estate business from acquiring their properties to
handling building operations. Hudson Pacific Properties was founded in 2006, under the name of
Hudson Capital. In 2010, the company went public as a REIT under the name of Hudson Pacific
Properties (HPP 2018).

Since then it has focused on leasing properties to large Fortune 500 companies, primarily in the
Media and Entertainment industries. Hudson Pacific Properties builds, repositions, leases and
sells both commercial office space in San Francisco, the Silicon Valley, and Seattle, as well as
studios located in Los Angeles. Some of Hudson Pacific Properties most well known clients
include Netflix, the NFL Network, Amazon and CBS. HPP’s specialty is providing customizable
properties to fit their client’s specific needs.

Data Collection
We collected the data on the two problems we identified regarding HPP’s long hiring process and
the lack of upward mobility currently present in the company through an interview with Shawn
McGarry, Vice President of Portfolio Management (McGarry, 2018). In addition to an interview
with Mr. McGarry we sent an anonymous survey to his property management team as well as
other employees throughout different departments within the company to gain greater insight on
the internal management problems the company is currently facing. It was clear through the
survey responses that current employees at HPP are generally unaware of the current program of
upward mobility through the company and agree that the hiring process should be shortened.

Management Problems Facing HPP


Hudson Pacific Properties has no known problems facing their company that the public has not
been made aware of in the news, however after talking with Mr. McGarry he identified two
processes within the company that are not operating at their full potential: a lack of upward
mobility and a lengthy hiring process (McGarry, 2018). Both of these negatively affect the
business in different ways, both of which are avoidable.

Lack of Upward Mobility


We have identified that Hudson Pacific Properties management has not implemented a
productive upward mobility program within the company. HPP’s employees are not given a clear
job description and are often faced with tasks that do not match their job title nor do they set the
employee up to be promotable. Without a clear understanding of their roles, employees gain
experience in multiple aspects of the company, however, this experience is not focused directly
on the skills needed to allow them to move up from their current position.

Internally promoted employees typically cost 18% less than ones recruited from outside the
company (Bidwell, 2011). They are more highly motivated and significantly more productive
during their first two years. The reason for this is that when employees who are in key positions
hold the same job for a long period of time, they can become too content and too comfortable.
They also have a lack motivation to maintain status quo and lack a fresh innovative view of the
business strategy and decision making process. This can cause the company to be insular to the
business environmental change.

Lack of upward mobility could also cause employees who are aggressive and talented to leave
the company to pursue their career aspirations elsewhere, causing the company to incur hiring
and retraining cost. By enhancing the upward mobility program, we can also expect to reduce
turnover and increase employee satisfaction (Bidwell, 2011). The Upward mobility program
would serve as an incentive to improve employee morale and in turn increase employee
satisfaction within the company as they are able to gain a promotion that demonstrates their
skills.

These benefits from our improved upward mobility program will, in turn, create a competitive
advantage for HPP. Outlined below are the causes of this problem that the company is facing, a
solution to this issue and how best to propose the change to the current management team.

Lengthy Hiring Process


Our current hiring process is proven to be lengthy and can detract from new hires desire to join
our team. HPP is not alone in having a drawn out hiring process, as it is one of the most common
HR problems (Agrawal, 2003). Our plan will significantly reduce the time it takes for us to hire
new employees, while still allowing us to recognize quality talent. It is crucial for the HR
department to develop an efficient hiring process for potential new employees. The Journal of
Business and Psychology suggests that employees have something called “financial risk
tolerance”.

Financial risk tolerance is “the maximum amount of uncertainty that someone is willing to accept
when making a financial decision” (Grable, 2000). Candidates that are left waiting through our
long hiring process, and may not have a job since they are seeking new employment, are
burdened with high financial risk since they may not have a source of income. This is a problem
that is easily eliminated by changing the procedures for hiring candidates.

Antecedents to HPP’s Management Problems


After identifying the problems Hudson Pacific Properties is facing, it is vital to understand how
these problems came forth in order to avoid similar issues in the future.
Lack of Upward Mobility Antecedent
Hudson Pacific Properties struggles when internally promoting people due to an unclear structure
of job descriptions. The lack of descriptive detail leads employees to taking on roles and tasks
that are not directly correlated with future promotion within the company. While having a wide
variety of tasks allow Hudson Pacific Properties’ employees to gain experience in all aspects of
the company and market, it is hard for them to navigate a clear path that leads to future
promotion.

The company has been in need of a better balance between breadth and depth of experience that
the employees gain. What they lack is a way for employees to get more specific expertise that
allows them to develop professionally. Professional development is a crucial aspect of employee
satisfaction, because employees want to know that they are being prepared to take on more
responsibility.

Long Hiring Process Antecedent


HPP’s long hiring process has lead to the loss of some potential new hires. While the length of
the process is intended to ensure that new employees fit in with the culture of HPP and are
equipped with the skills to handle a given position, an average hiring process of seven weeks has
proven to be too long. Some candidates, likely eager to find work, are dropping out of the
interview process.

