According to James Connell, director of Marshall White and Co. in Melbourne, his company has found enormous success in helping agents run a business within a business.
“We realised that to be successful you need to understand who you are in the marketplace. You can’t be all things to everyone, so we decided to focus on the $1 million-plus price range," he said.
“Doing this, we would remove about 700 of our total 1,200 listings because they weren’t in our target range, so we had to pick up our service to make up for the sudden drop in listings and sales.
“At Marshall White, I’ve always been a big believer in helping agents run a business of their own. To help reach the levels of service we strive for, we decided to introduce bonus commissions for agents who have their own effective business units.”
Under the model which was introduced in the early 2000s, agents are responsible for running their team as an employer which provides more freedom to individuals.
"We needed to work out that as an individual sales person, at what level do they have to perform before they are tempted to go and open their own business or if the company is getting an unreasonable yield from that person? So we set a level, which we call 'the bar' that when a team reaches they are then eligible for the bonus commission.
"The commission rate is balanced 50-50 between the company and the team.
"It rewards exceptional performance, incentivises people to grow and develop their business within a business and it often creates a forum where they make more money , recruit more support and generate more sales under our brand than they ever would on their own."
According to Mr Connell, the structure doesn’t work in the company's favour in good times. However, during down periods it provides a much needed respite for the business as a whole.
"In great times we reward generously, perhaps over generously, but there is a maturity in the approach that in leaner times, the teams stump up and take responsibility for major decisions in terms of expenses, size of the team and direction."
Now with 240 employees and an annual turnover of $2.7 billion, Marshall White boasts some of the country’s best agents, including 2013 Real Estate Business Top 100 Agent’s James Tostevin (placed first) and Marcus Chiminello (placed second).
Mr Connell revealed the bonus commissions during his presentation to the Sydney Ideas Exchange at The Star last week, along with Marshall White’s business structure and path to success.