Breaking Ground and Glass Ceilings: Sheryl Palmer’s Mission to Humanize Homebuilding

0:0025 % of the average selling price of a home today is spent on regulation. Before I buy land, before I get a building permit, before I build the house, 25 % of that average sales price is on regulation. So that's where we're spending a lot of time in Washington, why I was supposed to be there today to talk about what are the things we can do because other countries have figured it out honestly much better than we have. Hi, everyone. Welcome to Leadership Next, the podcast about the people and trends that are shaping the future of business. I'm Diane Brady. And I'm Kristen Stoller. Quantum computing has the potential to transform industries by solving optimization problems, boosting machine learning, and sparking innovation in logistics, finance, and materials science.

0:48Jason Garzada, CEO of Deloitte US, is a longtime sponsor of this podcast and is here with us today. Hi, Jason. Thanks for joining us.

0:57Sheryl Palmer:Great to see you, Diane. So what is quantum computing and how do you see it transforming industries? Well, quantum computing has been a topic for some time in research circles, certainly closely watched by business. But it's fundamentally a different computing paradigm that uses the principles of physics instead of mathematics to drive computing outcomes. It's been largely the domain of research, and it's becoming seen as being a more viable commercial computing methodology and approach. And I think the real uses will be ultimately around very complex optimization scenarios, further enhancements to scaling machine learning, and also very complicated simulations that could be relevant to a whole host of different business applications.

1:48Jason, what steps should leaders take to prepare for both its potential benefits as well as its potential risks?

1:54Sheryl Palmer:It's really about readiness planning right now and preparing an organization to understand the implications. So it's about understanding what skill sets would be required, what type of cybersecurity protocols would need to be in place, and begin to think about the types of use cases that would be very germane around optimization and simulation. Excellent advice. Thank you so much, Jason. Thanks, Jason. In this episode, we are speaking with Cheryl Palmer, who is the chairman and CEO of Taylor Morrison. And Cheryl, you are the first and only woman to lead a public home builder. Still to this day, you went there in 2007 and an incredible job you've done.

2:36We'll be talking about that. We are taping this episode here in Scottsdale, Arizona before an audience of leaders. So thank you for Deloitte's North America Next Generation CEO program. So thank you all for joining us for this live conversation. Absolutely. And thank you, Cheryl, for joining us as well. Delighted to be here. Yeah, of course. So one of the things, you know, I love, Cheryl, and that you're so good at is I love hearing stories. You're really good at telling stories. You have interviewed so many high-profile people, and I have it here. George W. Bush, Michelle Obama, Steve Case. You told Diane and I that you also worked for Ray Kroc at McDonald's, which is a really fun surprise.

3:18But I'd love to hear kind of your top story of interacting with them and the leadership lesson that you think about to this day. Oh, goodness. So many. But if I were to specific to your question, Kristen, you know, I think about I've had the absolute amazing opportunity to interview George W. three times. And so the first time was very systematic. I had to go through Secret Service to get all my questions. The next time and the third time was very casual. And his authenticity and candor really came out because he was just not, he wasn't on guard at all. He was very engaging. But what I loved about him was just his genuine one care that I looked good in the interview, which how unique would that be, right?

4:14We're walking from the green room and he's like, don't worry, you got this. It's my job to make you look good. And I'm like, no, I don't think it goes that way. But I so appreciate that. But he was really quite genuine. And then from a leadership standpoint, and this might sound so silly, but three interviews, I also had the opportunity to be in the rotunda when his dad passed and was and I'd sent him a note that I was sending my respects. And each one of those four communications, I got a handwritten letter from him. And that's a lost, I think, beautiful. My mom says it really matters. And it really matters.

4:52I just want to because we're before an audience of leaders, I want to also level set why you're doing interviews. You've got a podcast. is that something you're doing because you think it's important for a CEO to do? Is it something you're doing just because natural curiosity? And just give us some sense as to why you're doing these interviews. Well, I've been asked. It's intimidating for us, the interviewers, as you can imagine. Well, you know, I've been very fortunate. The first time was a circumstance where we had, we were owned by private equity. And at our closing dinner, when we went public, One of my new board members was Senator Flake, and he arranged it.

