The shocking death of George Floyd at the hands of Minneapolis police in May prompted real estate executives around the country to speak out against racism and encourage non-violent protests.
Glenn Kelman, CEO of the national brokerage Redfin, for one, pledged in a blog post that his company would commit to “hiring and developing more people of color to positions of power.”
But following that announcement, some former Redfin employees rebuked Kelman’s comments as disingenuous based on their own experiences at the Seattle-based firm.
Redfin, which has a market cap of $4 billion-plus, employed 3,377 people as of last December, but the company has furloughed and laid off staff during the pandemic.
The Real Deal spoke at length with Kelman in July and August to discuss the criticisms against his firm and what Redfin is doing to address a lack of diversity in the real estate industry.
A number of people felt that nepotism sometimes guided hiring decisions in [Redfin’s] Boston office and other offices. Is this a problem at the company?
More than any company I’ve ever worked at, Redfin has a huge number of agents whose children and parents are also agents. We pride ourselves on being a good employer. I think in the past, there was a market manager who hired a cousin, or two cousins, which is not unusual in a place like Boston, and we did think that was not good management practice. He left the company, maybe eight years ago.
The concern, based on my interviews, [is that] if you are a person of color seeing relationships between people and those in positions of power at a company, you might read that as not necessarily a commitment to diversity within your office.
I can understand that. I think that the challenge in diversifying your workforce, generally, is that you recruit who you know. We now have focus requisitions where they’re open for three months to candidates of color — essentially before others — because our recruiters tend to [focus on] areas where we’ve recruited in the past. We draw on our social networks, and it doesn’t reinforce diversity. We should be having a conversation about how many referrals we take, as opposed to other types of candidates.
I don’t want to beat on our chest and say that we’re perfect. We’re far from that. But on the other hand, I don’t think we’ve ever been more aggressive about slating for diversity in real estate operations and bringing people into the company who did not have a real estate background at all. Some of our top performers have been people who had no history with real estate, who are people of color, and who are just tearing it up.
I spoke to a former recruiter who said that she felt like there were times where, because managers were so involved in the hiring process, they sometimes defaulted to hiring people who had a traditional real estate background, rather than someone who might come with different skill sets that would be great for a position. Do you think that happens?
Generally, I think there are situations where employees who have no management experience apply for roles, and the role isn’t an entry-level manager position.
I can’t think of really anyone at Redfin — white, Black, male, or female — who has been able to make that leap. We try to create roles so that people can get management experience by managing a small team. I know that one of our challenges, quite apart from that, is taking people from a real estate background and bringing them into headquarters to become a software developer, a marketer or a program manager.
What’s difficult about that transition?
We have lots of people who come into the business as real estate agents and support staff who want to develop into high-paying roles at headquarters. [For that, you] have to be really good at developing business skills that you don’t develop as an agent, whether it’s writing software, whether it’s learning an income statement, whether it’s understanding statistical significance and analytics. And that is something that we are invested so much in right now, because work from home is going to free us from having to tell someone: “You have to move to Seattle.”
Telling candidates of color, in particular, that you have to move to Seattle has been fraught, because we don’t have as many Black people in Seattle as we should. So we’re hopeful that there will be more cross-pollination, that there will be more opportunity, that there will be more mobility.
What do you say to employees who are critical of basing executive bonuses on increasing diversity at the company, since it would mean predominately white executives making money from bringing in lower-level employees of different races?
I feel perplexed about this criticism. With many of the others, I understand where it’s coming from. I’m focused on a result: The result that I want is a diverse workforce and a diverse management team. If we’re trying to increase agent productivity, if we’re trying to improve customer success rate, we change a thousand things with our software and with our real estate policies and with our payment programs, until we get the result that we want. To me, holding executives accountable for diversity has already had a galvanizing impact on the company. Executives aren’t going to earn more money this way. The bonus that they normally would have gotten for other priorities, they will now have to earn by diversifying the company.
If I had to choose a priority to have in corporate America that has eluded most businesses, it would be diversifying — especially in the senior ranks. It would be one thing if you could hit the target by hiring a thousand entry-level people of color, but the only way to hit the target is by … diversifying management ranks. We have to drive revenue growth, we have to drive profit. It’s the only way to sustain the business. But we also are not going to build a sustainable business or one that we’re proud of if we only recruit white real estate agents or white software engineers.
Last month, you mentioned that Redfin was considering dropping customer surveys as part of promotion decisions. Have you made a final decision on that?
