In the initial study of six hundred participants conducted in 1998– 1999, the average PQ Assessment score was 90.5. However, in the period 2000–2003 we saw the average score rise to 102.9, with a –1SD (standard deviation) of 88.3 and a +1SD of 117.1.What this means is that someone who scored between 88.3 and 117.1 is “statistically normal” and falls into the same category as approximately 67 percent of the population. On a histogram, the total population creates a bellshaped curve, indicating that within random populations, the assessment will produce consistently normal distribution. It’s clear that as people understand partnering and the skills needed to be successful at it, the average PQ Assessment score will continue to rise. As stated earlier, Partnering Intelligence is a learned intelligence. The data show that people are learning to be better partners, and their collective PQ Assessment scores reflect that fact.
If we were to score on a percentile basis without grading on a curve, most of the population would get a D or an F. In a recent study conducted with over two hundred participants, the mean score was in the fiftieth percentile. It’s no wonder most partnerships fail. In general, most of us are very poor partners.
If it is so important for you be right in an argument that you would insult another person’s dignity, then you are probably not using a win-win style of conflict resolution. It is important when resolving conflicts to be sure our partners feel that they also have won. Being right is not more important than affording another human being the respect and dignity he or she deserves.
Since we began administering the Partnering Quotient (PQ) Assessment, we’ve been asked how it was developed. The Six Partnering Attributes are based on research conducted by a team I headed at USWEST Communications from 1988 to 1992 with more than two thousand middle- and upper-level executives and elected union officials from different geographic and cultural areas needing to partner with each other. The research was expanded to include other executives including nonprofit and community leaders from 1992 to 1998. The assessment statements were developed by a team and then reviewed by Margaret Molinari, Ph.D., an organizational psychologist at the University of California, Sacramento. The assessment was successfully validated in a psychometric study conducted at the University of St. Thomas in Minneapolis.
If you feel that you are basically a private person, you may be sending signals to partners that you are uncomfortable disclosing information about yourself or your needs.While it may be that you are simply introverted, having the ability to self-disclose to your partner is crucial if you are going to establish trust. Early on you may want to communicate your personal preference or personality style with partners to ensure that there will be no misunderstandings.
People who prefer to spend time by themselves are generally introverted in their personality preference.While this in itself is neither good nor bad, if one becomes too reclusive, it makes it difficult for them to depend on anyone for anything. Even highly introverted people need to interact with others to help get their needs met. If you are uncomfortable being with others, you may be sending your partners mixed and confusing messages. You may also want to think about your ability to trust.Do you avoid being with people because you do not trust them enough to let them get to know you?
Today, the United Kingdom is by far most advanced in trading property derivatives. In the late 1990s, a group of fund managers formed the Property Derivatives Users’ Association, now part of the Investment Property Forum (IPF). This lobbyist group helped persuade the UK’s Financial Services Authority (FSA) that there could be sufficient liquidity in a property derivatives market. New regulations in November 2002 meant that insurance companies could treat property derivatives as admissible assets. Before, they were subject to different tax rules from other derivatives, resulting in concern that any losses might not be tax deductible.
Besides tax accounting restrictions, stamp duty has been lifted, provided that no rights in the land exists. These changes in regulation and taxation boosted activity in the UK property derivative market. However, these were unfortunately by far not the only hurdles for the property derivatives market.
A survey of institutions, investment managers, property companies and investment banks undertaken by Hermes in May 2006 was targeted to find out the most significant hurdles to trading property derivatives.
Both professional real estate investors and private homeowners can benefit greatly from a property derivatives market. Today, investors can buy shares of real estate companies, real estate funds, Real Estate Investment Trusts (REITs) or other indirect investment vehicles. In terms of liquidity and divisibility, they are comparable to shares in equity. However, prices of these investments rarely follow property prices but are rather correlated with interest rates
and equity markets. Thus, they do not provide the valuable diversification effect an investor expects from the asset class real estate. Homeowners on the other hand face difficulties to hedge the risk of a sharp price drop of residential house prices. Often, the only admissible strategy is to sell the property. Why is real estate, given its size and economic importance, an asset class without a liquid derivatives market that would make it easier to hedge and invest in real estate?
The derivatives market of many other asset classes has matured to at least the same size as the underlying market within a few years. Derivatives could unlock the potential of the commercial property market by removing physical delivery and thereby enabling faster, cheaper and more effective execution of allocation strategies, short-term hedges, risk transfer and geographical diversification. Heterogeneity of the base market make physical delivery impossible for property derivatives, so only cash settlement is practicable and desirable. The use of property derivatives should not be limited to the investment market. Corporate occupiers could use derivatives to manage their property risk through rental swaps in much the same way that a company’s treasury manages financial risk with interest rate swaps. Hedge funds could also become major players in the market. In fact, their early participation may help establish a liquid market more quickly.