The hiring process takes so long because all the hiring decisions are made in the Los Angeles
office. It begins with the HR team in LA analyzing resumes and conducting the phone
interviews, after which they direct the potential candidates to Mr. McGarry. Mr. McGarry then
directs them to another person above him before the HR team in the LA office can conduct a
background check. This shows how a solution to maximize efficiency of the hiring process is
needed.

As mentioned in the textbook, "Quantitative measurements should be used whenever possible


because they clearly define the expectations of employees and communicate the most important
objectives of an organization” (Gulati, 2017). It is clear to us that the hiring process lacks
quantitative measurements that clearly define the work culture and expectation of each HPP
location.

Solutions to Problems Facing HPP


In order to resolve the internal management issues currently facing Hudson Pacific Properties it
is crucial to provide realistic and timely solutions to solve the matter.
Increasing Upward Mobility
After speaking with Mr. McGarry, it was clear that employees throughout the company need a
more detailed job description, outlining skills needed to execute the functions of their current
position, as well as positions they wish to reach upon promotion. By having a clear path towards
promotion, it will be evident when an employee has earned a promotion because they will have
mastered all skills and gained all experiences needed at their current position.

Hudson Pacific Properties should implement semi-annual 360 Degree Feedback reviews in
which one’s superiors, subordinates, and co-workers evaluate their quality of work, the
experiences they have gained, and their skill level needed for the desired position. This will
inform one of their weaknesses and ways to improve in order to position themselves for upward
mobility within the company. By being evaluated semi-annually, employees of HPP will always
be informed of what is expected of them at their current position.

In order to implement this review process, we will begin proposing this idea to the senior
executives of the management team. Upon approval, our team will begin to inform the company
of the new system. In order to begin the process at the beginning of 2019, upper management in
the company must create detailed job descriptions and list required skills for each position within
the company and inform employees by June 2018. This will allow 6 months for employees to
focus on what their position entails. In January of 2019, each employee’s manager or boss will
conduct the first job description and skills review. After completing this review amendments or
adjusts can be made to improve this process if necessary.

Decreasing Time of Hiring Process


In order to decrease the time it takes from initial review of one’s resume, we recommend that an
HR team located in each major hub will be in charge of the hiring in that location. Having an HR
team in Southern California, Northern California, and Seattle will be crucial to expediting the
process. By having employees located in each specific market, they will have a better
understanding of the culture of the office space as well as the area. The business and culture of
the office spaces in the studios in Hollywood is very different from that in the Silicon Valley or
Seattle. It is much more likely that a specific office will understand what kind of employees will
fit within the current structure they have in place.

HPP could also make use of a realistic job preview (RJP) or a process that would provide
information about the positive and negative aspects of the job conditions to the job candidates.
Implementation of a RJP can be approved by upper management relatively quickly (Wanous,
1989). A RJP will allow applicants to gather a full understanding of what a position will entail. In
turn, applicant turnover will be reduced and only candidates who are a better fit for the position
would complete the hiring process.

Risks and Unintended Consequences of Solutions


While our solutions will improve our current upward mobility program and our lengthy HR
hiring process, we must take the proper precautions to ensure that we avoid negative backlash to
our implementations.

Risks Associated with Upward Mobility Implementation


360 degree feedback reviews have relatively no unintended consequences. They are designed to
inform employees of their strengths, and performance on an anonymous basis. With this
feedback, employees will have the ability to gauge their strengths and inform management of
their desired direction in the upward mobility program (Gulati, 2017). A disadvantage of
implementing a RJP is that they are often difficult to structure and require a great deal of data.

Additionally, for the structure of RJPs to be built effectively, data must be very precise. If the
method of collecting data is not done properly, a RJP can affect a company adversely, making
more confusion about role description and employee responsibilities (Gulati, 2017). Another risk
of implementing RJP’s is that top management who “see the RJP as potentially exposing their
leadership failures” may criticize the data that has been collected and deem it “unrepresentative”.

Risks Associated with Shortening the HR Hiring Process


HPP’s extensive hiring process allows HR to ensure that new employees will fit the culture of the
division that they are entering and that they possess the skills to complete the job they are being
hired for. Our plan to implement divisional HR Directors will shorten the hiring process
significantly. However, we must take steps to ensure that we are modifying the hiring process in
a way that will not add a burden to HR or unexpectedly slow down the process in other ways.

Overcoming Resistance
All organizations are initially resistant to change as a result of having inertia. The changes we’re
proposing are both examples of proactive, planned, and incremental changes. We’re choosing to
make proactive changes because proactive organizations tend to implement change more
effectively and with less resistance from employees (Crant, 2000). Because the changes are
proactive and incremental, we have more time to implement them and listen to employee
feedback on them. The changes being planned instead of organic will allow us to implement
them with a focused plan, but it may invite resistance from employees who feel their input is
being overlooked.

