On June 1, Sabine Kraut, a New York-based vice-president at Wafra Investment Advisory Group, filed a complaint with the Equal Employment Opportunity Commission, a federal agency, alleging that Wafra’s head of real estate, Frank Lively, sexually harassed her for at least six years and stunted her career because of her gender.
Kraut reported the harassment to Wafra in April. Lively was fired. Since then, she alleges that members of Wafra’s real estate team have retaliated by demoting her responsibilities, among other issues. Kraut is highly critical of Wafra’s HR process. She called the firm’s HR department “non-existent” when she joined in 2012 and it was a two-person unit. She claims the department is still ineffective because she has been “aggressively retaliated against by her peers, replacement supervisors and Wafra’s management despite frequently reporting such incidences to human resources.”
Wafra said it “is committed to a safe and welcoming environment for all of our team members” and a spokesman declined further comment. Lively could not be reached for comment.
While no single fix stops harassment, mechanisms should be in place to lessen such incidences in the sector.
The easy one: firms must have a functioning human resources team. A dedicated HR head or team may not prevent harassment, as many recent #MeToo stories have shown, but it is an important step. Small and mid-sized managers have told PERE they lack the capacity and/or need for HR. In those cases, consultants who can ensure there are proper reporting steps and an independent review process become necessary. Such arrangements should offer protections from retaliation when issues are reported.
As size allows, firms should also incorporate multiple executives’ input for staff career trajectories. When one leader has sole responsibility for promotions and pay decisions, the possibility for bias is increased. Blackstone’s promotion process is one way a firm can combat gender prejudice. As PERE reported in January, the firm’s cross-business management committee reviews promotions, rather than task one group leader.
Balanced leadership – a tall order for most private real estate firms – is also key to fostering a culture where women feel comfortable reporting discrimination. PERE examined the top 10 global investment managers and found an eight-to-one average ratio of men to women senior leaders, as listed on management committees, partner lists and other groupings. Change comes slowly, but executive recruiters tell PERE they are now almost always tasked with slating at least one female candidate in their searches.
Perhaps critically, private real estate needs strong leadership from industry groups. PERE was surprised to hear that CREW Network, a 10,000-member group for women in commercial real estate dedicated to “transforming the industry by advancing women globally,” did not consider combatting harassment or speaking out about the issue to the press to be part of its mission, per a conversation with CREW’s spokeswoman. She did not elaborate on why the group does not work to fight harassment.
Another group, the Association of Foreign Investors in Real Estate, was similarly mum when asked for comment. Lively, the former Wafra executive, had myriad AFIRE leadership roles, including 2016 chair and, most recently, transition advisor. AFIRE’s CEO told PERE he had no comment on either the allegations against Lively or if the group would examine Lively’s conduct as it related to his AFIRE positions.
This may change when the sector’s investors chime in. Some already are. The Los Angeles County Employees’ Retirement Association said at its May meeting that its investment division will implement an enhanced monitoring approach for external managers’ policies regarding diversity and inclusion, including due diligence on sexual harassment.
LACERA cited a desire to encourage inclusion for its managers and a need to mitigate asset risk. Earlier this year, Ivanhoé Cambridge deemed the Presidents Club scandal so unacceptable that it pulled future funding for the investments of Residential Land, the London-based private property company of former Presidents Club trustee Bruce Ritchie.
But, as PERE said when the Presidents Club debacle broke, fear of losing money is a misguided reaction because it misses the most important issue: harassment, whether at a social occasion or during the working day, has no place. While the private real estate industry has largely been spared the #MeToo spotlight, Wafra’s example is a reminder of the importance of having the correct protections in place – not for firms or for capital, but for the woman serving both.
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