5:31And so it was just a very small, intimate group, probably about 50 of us. And that was my first time. I had dinner with him, and then I interviewed him. Then I got asked to do the other. One was for a veteran's cause, and he supports and paints veterans. But what it did for me, Diane, is you get to, I mean, in the research, which you will know so much better than I do, I learned so much. I read like three of his books and I reached out to find friends that, you know, I knew him personally so that you're more prepared. And that to me is the exciting part. Same with Donna Brazile and Carl Rope when I interviewed them together.

6:13Here, like on TV, they're very different. And this was for the Homebuilding Association that they have very different beliefs. But the reality is they're two humans that are on different sides of the aisle. But at the end of the day, they're still friends. And so being able to get into that chemistry and really get into the issues that can affect the veterans, if it was George Bush or our Home Builder Association with the other two, you actually can make a difference through that process. Well, let's stay in the moment. You have a fascinating background, some of the people you've met. But you actually gave up an opportunity to go to Washington, which many of you in this room will have to do throughout your careers or if you don't already do it, to come here.

6:55Life's about tough choices. What did you give up to be here and why? Well, it really wasn't a tough choice because I had already made the commitment quite some time ago. And we have been trying to schedule a meeting with the new director of the FHFA, Bill Pulte. And in our industry, I think I'm known as the one with a lot of mortgage knowledge. I've taken the time to really understand. And so Bill had reached out to me and said, I really need you at this meeting. And so there was five CEOs in total that were going to join. He had reached out. And so I really wanted to be there. But in all fairness, we had been trying to schedule this for three months.

7:35And two weeks ago, he finally settled on a date. And we tried to see could I be in both places was and it just wasn't possible. So as important as that was I know the meetings in good hands with a lot of my peers and I'm delighted to be here. But you've been going to Washington. This wouldn't have been your first time. Right. So I wonder, Cheryl, what advice do you have for CEOs who are going to have to do this at some point in their career, you know, dealing with administrations on both sides of the aisle? It's a really good question, Kristen, because like anywhere, it's about relationships. And I remember my first time on the Hill, really focused on lobbying particular initiatives.

8:18This goes back almost 20 years. And it's daunting. It was scary. I have to be honest. It was like, these guys, they're representatives of our country. They've been voted in by the people. They must be so informed. First thing I learned is they're not as informed as you think about all the issues. You really humanize them. We've seen that on TV. Yep. Okay, good. And I say that with respect, that they're like learning almost as they're walking in the meeting on some issues. And here, for the folks that are out there lobbying, these are really big, important issues that affect our business, affect the consumer.

8:53I mean, our business affects consumers all over the country. And so I was actually a little tiffed that they wouldn't take the time, just like we talked about, being prepared. um but what you quickly realize it's not about the relationships you build when you're in dc it's about the relationships you build when you're not in their office with their staff because now all of a sudden you have a different and personal connection and that's when real things happen um and it doesn't matter what the issue is so it's about education informing and relationships and perseverance because none of this stuff happens fast i think about the great financial crisis and how difficult that was and how impactful the decisions they were making in banking had on our industry.

9:41And honestly, they were somewhat oblivious to it. And so it's really about educating. Now, you came to the role in 2007, and I hope you don't mind that I mentioned that you're the first and only woman. I don't want to see everything through a gender lens, of course, but I am curious, first of all, what positioned you to get that? I mean, you started at McDonald's. I did. You even knew, you even knew, Ray Kroc, I believe, yelled at you. He did. He did. So what made you the right person to lead Taylor Morrison? In a very interesting time, the company had just come together, pre-IPO. Frankly, we knew at least some type of crisis was looming in 2007.

10:23It hadn't fully come to rest yet. What made you the right person for that job? It hadn't come to roost across the country, but it had in certain markets. Sure. And I had been the area president in Nevada for another brand, another big top five builder, and they had gone through just a significant crisis. It was the first place that it came. I left that to actually stay home with my kids because they were heading off to college and I I feel like I've been traveling my entire career. And then this opportunity came. And when I joined, honestly, I joined Morrison Homes in 2006. So I'm just about in my 20 years.

