“I\’m the only one in the region who hasn\’t been cut.” Xiao Xue, a person from a regional investment department of Shimao, wrote this paragraph into his resume, which was quite tragic in his self mockery.
In early January 2022, the company informed him to work in the investment department of the group. A few days later, Shimao announced a new round of organizational structure adjustment, taking back the authority of the original regional companies such as investment, audit and procurement to the headquarters, so as to cross the downward cycle of the industry, increase revenue and reduce expenditure.
On December 16, 2021, Vanke announced that Zhang Hai would no longer serve as the head of Shanghai regional zone and would continue to serve as the chief partner and CEO of Vanke’s development and operation headquarters. A person close to Vanke said that this action is intended to recover the authority of some regions to the group’s development and operation headquarters.
Since the second half of 2021, liquidity risks have occurred frequently in the real estate industry. In order to cope with the current crisis, from the end of 2021 to the beginning of 2022, more and more real estate enterprises began to merge regions, streamline organizational structure, and recover the authority closely related to capital such as investment, financing and bidding to the headquarters in this process.
Lin Zhong, chairman of the board of directors of Xuhui, said in an interview with the economic observer that some real estate enterprises originally delegated power to flush the scale. Under the current situation, they pursue more efficiency and intensive cultivation, so it is inevitable to close the power
collection
In this organizational structure adjustment, the investment departments of Companies in nearly 30 cities of Shimao Group have been abolished, and only a few backbone have been transferred to the headquarters. At present, there are only more than 10 employees in the investment department of the whole company.
Xiao Xue said that the regional investment department was abolished and the investment was strongly controlled by the group. The reason for making this choice was that Shimao planned not to take land in a year or two, “there is no need to raise so many people”.
“Now the company is considering survival rather than development and expansion”. Therefore, after being transferred to the Group Investment Center, Xiao Xue doesn\’t have to look around and pay attention to the land listing information of various cities. Her main work is to deal with the relationship between assets and the government, which was originally the responsibility of the regional general manager and the government relations department.
“There are not many people left in the company, so there is no need to distinguish this work so clearly.” Xiao Xue has a Buddhist mentality. Now she needs to convince local government departments every day to let them know that the company is still actively saving itself and that the projects under construction will not be completed.
In addition to investment, Shimao also directly managed the audit and procurement of regional and urban companies by the group. At the same time, Shimao also integrated some functional departments of the group, merged R & D and design and user service departments, operation and engineering departments, cost and procurement departments, adjusted the project ownership of some regional companies, and changed the functional departments of regional and regional companies from 11 to 7.
The investment department bears the brunt of streamlining the structure, “gradually expanding to other departments from January, in order”. For half a month, Xiao Xue watched her colleagues leave one after another. She was glad that she was left and didn\’t reduce her salary.
“One is the merger of regional companies. If two people compete for one post, someone must go; the other is that some posts, such as marketing, are worthless in the market if there is no sales performance and no commission, and there is no need to keep them.” Xiao Xue said.
Take back the important functional authority from the regional headquarters, and Shimao is not the only one. As early as September 2021, Vanke established the development and operation headquarters to centrally manage the operation and management of seven regional business groups, overseas business units and long-term rental apartment business units.
In December 2020, Vanke headquarters stripped off the functions of large-scale production, including the departments of design, bidding and procurement, cost and engineering, moved to Shanghai, and established the “research and Development Association”, with Zhang Hai as the head; In June 2021, the research and development association was upgraded to a development and operation center.
People close to Vanke said that the move was to cooperate with the headquarters from “real estate headquarters” to “group headquarters”. With the formation of diversified business forms of Vanke, the functions of Shenzhen headquarters can not only focus on real estate, but also need to invest more energy in other businesses. The development and operation headquarters headquartered in Shanghai has become the de facto real estate headquarters of Vanke.
According to the source, among the current 7 regional heads of Vanke, 6 were once subordinates of Zhang Hai. Therefore, Zhang Hai is suitable to assume the responsibility of the head of the real estate development and operation Department.
