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What really IS 'commercial awareness'?

Blog Posts  (3)

Article posted by Kate Peers-McQueen on Feb 08, 2024

“Please find us someone commercially aware” – a commonly heard phrase in our office, but what does it actually mean? Both in my areas of Residential Development and Town Planning, and across the wider built environment, whether it’s written on a job description as part of a wishlist, or given as feedback as to why someone is or, often, isn’t hired, it’s clear that more needs to be understood from this seemingly objective term.

This is important both as a hiring manager to mitigate any bias in your decision-making and ensure that you’re getting the exact experience you need in a candidate, and from a candidate perspective to ensure that you’re focusing on specific areas to improve and learn within. Below is the culmination of research I’ve conducted through interviews with clients in the sector, through a LinkedIn poll with the wider market, and in my day-to-day discussions with candidates and colleagues.

What do market experts think commercial awareness is?

Solely from the LinkedIn poll I conducted, there was immediate discourse in what ‘commercial awareness’ could be defined as. Nearly 50% of the respondents cited that an ‘understanding of the market’ was the most prevalent definition, while 26% and 21% cited that it was an ‘understanding of profitability and business development’ / ‘the importance of clients’, respectively.

Seeking thoughts from some of our esteemed clients across the sector, I had a variety of responses, including: “talking about return hurdles (IRR and profit)”, “understanding that more doesn’t always equal more” (Damon Turner, Partner, Welbeck Land), and having “common sense, strategic planning” (David Le Lacheur, Owner, The Land Agency). Others have cited “knowledge of market trends, client profiles, key competitors”, “a skill that enables the individual to articulate their ability to be strategic in thinking”, and “it's being aware of the impact your daily role has on the business you work for”. So, how can we further break this down?

What makes a Town Planner ‘commercially aware’?

In Residential Development and Town Planning, professionals within land and development obviously need a certain-level of commerciality as they are dealing with external factors and finances on a daily basis, but I wanted to know what some of my clients qualified as ‘commercially aware’ regarding town planners, and in turn, whether this factored into why they might choose to use said town planners as a consultant.

Oliver Myerson (Managing Director, Obsidian Strategic), believes that having an understanding the commercial implications of your work is most important, with the most commercially aware consultants “striving for [the planning permission that drives the most value/profit] as they understand the need to drive as much value as they can for their clients/business”, as opposed to achieving the easiest planning permission.

Other views include deeming someone as ‘commercially aware’ as someone who “understand[s] what makes schemes viable and [what] doesn’t” (Andrew Boyd, Partner Allsop), or “looks at the likelihood of getting planning permission when weighed against the costs…also considering the time it will take” (Martin Cumberworth, Strategic Land Director, Bloor Homes Eastern). This is echoed by Nicholas Mee (Managing Director – Development, Rockwell Property) who highlights the practical elements required, saying “There are plenty out there (planners) who can recite the London Plan, local policy etc. but do not have a grasp of the viability challenges developers have to be live to in order to ensure a planning consent is actually deliverable.”

Damon Turner then summed up stating that “in reality it is a balance of all, however I think I would expect them to understand time”, which I believe sets the overall frame within which commercial awareness is set, as if you don’t understand the concept of cost and value within certain timeframes, it is all irrelevant, as you could sit on land or an asset for too long while values change and the whole project becomes unprofitable.

When asking (Emma Beardmore, Senior Development Manager, LB Enfield) why she chose certain planning consultants, it’s often as simple as someone she knows will “get the job done” - sometimes it is who can think strategically, and sometimes it is how much they can think from other peoples’ points of view.

Breaking down the ‘types’ of ‘commercial awareness’

Based on the research conducted, and taking the lead of Martin Cumberworth, who suggests that “Having a good knowledge of the current state of the market and the industry, a clear understanding the commercial drivers of the business, and knowing when to ‘take a view’” are key, I’ve separated what commercial awareness is defined by into three main areas; Market/Macro-Economic Awareness, Profit/Business Awareness, and Strategic Thinking. While these are not perfect, arguably the three are separate points where if someone is strong on all, they would be seen as commercially aware, but having a strong understanding of one does not mean you would have the other two.

So, how do we measure and test these?

Even with a more broken-down definition of ‘commercial awareness’, the question still remains as to how one would measure this at interview stage and remove any bias when judging a candidate and their application of it.

Whilst not quantifiable in the same way that the number of sites managed and value of a portfolio can be, we can ask questions to see how individuals can meet these three different criteria, for example asking, “what they think has changed or needs to change in their market”, “where they felt they added value to a process and how they did it”, or “to identify actions they had taken to reduce costs or increase revenue across the business”.

How can I gain commercial awareness as a candidate?

Interestingly, it seems that there are differing opinions on whether ‘commercial awareness’ can be taught, or whether it is something one naturally has. Most people I surveyed said “yes” or “to an extent”, mostly gained through learning from others and their experiences, including mentoring and networking.

There are clearly some natural traits that often lead to someone being more commercially aware – being a “good leader that has self-awareness” (Andrew Boyd), or being someone that’s “intellectually curious” or “genuinely interested”, but one respondent commented while being taught where to source relevant information, you can’t force someone to consume it – this is something that the individual themselves needs to take responsibility for when coming to these three main pillars of ‘commercial awareness’ in their current and future projects.

If you have any other definitions of what makes someone ‘commercially aware’ I’d love to hear them – or if you’re struggling to put together the key areas of ‘commercial awareness’ that are important for your next hire - or want to talk about how you can improve your own ‘commercial awareness’ in your career, please contact me via the below:

Email: kpeersmcqueen@cobaltrecruitment.com

Phone: 0207 478 2523

 

Finally, thank you to all of the expert opinions that have helped me create this thought piece - your contributions to this piece and the sector are highly valued.