Building a successful and profitable business is a challenge that principals nationwide face on a daily basis.
But, as many have come to realise, finding the right person for the job is only half the battle; keeping them is what really counts.
Real Estate Business spoke to some of the industry’s recruitment specialists and business owners and got them to shed some light on how best to retain quality staff.
THE POST-RECRUITMENT PROCESS
What happens immediately after new recruits join the business has been flagged as a focal point for retaining staff.
In a Real Estate Business straw poll conducted earlier this year, more than 90 per cent of real estate professionals claimed they offer a formal induction program to new recruits.
Century 21 chairman Charles Tarbey believes the results might be plausible if a majority of respondents were from larger franchise groups. Otherwise, he says, formal inductions are “simply not there”.
“There’s a whole bunch of principals out there that say, ‘What’s the point in inducting recruits?’. You get them in, train them and then they leave you,” he says.
PS Recruitment director Paula Simoes questions how some agencies define a ‘formal’ induction program.
“To me, a formal induction program is a systemised approach, which includes meetings with staff and managerial appraisals,” Ms Simoes says.
Sharon Bennie, director of the Sharon Bennie real estate and property specialist recruitment firm, agrees. “Some of our clients do two to three days offsite, which is incredibly thorough, and obviously not possible for all scales of business,” she says.
“We’ve found that most of the businesses we work with – at least 85 per cent – are extremely professional and do have a formal induction process.”
She believes that around one quarter of staff decide in their first two weeks whether or not to remain in their new position – “so the process is critical”, Ms Bennie says.
“On the day of commencement, the first three months should be mapped out for them, including a full day blocked out for ‘on boarding’ at a minimum. You should also ensure your whole team knows they are starting.”
BUILDING A HAPPY OFFICE
Having a working environment that is enjoyable and positive is one simple way to keep most staff members happy.
So much so, in fact, that some industry figures believe office culture is at the core of retaining staff.
“The secret to retaining valued staff has less to do with money and is more about creating an office culture people enjoy being a part of,” Sharon Bennie says.
“A survey by business coaching company Shirlaws found 70 per cent of businesses believed a clear culture was ‘the most important factor in recruiting and retaining key staff’.”
These sentiments were reflected in the 2009 Macquarie Relationship Banking ‘Real Estate Benchmarking Survey’.
Approximately 68 per cent of participants identified improving/maintaining culture as likely to have an enormous or significant impact on their business in the coming 12 months, the study found.
And while most agents enter the business in the hope of securing wealth, most of them stay for reasons that have nothing to do with money.
People generally start in real estate to follow their career or financial aspirations, but they stay in the industry for the relationships they develop.
STARTING AT THE TOP
So how exactly do you build a successful office environment?
“We look at retention of staff from the top,” says First National Real Estate Latrobe’s director, Colin Gooding. “To expect our growing team to have similar values, management must lead by example and follow the disciplined actions that we have in place.”
First National Latrobe’s business model and corporate structure differ from those of a majority of agencies across Australia, he says.
This is largely due to the corporate structure’s including a board of directors and employing the assistance of a business coach.
“Setting up a board of directors and having an outside chairperson teach us about corporate governance has been a breakthrough experience,” Mr Gooding says.
“In recent years we discovered that if we were going to succeed in real estate that we needed to be more transparent with one another as directors.”
This extended to being open with staff.
Two years on, the business is performing better than ever.
Mr Gooding believes the change, along with the decision to bring in an independent business coach, has enhanced communication and allowed the team and office to flourish.
“Having the entire team present for 90 per cent of our business and strategic planning discussions has allowed them to not only think but to feel and know they are part of a vibrant business,” he says.
“Everyone has something to offer and if you allow your staff to be themselves, it’s amazing the ideas that they can contribute.”
Communication does not rest entirely on the shoulders of management, he says.
For communication to flow effectively, sales agents and other office staff must be able to communicate effectively as well, says Gough Recruitment’s NSW state manager, Darren Gorrel.
“Communication is obviously very important for both parties,” he says. “The principal will want to know where the sales agent is up to, who he is talking to, how many listings he currently has and how many listings are coming on.”
“For the sales agent, it is good to let their boss know what they are doing and where they are up to because not a lot of people like being micro-managed. If the communication lines are open and people are honest with each other, there will be less conflict in the office.”
OBSERVE AND REPORT
Knowing who is the ‘right’ person for the job is a challenge that every principal and business owner faces, but it plays a pivotal role in staff retention.
This is why Richardson and Wrench South Sydney director Greg McKinley has established key performance indicators (KPIs) and goals to help measure the success of his staff
Setting targets and KPIs not only allows the principal to know who in the company is performing well, but also lets staff understand what is expected of them, Mr McKinley says.