The person close to Vanke said that the move of the development and operation headquarters to the front of the stage means that Vanke’s “weak headquarters and strong front line” for many years began to turn. In the future, the development and operation headquarters will take back the relevant authorities of the regional headquarters and strengthen headquarters control.
On January 8, 2022, Wanda real estate announced to adjust its organizational structure and integrate the original four regions of East, West, South and North into two regions of North and south. With the adjustment of organizational structure, the personnel of the project company in the East and west regions will be merged into the South and North regions, and the personnel will be optimized.
A person familiar with Wanda disclosed that the purpose of the merger area is to make it easier for the group to manage, further centralize the management power, and plan to complete the structure adjustment before the Spring Festival. This adjustment mainly involves the operation and marketing platform. The project personnel will not move temporarily, and some employees will be transferred to the business management sector
stress response
Besides Vanke, Shimao and Wanda, the organizational structure adjustment and personnel optimization actions of more and more real estate enterprises have been carried out, especially those with liquidity risk. Yango Group Co.Ltd(000671) , Olympic Park, etc. have carried out several rounds of organization and personnel optimization, and the streamlining efforts have exceeded 30%.
At the end of 2021, country garden also adjusted its organizational structure, reducing the number of regional companies from 106 to 65. Country garden said that the adjustment of China’s real estate regional setting is to further adapt to the industry reform and the external market environment.
Even CNOOC and poly have heard about organizational structure and personnel optimization. A top 20 real estate enterprise headquartered in Shanghai also said that the company is brewing the action of power collection by the headquarters.
A top 10 real estate enterprise believes that more real estate enterprises will join the ranks of headquarters power collection and streamlining the organizational structure in 2022, which is a stress response to the survival of real estate companies.
According to him, the original organization of real estate enterprises is relatively flat. It is generally a three-level structure of headquarters, urban companies and projects. Investment, cost, bidding and procurement and other functions are under the unified management of the headquarters. “The role of the group in directly managing bidding and procurement is to scale up. Only one supplier can depress the price all over the country”.
The same is true in other fields, such as investment. Due to limited funds, the choice of which city to invest in and what kind of plot to invest in is generally coordinated by the headquarters and participated by regional companies.
Around 2016, the national real estate market ushered in a wave of market. In order to do large-scale, many real estate enterprises continued to delegate the headquarters functions and powers such as investment and financing to regional companies. Not only Vanke, regional companies of country garden, rongchuang, Yango Group Co.Ltd(000671) and other real estate enterprises also have greater authority.
According to a senior real estate source, a dark horse real estate enterprise established a region in that year, and the group appointed only one regional general manager, equipped with corresponding fund use amount, collection and profit assessment.
“All personnel, investment, financial and other authority are decentralized to the region. The total number of people in the region has the final say, which is equivalent to the boss’s money for you to start business,” the property owner said. Most of the Fujian and Zhejiang Housing enterprises adopted similar expansion mode at that time.
The above-mentioned top 10 real estate enterprises said that decentralization can make each region become a complete business entity, while the group is more weakened into an organization of financial management to assess the sales, profits and payment collection of the region. “The region has become larger, and many urban companies have split up. They also begin to have their own procurement, investment and other functions and powers. If everything has to be decided by the group, the efficiency is too low.”.
At present, the right collection of real estate enterprises is also a stress response. When real estate enterprises reduce land acquisition and cash flow tension, the limited available funds need to be calculated carefully. Personnel, finance, investment and the recovery of the headquarters of bidding and procurement can further improve the efficiency of fund use and per capita efficiency
fusion
On the last day of 2021, Ding Zuyu, CEO of E-House enterprise Holding Co., Ltd., predicted that in the next five years, the average annual scale of the real estate industry will be 1.06 billion-1.27 billion square meters, with a median of about 1.1 billion square meters, equivalent to the level from 2015 to 2016. It is expected that the annual transaction amount will remain at about 150000 billion yuan.