11:05And I joined as an area president. It seemed like five minutes after I joined, there was discussions about two. And we were a private U.S. company of a U.K. public. So we were a sub of a U.K. public. And it seemed like five minutes after I joined, there was discussion about the two UK publics that had North American holdings coming together. So we spent about seven, eight months working on that. And there's a lot of different laws in the UK. So somebody else was brought, somebody else, the CEO of one of the companies was appointed. and about 90 days later the CEO from the UK said I think we need to make a change and asked me to come to meet the board in the UK and I did and you know to be quite honest there's a little bit of fake it till you make it when you take on a new big role and it was private so I didn't have the public concerns about how to run a public company.

12:06Got the role and it was all about surrounding myself with good people. I don't think each, either of the companies, if I were to be really honest, I don't think either of the companies would have made it independent at that time, because you're right, it was 2006, then 2007 when I took over. But the next five years were really tough. And then the UK sold us to private equity. Was there a moment either, you know, around 2008 during the housing crash, or, you know, years later when you did the IPO that you thought, this is too much for me. I want to help. There was a point in 2010 where I actually resigned.

12:48Really? Tell us about that. I was owned by two private equity firms. They, and I hate to talk about the woman card, but they really didn't have females. I talk about the woman card all the time. I remember three women here. Come on, Cheryl. They didn't have any women in their portfolio as leaders. And honestly, their style was about second guessing every decision and you can't run a company that way. I mean, I can't stop with every decision and go ask permission. And if you don't have trust in my judgment, then I'm the wrong person. And so I made a really, really hard decision and thought, you know, the best thing I can do for this company is step away and they can bring somebody in they have confidence in.

13:27And so I took the day off because I knew this would be hard for me. I'd And I sent the note. And I had one of the board members call. And I'm like, I'll be happy to stay, you know, as long as you need. I'll be happy to pack up, whatever works best for you. But I'm happy to help find my replacement. And he calls. He's like, so where are you going? And I'm like, just like I said in my letter, I'm not. But I had been through other experience in life that life is short. And, you know, things really matter. and um he's like you really don't have another job I'm like no I mean what I said is true I'll stay as long as you need and he called one of the other private equity guys and asked him to come meet and I'm like we don't need to do that it's really okay and they came um we met for dinner and after about four hours he's like I'd really ask you to give me another chance and next year I was the CEO of the year for their private equity firm.

14:32Wow. How do you convince you? I took the company public. Yeah. What did he say? You know, at that point, I had nothing to lose. And sometimes it's OK just to stand alone and not have the fear of repercussions. I had already resigned. And you don't resign and think you're staying. That wasn't my plan. It's a bold move, yeah. And he just, I was very honest with him on the whys and the way he was treating and the way he was undermining and how difficult it was to operate a company that way. And if you don't trust, then you really you should move on. Which gets back to one of the questions that this program addresses, which is not who wants to be a CEO.

15:08Why would you want to be a CEO? And when did you let's start with when did you realize, you know what, I can run this thing and I want to run this? When I got it. I mean, if I were truly honest, it was a big move from running a region to running a company that was being merged. So two big companies. But that's, like I said, it's when you really surround yourself with experts in every function. And you know enough to be dangerous at 5 ,000 feet because you're generally operating at 30 ,000. And you have to know when to like swoop in and when to swoop out and let your team do what they do. You know, the honest to God truth, Diane, is I didn't know anything more the day I took the job than the day before.

15:57But when you get in the role, you have access to a lot more information and a lot more people. And that if you use that well and the team well, you begin to grow confidence. So when you led in day one, now you're 18 years in to the job, 20 if you include when you joined the unit. How do you lead differently today? Obviously, the environment's different. But when you think about yourself as a leader and you go back to that starting out point, anything, any advice you would give yourself? Well, leading in crisis is different than leading a stable business. And so when I think about crisis, when we brought the two companies together, it was crisis.