There are several different approaches to measuring and assessing staff performance.
The most common approach is setting and monitoring monthly sales targets, according to Gough Recruitment’s Darren Gorrel.
“I’d say the main KPI is basically the results that they have to achieve each month, or at least quarterly,” Mr Gorrel says.
“Obviously if you are not listing and selling three to four properties a month then you are probably not paying your way.”
This is a core component of the way in which Mr Gooding measures staff performance.
“We have targeted KPIs and KPAs (key point activities) that measure our individual, departmental and overall business performance,” he explains.
“These measures show us what we are doing well but more importantly what we are not doing well. Continual improvement of our policies and procedures never stops.
“We believe that if we can continually refine and improve what we have in place, the rewards will follow – they already are.”
Revenue isn’t the only way to measure staff performance, says Mr McKinley.
“With our KPIs, we don’t do it solely around revenue but performance,” he says. “Certain performance attracts certain rewards rather than [our KPIs] being just revenue-based.”
“The more experienced agents are always going to win on a revenue measurement so it is much better to reward someone around activity.
“Our KPIs measure activity, such as the number of face-to-face meetings, as being more important than revenue. Activity will lead to productivity.”
Andrew Reibelt, principal of RealWay Property Consultants, agrees.
“One key to a successful business is to monitor and reward those seemingly non-dollar productive items to a staff member’s role,” Mr Reibelt says. “[These items are] ultimately the most important of all.”
Vendor retention and generating leads for future business are two key elements of non-dollar orientated KPIs that Mr Reibelt has established to help monitor the success of his sales team.
“Customer retention on our database has been a crucial one for us over the course of our time in real estate,” he says. “Essentially, if a client considers us to be their only choice of agent they will not be lost to other agencies in the sale or rental process.
“Lead generation – or ‘prospecting’ – can be the crop that brings rewards once it has grown and been harvested. If not done consistently, a business can wither and die.”
In addition, maintaining a high level of customer service and successfully negotiating with a vendor around their initial asking price goes a long way for Mr Reibelt.
“[An agency with this type of KPI structure] is more likely to have longevity than those that purely focus on the commission at the end of each month,” he says.
However, additional support may be required.
“If a sales agent is missing out on some business then that means the agency is missing out on business,” Mr Gorrel says.
“Any extra assistance that the sales agent can get to win a listing is obviously better not only for the agent but for the business as well.
“I just think maybe a bit more support – or if they have the time to do it, ‘buddying’ them up with a more experienced sales agent – can really help.”
But when someone isn’t the ‘right fit’ for the business, it may be time to act – and to act quickly.
It’s important to acknowledge that, unfortunately, some people simply do not fit in, according to Mr Gooding.
“The culture in our office is growing as we create a group environment of ‘we are’ rather than ‘I am’,” he says. “Strong personalities would find it hard to work in our office.”
Staff who continually rock the boat can really tarnish an office culture and environment. This can have a ripple effect, impacting staff performance and bringing down communication channels.
An example would be sales agents who steal listings from other staff members.
“I have heard of a couple of situations where one sales agent has attempted to steal another agent’s listing,” says Darren Gorrel.
“The culture and work environment is probably the most important factor in any office, so if this affects the culture of the office and trust is broken, then it is probably a good idea to move [the employee] on.”
While this may appear to be a fairly black and white situation, there are some serious questions principals should consider prior to making a decision.
“It can be a ‘Catch 22’ situation, where the person who attempts to steal the listing is a top biller. It can become a real balancing act for the principal.” Mr Gorrel says.
“The principal needs to ask themself, ‘Do I punt somebody who has been billing $500,000 to $600,000 a year for doing the wrong thing, or do I keep them and run the risk of losing one or two other agents?’”
While a bad attitude “is like a cancer – you need to get it out quick and do it early,” Mr McKinley acknowledges the approach may be different if the staff member is a long-term employee.
“If they are going through issues, you work with them,” he says. “People have highs and lows in life.
“The decision to let someone go is not about figures, it is about attitude. With the right attitude you will turn the figures around – they will look after themselves.”
Justine Walker, Gough Recruitment’s WA state manager, identifies career progression as important for staff motivation and retention.
“A good principal will attract talent to their business, develop their skills and retain by offering career progression,” Ms Walker says.
“Your staff keep your business running from the ground up. Long-term and loyal staff will make sure you avoid the pot holes.”
Colin Gooding also likes his staff to have a long-term outlook: “There are many good agents in the industry; however, too many of them are focused on today rather than tomorrow,” he says.