The above-mentioned top 10 real estate enterprises firmly believe that the scale reduction of the whole real estate industry in the future will be a deterministic event, and the current choice of headquarters centralization by real estate enterprises is a side of enterprise organizational effectiveness serving phased strategy in different times.
Since the second half of 2021, following China Fortune Land Development Co.Ltd(600340) , Sichuan Languang Development Co.Ltd(600466) and Xinli real estate and other real estate enterprises, Evergrande, jiazhaoye, Yango Group Co.Ltd(000671) , Aoyuan and other 100 billion real estate enterprises have experienced events such as overdue employee financial management and debt default. Most real estate enterprises are frightened and rescue themselves one after another.
In this case, some real estate enterprises began to adjust their organizational structure. According to incomplete sorting, since the second half of 2021, more than 20 companies, including Vanke, country garden, China Resources Land, Poly Developments And Holdings Group Co.Ltd(600048) , Shimao, Xincheng, Xuhui, Zhongnan land, Yango Group Co.Ltd(000671) , Yajule, jiazhaoye and Aoyuan, have adjusted their organizational structures.
According to a person close to Longhu, Longhu has always maintained the management style of strong control of the group. Since the second half of 2021, it has carried out personnel optimization for many times to transport employees from real estate investment, R & D, cost and other lines to commercial, property and other channels, “The company has made it clear that there should be profit growth and quality growth. The budget for land acquisition and investment every year is based on the sales return. Each piece of land is not taken for the purpose of acquisition. It must return to the logic of making money. If you don\’t make money, you don\’t do it.”.
The person close to Longhu said that Longhu’s land acquisition rate of return requires more than 12 points, but when the limited money needs to be distributed to multiple urban companies, it is “rolled up” internally. The project rate of return from September to October is more than 13% – 14%, and the land with a full caliber of more than 300 billion yuan throughout the year, with an equity ratio of about 60% – 70%.
“In this case, the group’s investment strategy also began to shrink, taking only pure housing and only core cities.” According to the person close to Longhu, from the second half of 2021, Longhu will only focus on 43 cities, and all other cities will retreat and change positions.
According to the research report released by Yihan think tank, with the gradual disappearance of land, financial and demographic dividends and the continuous tightening at the macro level, the real estate industry has entered a long cycle of low growth and low profit. It is the general trend for real estate enterprises to adjust their organizational structure to adapt to market changes. Organizational adjustment can not only optimize and integrate resources to the greatest extent, but also further reduce management costs and improve per capita efficiency; At this stage, the strategy of real estate enterprises is mainly focused and deep cultivation.
The core of the organizational structure adjustment of the headquarters focuses on shortening the management chain of the headquarters, streamlining the personnel of the headquarters and integrating similar functional departments. Its core purpose is to reduce intermediate links, facilitate managers to judge and make decisions faster, improve operation efficiency, and better meet the practical needs of fine operation of real estate; At the same time, reduce operating costs, remove hidden departmental barriers and reduce internal consumption, which is emphasized in the research report released by Yihan think tank.
“The whole industry is expected to shrink by 20% ~ 30% in 2022, so the personnel must also be reduced year-on-year. It is impossible for enterprises to cut people directly. It needs to be optimized from the management line. Which posts must be retained and which can be reduced, and the actual posts are determined based on the number of projects”, said the person from the top 10 real estate enterprises.
The source believes that the power collection of the headquarters is a major change in the enterprise management orientation under the industry reform. “Everyone knows that there will be no explosive growth in the industry scale in the future, and the enterprise will match an expected organization to strengthen the improvement of efficiency”.
Another TOP10 real estate enterprise disclosed that the industry has entered the downward cycle, the company has encountered difficulties, and the overall budget has shrunk. In terms of organizational efficiency, it can\’t use so many people and afford such a large organization. “But it’s not a matter of employees\’ personal ability. It’s just that in the future, when this wave of difficulties has passed, the company has eased down, and we still hope everyone will return.”.