16:40Great financial was hard and it was almost taking a street fighting mentality. And it did mean you were involved in a lot, a lot of details. You know, I would say COVID had a similar, you know, it's a crisis when your team is uncertain and scared and nervous and everyone's got a different emotion and there's no right or wrong. You do swoop in. But I think my lesson is to know the times when to do that and when to back away. I'll also add on that because, Cheryl, I feel like for me in my career, I've been told the only way to get ahead is by job hopping, moving companies. You've now been at the same one for 20 years.

17:26Why didn't you move around? Why have you stuck it out for that long? I love what we do. I love what our company. When I joined, our two companies came together. We were less than a billion dollars, and this year will be closer to$9 billion. We went down to 600 people, and now we're at almost 3 ,500. So I feel like in some ways I gave birth to this company. And what we've built, we've done seven acquisitions. Most of my senior team has been here. I think on my 10 direct reports, we have over 150 years of experience in the company. So I did it for the people. I've stayed for the people. I love what we do.

18:11And I love the impact. And it's really important to stay grounded, Kristen, in what we do. It's not just running a company, but building communities where people get, it's soft and squishy. It really is. But it's important to keep like a foot on the ground and recognize the impact that we have every day when families get to move into a home and raise their families. You have a very diverse workforce, too, people of all ages. One of the things I always am really curious, especially now when you have all these external pressures coming at you and you have a young generation, Gen Z, Gen Alpha, who really want their CEOs to be very candid, very open.

18:55How do you balance that with the pressures you have from up top too? Yeah, everybody wants to know you. Yeah. You can't know all of them. Yeah. Hmm. It's interesting. I have a CMO who is remarkably talented. She joined the organization, I think, just about 10 years ago, very young. I think I brought her in as a PR manager, and now she's our CMO. And she keeps me pretty grounded on the difference in our workforce and particularly about the issues. And I've, my own internal policy is I will talk about the issues within the organization. I won't talk about people. So for me, if I can keep that separation, it should never be personal.

19:47I think anybody in my role, it should never be personal. But what the organization knows they have for me is total honesty, transparency. COVID's a great example of that. You know, you had half, I had half the organization that was like, you know, do not make us get a vaccine. You know, that is not your decision. I had half the organization that's like, if don't let them come to work if they don't get a vaccine. And all I could really do is provide facts, data, bring, we never made a decision that you had to do that. Now, there was almost a time where we were we would have been required but that came and went and but I was so transparent I had weekly calls with the entire organization when we had to lay off people I had you know these are hard conversations but I didn't hide behind a computer I didn't hide behind a memo I would get on camera and so I don't know them all but I think they all think they know me really well That's interesting.

20:52You know, one of the things, and keeping with the demographics, obviously, I'm intrigued. Let's talk a little bit about what differentiates you from the other home builders. Because I think that we tend to sometimes see it as, you know, that we talk about home building as more of a macro issue, right? Like what's happening to housing prices. You have many different brands that I think are adopting to both how people buy. You know, you've got a brand for renters. I mean, talk about how you are seeing the market right now, because there's no question there's an affordability crisis. Significant.

21:27What are you doing about it? There is a significant affordability crisis, and we've attacked it with our rental brand, Yardley. and it's still building lifestyle communities like we do. So we buy land, we build houses, we have a management company that rents them, but it allows for affordable with gates and a lifestyle component. So it's very similar to what we do, but then we ultimately sell that asset to somebody that does this for a living. You know, I used to have a business in Canada. We sold it and we built high rises. And I remember Diane so vividly that over my years there, you know, we probably started with an average square foot of those units of like 1300 square feet, and maybe they sold for six or 700 ,000.

22:17By the time I sold that business, our average size was 600 square feet, still selling for six or 700 ,000. So you can only do so much to squish it down, Right. And so multifamily. So there's other ways, but it all starts with the land and it starts with some of the things we talked about with policy is 25 percent of the average selling price of a home today is spent on regulation. before I buy land, before I get a building permit, before I build the house. 25 % of that average sales price is on regulation. So that's where we're spending a lot of time in Washington, why I was supposed to be there today, to talk about what are the things we can do, because other countries have figured it out, honestly, much better than we have.