In order to reduce resistance to our proposed changes, the first thing we need to do is generate
dissatisfaction. There is already a fair amount of dissatisfaction about the current hiring process,
and HPP’s tendency to hire from the outside doesn’t help. Even the simple act of sending out our
survey causes employees to consider these problems and generates dissatisfaction. Further
dissatisfaction could be generated by holding informational meetings about the problem and
sending survey respondents emails explaining the situation.
The next step in implementing change will be developing a compelling model. This report,
combined with our SMART goals represent that model and will provide the vision the
organization needs to implement the change with a minimum of resistance.

Conclusion
While Hudson Pacific Properties is an excellently run organization, there are still internal
management issues the company has regarding lack of upward mobility and a lengthy hiring
process. By implementing the proposed solutions outlined above, the employees and
management team of HPP will see significant changes to these issues.

Appendix: Survey Results

1.) Are you interested in moving 2.) Are you aware of the current 10. On a scale from 1-10 with 1
up in the company? upward mobility process? being the worst and 10 the best,
how would you rate the current
HR system?
Yes: 15 Yes: 6 Total Responses: 24

No: 4 No: 13 Average rating: 5.27

Highlights:

(For our survey highlights, we chose answers given by Shawn McGarry, HPP’s VP of Portfolio Management)
3.) Regarding the current upward mobility program, how well do you feel this process is helping you achieve
upward mobility throughout the company?
Although there hasn't been a position open or created for me personally to advance to the next level, I have gained
valuable experience in all different aspects of real estate which at some point would be helpful.

4.) What would you do to improve or change the current upward mobility program?
There are not clear specific job responsibilities for each position within the organization. HPP should look to create
these in order for its employees to set targets and gain the experience one needs for advancement.

5.) What would you get rid of in the current upward mobility program?
With every company politics come in to play slightly. Not saying this is an issue or part of HPP's upward mobility
program, it is just something people should be aware of and learn how to navigate appropriately.

6.) Is there a time where you feel like you should have received a promotion but did not? If so, describe why you
deserved to be promoted.
Yes, I have been with HPP for some years now, and I would like to have an equal competition for a promotion. That
and I have contributed a lot to HPP, I'm hardworking and would always complete my tasks on time.

7.) Was there a time where you felt it was unfair that an employee got promoted? If so, describe why you think it
was unfair, and why that employee should not have been promoted?
I can't recall ever thinking someone's promotion was unfair, however I do believe at times we promote people a bit too
soon. The main driver as I see it, is at times feel like they owe it to an employee who has been with the company for
many years, but also in our markets it is very difficult to find outside candidates because of the tough labor market.

8.) Does HPP ensure their employees are satisfied? If so, how? If not, why not?
HPP does a great job ensuring their employees are satisfied. We conduct an annual Voice of the Employee survey and
more importantly we implement action items that support a very strong culture. In addition HPP does a great job of
ensuring a solid work/life balance. HPP also does many things for its employees such as providing 4 meals per week
that is catered or brought into each office, provides employees with half day summer days, where the employees are
able to leave on particular Fridays at 12 noon without having to take time off (but they do need to coordinate with their
supervisor), HPP provides more holidays than any company I can recall (14 holidays) in 2018 and lastly HPP does a
great job recognizing performance.

9.) Is there a time when a fellow co-worker you knew decided to quit working for HPP? If so what was their
reason for leaving?
There have been a few people who have left and I would say most is due to an increase in pay, however I can attest that
at least have who have left have reached back out to us to see if they could come back.

10.) What are some areas that you think the HR division can improve on?
A better relationship with the local agencies and head hunters in our markets. Corporate HR is in the LA office and
being remote and not understanding the market can have its disadvantages. HPP has made progress with this by putting
an HR employee in our markets.

11.) How is the hiring process like at HPP? Describe the hiring process that you have been through or have seen.
HPP utilizes many different agencies and have the jobs posted on many job sites. Upon an application submitted our
Corporate HR department will review the resumes and do an initial phone screen of those that their resumes look in
line with the job posting. If the phone screen goes well then HR will recommend for the hiring manager and the
property team to meet with the candidate. If there is a recommendation from the hiring manager then the candidate will
move to the next level of reviews. This typically involves in person interviews at the VP and SVP levels. Upon
approval from the VP/SVP then HR will make the formal offer to the candidate pending approved background check.

12.) What would you change or improve about the current hiring process?
Because HPP is so focused on culture and hiring the right person, sometimes the in person interview process can take
awhile. We sometimes lose candidates because of the lengthy interview process. However I am not sure I would change
this because it is more important to get it right (hire right once) then it is shortcut the process.

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HPP, (2018). Hudson Pacific Property. Retrieved February 09, 2018, from

http://investors.hudsonpacificproperties.com/CustomPage/Index?keyGenPage=1073744035

McGarry, S. (2018, February 20). Personal Interview.

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mobility. Administrative Science Quarterly, 56(3), 369-407.

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