In sum, property derivatives unite many of the advantages of direct and indirect real estate investments. Since they follow closely a specified property price or performance index, an investor benefits from the asset class diversification effect without actually buying property directly. At the same time, administration and transaction costs, which indirectly result in every traditional investment vehicle, are saved. However, indirect investment vehicles and property derivatives should not primarily be seen as substitutes but as complements, just as equity derivatives and stocks.
Market participants are generally only motivated to trade new instruments if no acceptable substitutes already exist (Fitzgerald, 1993). If a property derivative could be easily mimicked using existing real estate vehicles in combination with, for example, interest rate derivatives, therewould be little interest in developing and using a market for property derivatives.However, it seems that such substitutes do not exist for property derivatives. This provides a strong rationale for these new instruments.
An over-the-counter (OTC) derivative, e.g. a swap between a bank and an investor, can be arranged in a fewminutes with no significant transaction costs. Contracts can be written against the total return, income-only or capital value-only components of the underlying index. Derivatives generally improve transparency. The development of a property derivatives market is not just good for itself but for the industry as a whole, because many people still think of property as an illiquid asset class with very poor transparency. So far, transparency is prevented since fund managers hesitate to disclose information publicly and make it available to competitors.
Derivatives enable investors to move exposures around much more easily. A derivative allows quick implementation of investment decisions and therefore makes tactical allocation possible. It allows investors to enter short real estate positions and to get a hedge at a reasonable price.
Some investors welcome possibilities to invest in property without having to make direct investments. Further, there is a growing demand for new instruments that allow for greater liquidity than the existing indirect investment vehicles. It can be argued that increasing volatility, which is observed in many property markets, brings property risk to investors’ minds and makes instruments to hedge the risk more desirable.
Many private and institutional investors faced difficulties in finding suitable, diversified real estate investments, since supply was much lower than demand. The gap would be even wider if all investors strictly targeted a Markowitz-efficient allocation. Consequently, many real estate investment vehicles traded at a premium over their net asset value (NAV). The risk factor of premiums and discounts increase volatility and can result in sharp downturns, once excess demand vanishes.
Although indirect investment vehicles have become more popular recently, derivatives offer an alternative that allows more sophisticated uses such as hedging real estate portfolios or swapping sector or country exposure. Most indirect investment vehicles need to comply with a number of regulations. Typically, they are required to distribute most of their income as dividends and thus resemble a fixed income investment rather than an investment that tracks property prices. Consequently, indirect investment vehicles lose a part of the diversification benefits that investors expect from real estate.
People who prefer to deal with actuality rather than possibilities may be uncomfortable making decisions based on the unknown. If this is an issue for you, it may reflect a past orientation in your decision-making style; that is, you are more comfortable making decisions and plans based on the past or present than on the future. You may also feel some discomfort with change. Current reality is tangible, and many people have a sense of control over it. Since the future is
unknown, and change may be required, possibilities may cause anxiety over what changes they will bring.
If you have negotiated your partnership with openness and honesty and used self-disclosure and feedback, by the time the negotiations are completed a handshake should be sufficient to seal the agreement. If you need the security of a signed legal document, this may be an indication that you do not trust your partner. If you need to bring in the lawyers during the early stages of partnership development, you need to think about whether you truly trust this partner.
Schedule changes requiring flexibility are the norm for most of us. If schedule changes make you feel frustrated and anxious, you may want to think about why these changes bother you so much. Partnerships are full of uncertainties and change, and if this is difficult for you, you may have a problem being in a partnership.
Consider this question from the chairman of one of the largest industrial groups in the Asia-Pacific region: How can our group of 20 diversified companies provide flexibility for each operating company to grow and innovate and, at the same time, reduce administrative overheads and employ information technology effectively across the group?
And this, from the president of the largest division of one of the world’s leading elevator companies: Our business focuses on providing local services to customers in 22 countries. Will our biggest foreign competitor enter our region with a business infrastructure that relies on 22 country operations? No way! The reason for international expansion is generally to pursue an opportunity for growth; it may also be because existing markets are saturated. But business history is full of examples of companies whose international ventures do not succeed as intended. UK retailer Marks &
Spencer, for example, believed it could broaden its revenue base by expanding internationally, only to find that it didn’t work. It has since closed or sold most of its foreign operations and focused on its core UK market.