23:04That's what I'm wondering, because you travel a lot, and you get a lot of different perspectives on that. What do you think other countries are doing that the U.S. should adopt? Well, I had the fortune when I was owned by the Taylor Wimpy Company in the UK, and I was on their board for about eight years. So their whole process is different. We had board meetings every month. Nine months a year I was over in the UK. But one of the most basic differences, Kristen, is every single map. So when we get an entitlement and get land approved to build houses, we get a final map. and every entitlement or final map had an overlay that said 15 % of these houses are going to have to be delivered at an affordable level, meaning they have to be sold to someone at a medium income.

23:48And we had to build them the same way. But now when we all bid for the land, you, you, you, we all were like bidding for this land. We all knew the same rules. And I'm not an advocate that We should go build Section 16 housing and just go build a community of cheap or affordable houses, but integrate people. And that's what it allowed for. So I wish we could do something like that here. There's a few markets that have figured it out, but not enough. You know, it's one of the big questions that a lot of leaders have to deal with is, do I want to go public? And sometimes you have a choice, of course.

24:28But what have you learned in terms of running a public company? Because that's something that a lot of companies I see now try to put off. And when you're being such a public figure, that comes, it's very different to be a public figure now than it was two decades ago. So talk a little bit about that and just share your experience and any advice you've had. And leading through IPO. I think that's a hard thing to do. But so fun. I mean, honestly, the best experience. I haven't heard fun yet, but I'm curious. Yeah. Oh, it's a lot of work. But I guess it's because I love what I do so much. But getting to go on the road for 17 days and tell your story probably no less than, you know, 250 times about how we're positioned, how we're different.

25:19We are the biggest home building IPO that's ever happened. I mean, it's going to be a hard one to beat, to be honest. And it was amazing. It was an amazing experience ringing the bell the first time. I don't know. I think my cheekbones hurt by the end of that day because I was clapping. You have to do the whole time. Yeah, the whole clapping. But just the pride of, you know, I grew up in New York, but I had never been at the stock exchange. And but the why, Diane, cost a capital. Yeah. I mean, if you were to really be honest about it, you know, the treadmill of I sometimes feel I live my life in six week increments.

25:56Earnings call to board meeting to earnings call to board meeting. And it's a treadmill. And it's on 20, you're on 20 hours a day. You have this great story. This gets to the other point I was mentioning about being a public figure where you approached Arnold Schwarzenegger. I believe he was working out at the time. And he had that like, I've been recognized. But I talked to a lot of CEOs who that is the constant scrutiny. you I think you become to your point very humanizing to your team and we have not talked about the various ways that you've done that but you've done a lot but I do think to understand almost the public figure nature of a role especially in areas like home building you know there's a lot of anger out there about the cost of housing and you could be sort of a symbol of that to a lot of people.

26:49So I'd love to just get your sense as to how you navigate that, because I think you lead into it in many ways. Yeah. Now, it's amazing how much time today companies are spending on security and, you know, with what happened in New York just many, many weeks ago. It's a little daunting. And you do, I mean, everyone should appreciate that everyone believes they have the right to know everything about you and everything you're doing at any time. I know when I separated from my husband, you know, 10 years ago, everyone felt like they needed to know every detail. And so there are things in life that, you know, should be private and it's hard in a public role.

27:38I have chosen to own the impact of what we do and so I've leaned in instead of out. So I do do a fair amount of media but it's helpful for our industry because consumers need to be educated and so I don't do it for self-promotion. I do it because it helps consumers recognize because with all due respect not everything that's shared in the media is accurate. And so to be able to have a voice and share, I hear how often it's impactful. It's also, interestingly enough, this was the part that was surprising to me, how impactful it is to my team. I mean, they have a great deal of pride that, you know, their CEO is out in making a difference and tackling the big issues.

28:29But I'll tackle the big issues in our industry. Once again, I think where it's been most difficult for me, just honestly, is, you know, police violence, things that really don't affect our industry. But every CEO... Dial a quote, what's your opinion on this or that? Yeah. And when do you choose to speak up? Right. And that's, that's the debate that I have with my team on, you know, many of these big ones. And, you know, is there a way to speak up and not take a view? Because no view, when you have these issues that are so divisive in our country today, there's no winning. I mean, there just isn't.