We did decide to discontinue using surveys. It is part of a larger recognition that systems designed to take customer input can replicate customer bias. When we announced that decision within the company, I viewed it as a significant event. But I was still surprised when one of our Black real estate agents called me and said: “This is the happiest day. I’ve worked here for 10 years. Every once in a while I got a survey, and we all knew why people gave me bad marks, and now we’re finally doing something about it …”
All I could do was apologize for taking so long to make that change. We had actually clung to surveys, in some ways, to avoid manager discretion because that subjectivity is fraught with its own possibilities of bias. I waited too long to make that change. I was the proponent for keeping surveys for a long time. That’s a perfect example of how Black Lives Matter made me see that in a totally different way.
Are you eliminating all customer surveys then?
We’re not using them for any promotion or disciplinary decisions. We still need to systematically hear the voice of the customer. But it is our right to decide when to disregard that. A customer gets out of the car, sees that his agent is Black and immediately develops a strong aversion to that agent, we can just set that aside. We have to have the latitude to do that.
What do you think of corporate America’s response so far to the death of George Floyd and the Black Lives Matter movement?
Time will tell if it was purely symbolic, but I still think the degree to which corporate America swung behind Black Lives Matter was startling. It was a movement that most people felt hesitant about supporting. There was always this argument that all lives matter, and of course they do. But I think corporate America felt compelled to recognize the special threats to African Americans, so every industry has been going through a moment of introspection.
Have you seen a difference between the responses from private companies versus publicly traded ones?
To some degree. But I honestly think much of the response is driven by the executive team having some moment of recognition and by the employees in the organization and the degree of public attention the company gets — regardless of whether it is publicly traded. So, Airbnb would be an example of a company that isn’t publicly traded, but is very much in the spotlight. One change that we’ve noticed is the competition for African-American board members. We’ve been running a search for African-American board members, and almost everyone I’m talking to is being courted by many many companies. I think that will lead to a lasting change.
Time will tell if it was purely symbolic, but I still think the degree to which corporate America swung behind Black Lives Matter was startling. It was a movement that most people felt hesitant about supporting.
My experience of adding women to our board was fairly profound. I thought that it would be more symbolic than it was. But I think there’s a real sense that if … an executive is harassing women or if there’s some other sort of systemic sexism, there’s really no one in the boardroom who is going to take up that issue enthusiastically until there is a woman in the boardroom. In the same way, you would expect a white board member to care about diversity, and we do. But I think Black board members have a different experience of life and Black employees know that if there is an issue with the company, it will resonate a different way with those board members.
What changes should real estate companies be making, specifically?
I would start with enforcement of the Fair Housing Act. [Real estate agents] are in the car alone with customers at their most unguarded moments, when they are talking about their aspirations for their families. It affects the shape of our society for a generation and, in that moment, I don’t think there’s much anxiety about fair housing enforcement.
It’s not just a government obligation. Every broker should be talking about this. We use a portion of every all-hands kickoff each year to talk about fair housing. It’s only a matter of time before a Redfin agent serves a Black customer differently than a white customer, and it is to our shame. That legacy is hard to live with. When you run a company with hundreds of thousands of people, each who has their own experiences and biases, conscious or unconscious, you just have a responsibility to work against that and try to create a better society.
What did you think of President Trump’s decision to repeal the Affirmatively Fair Housing rule?
I try not to criticize political figures, but my hope is that NIMBYism, in general, is down for the count. I know so many people who are well-meaning progressives and conservatives — who favor integration in many ways — but then go absolutely ape when a condominium is zoned for their neighborhood.
This idea that the federal government wouldn’t stand behind the efforts to upzone neighborhoods, to provide a mix of housing, to me is really heartbreaking.
This idea that the federal government wouldn’t stand behind the efforts to upzone neighborhoods, to provide a mix of housing, to me is really heartbreaking. There’s just no way you can argue that schools, jobs, groceries, everything, can be separate but equal. And this idea that we’re going to reform the police but still have Black people and white people living in totally different worlds, and expect that to produce a just society, to me seems risible. I don’t think we can achieve true integration — not just in political or economic terms — but in our hearts and how we look at different races, unless we live alongside one another. And the government should get completely behind that.
Are there any cities or towns that you think would serve as a model for others in the U.S.?
I think that parts of Maryland around Baltimore are really good examples of how zoning and government support for affordable housing can really make a difference. Those are some of the most integrated neighborhoods in America, and it’s an example where the government didn’t just throw money at the problem; it really engaged.
Write to Kathryn Brenzel at kathryn@therealdeal.com