So, when a ‘tomorrow guy’ does come along, it’s imperative to take advantage of the opportunity and assist their growth as much as possible.
“[If you have] tomorrow’s leaders within the ranks, it is important to pass on to them why certain management decisions are made,” Mr Gooding says.
“This allows them to learn and understand how to run a business, and [they provide] welcome challenges to our decision making process, which lets us see their leadership qualities.
“We offer traineeships to those who want to obtain a full estate agent’s licence. This also shows us who is going to fit into our succession plan.”
Staff will simply leave if principals don’t show a tangible commitment to career progression, adds Sharon Bennie.
“Career development displays an employer’s investment in their employees, which prompts loyalty and staff retention,” she says.
But not everyone is interested in climbing the corporate ladder. Many sales agents are quite comfortable doing what they do best: listing and selling real estate.
“Some people don’t want to open up their own office,” Mr Gorrel says. “They are just happy to be a successful sales agent, bill a lot of money and make a lot of money.”
Some agents may be intimidated by the idea of running their own business, and with the extra pressures of hiring staff, managing payroll tax, super – the list goes on – it’s little wonder.
A comfortable pay packet and the tools needed to get the job done may be enough for many people. But the opportunity for a progressive career path in which they can see a long-term future and gain a sense of achievement is also important, Mr McKinley says.
BUT MONEY TALKS…
Fortunately for principals and business owners, one of the most fundamental elements of a successful staff retention strategy is also one of the simplest: reward those who achieve.
“Our industry is rewards-based,” Mr McKinley says. “Our staff is highly competitive and they are paid at the highest level. The people who stay with us earn well.”
His approach is that a happy employee is a motivated employee, and he believes rewarding staff is a step towards the future.
“If the employer is happy and the employees are achieving it will lead to a good long-term relationship,” Mr McKinley says.
When all’s said and done, however, money plays a huge part in ensuring staff remain with a business.
“That is why they do it,” Mr Gorrel says. “This is a tough industry and if you’re not earning six figures it’s probably not worth doing.”
Principals will need to consider the pay packages and additional benefits on offer to their staff if they want them to stick around.
“[Principals need to] be competitive and up to date with current market salary rates for their employees,” Gough Recruitment’s Justine Walker says.
“We send out regular salary benchmarking to our clients so they can ascertain if they are competitive in the market because I can guarantee if they are not, their staff will be looking at other opportunities.”
Not every agent will want a commission only agreement, so a debit/credit or salary plus commission payment structure should be offered to all staff, according to Mr Gorrel.
To keep leading performers on the payroll, principals will need to be open and willing to negotiating a ‘fair’ commission split.
“Some of these guys, if they are billing a lot of money, will negotiate themselves a bigger slice of the pie – from 50 per cent to 55 to 60 per cent,” Mr Gorrel says.
“I have even heard of one agency paying 70 per cent to their top billers, but this is not very common.”
First National Latrobe has a different approach. The agency does not reward sales staff above the agreed salary/commission package; rather, they are rewarded with the latest industry tools and other business initiatives.
“We all know we can generate an excellent income by doing the required tasks and what is expected of us,” Mr Gooding says.
“One thing that we do which is over and above the norm is with our vehicle allowances. In the big picture it is not a huge cost for the return you can generate.”
Sharon Bennie recommends agencies link their remuneration packages to the organisation’s goals and values.
Furthermore, initiatives such as child care and health benefits “say that you value family, while giving longevity bonuses for employees on the anniversaries of their employment with you says that you value employees who stay with the business”, she says.
USING LIMITED FUNDS
Not all agencies and principals are in a position, financially, to increase salaries and commission percentages.
However, taking the team out for a dinner on special occasions or simply to say ‘thank you’ can be reward in itself, keeping staff focused on the task at hand, Mr McKinsey says.
“Money is not the only thing that employees are looking for. Sometimes it’s about recognition of their achievements and communicating that to others.
“It’s also good to take staff out together. We did the Starlight fun run the other day. It’s a team building exercise. People want to achieve and to be around achievers.”
Quite a few real estate groups and principals also encourage and support staff’s involvement with charities.
Dean Mackie, managing principal at the McGrath Neutral Bay/Mosman/Northbridge franchise, has noticed a big shift in his team’s commitment to the community and each other since they increased their involvement in local activities.
“Embracing concepts like ‘give a free hug’ has served to bond the team,” the Franchise Council of Australia’s 2011 national community service award winner says. “It’s because it requires giving up on time and sharing the experience of giving with their colleagues.
“Historically, we haven’t had any real issue with staff retention but we definitely feel that our team likes the feeling of working in a business where it is not just about work, money or profit.”