As brokerage executives across the country take on the Herculean task of bringing their operations in line with today's realities, they often find themselves ambushed by the very corporate culture they seek to improve.
Anticipating this bushwhacking, and designing a change process with reduced risk, may be critical to their success. This article will review a number of "ambush points" generated during a recent broker profitability conference in
Overall, both speakers and attendees were very positive about their efforts to improve profitability. Not surprisingly, the successful ones were concentrating on the key areas of agent recruitment, office management, customer relations and financial management.
There was general consensus that the profile of the average agent recruit is changing. The Generation X recruit (29-36 years old) differs widely from their Civic or Boomer predecessor.
As a group, they are not as willing to give up a regular income stream and often demand a stipend or draw while they develop their real estate careers. A fair number of brokers reported offering such packages to those agents, if they were willing to follow a very specific training and mentoring track.
The participants also noted that class of recruits is less likely to work as many hours as the traditional agent, especially during weekends, considering them as sacred personal time.
The cultural ambush in this scenario happens when (not "if") the firm's traditional agents share the benefit of their years of "We scorched the broker's earth" techniques with the newer agents.
The best successes with "Gen Xers" seems to come from programs that:
- Place the agent in a more structured training, mentoring and productivity environment;
- Establish specific time management and productivity objectives;
- Use an automated monitoring system to carefully track their time management and productivity;
- Feature instant counseling and course corrections when expectations and objectives are not met; and
- Are not afraid to terminate agents who do not perform.
To many, these components may appear to be just basic management wisdom and common sense. The difference appeared to be in the brokerage?s ability to follow up and to spot early on when a recruit probably wasn?t going it.
The Big Lesson
Keep new agents away from the veteran civic or boomer whose advice, while appropriate for their same generation, is bad for Gen Xers whose prioritization of work as a life's activity is not as defined.
The next aspect of profitability focused on the office manager. From the onset it was clear the participants were still trying to decide whether the traditional office manager is part of the problem or the solution. Several brokers pointed out that the manager role is going through a significant shift in its function and skill set.
While traditional managers focused on recruitment, retention and motivation, the contemporary manager's role is increasingly tied to financial performance and contribution to firm profitability. Brokers reported efforts to reorient the manager's toward financial objectives were very difficult and could have strong "political" ramifications. This cultural ambush occurs when managers keep promising agents "the moon," despite financial ramifications. The solution seems to be setting clear objectives for them regarding new agent relationships, and then monitoring their achievement.
These profitability program characteristics are showing solid results at the manager level:
- Having a strong company profitability strategy, actively supported by executives and ownership;
- Including managers in company-wide planning so they buy into the big picture;
- Giving them very specific office profitability and productivity expectations;
- Shifting their compensation from a production/market share emphasis to a more balanced formula that rewarded profitability across the entire transaction; and
- Willingness to terminate, without regard to popularity or tradition, managers who won't share the firm's financial priorities.
Another operational adjustment emerging as a key success indicator involved the firm's accounting functions. Participants reported in many cases their legacy accounting procedures and systems couldn't provide current, relevant financial information that would help profitability. Many systems seemed to focus instead on monthly or quarterly reporting formats.
Consensus was that an effective accounting system must provide information about agent, office and firm financial performance on an almost "real time" basis, to the extent personnel resources exist.
It also must deliver information that allows financial performance to be compared with actual goals and objectives. In short, it must allow owners, executives, managers and agents to know exactly where they are compared to where they ought to be.
The cultural ambush from the "bean counters" often comes in the guise of not having enough time or manpower to input the numbers in a timely fashion. The solution appears to be an accounting procedures audit. Often there are a number of inefficiencies or redundancies that can be caught. The freed up resources can then be used on a profitability reporting system.
Firms showing effective use of accounting information as a key success indicator are those that can:
Incorporate a system everyone can access, understand and use in their profitability efforts;
Provide training for each level in using the system effectively in their individual efforts; and
Use it as a focusing and centering device so the entire team stays on the same
page regarding financial goals and objectives.
The participants also reported success with other profitability programs. Although cross-sell programs were almost standard, with a variety of locally inspired program, product and service options, current efforts are on improving conversion rates, which remain low in many programs.
Several shared the achievements in their customer relationship management systems.
The key here appears based on the firm's ability to implement a lead and listing management program. Another factor is the firm's ability to use its property-marketing program to drive customers to the firm, then to the agents. Done correctly, these not only provide the firm a way to directly affect profitability through cross-sell programs but, equally important, allowed it to expand its brand's value and impact.
The participants left the conference with a renewed sense of opportunity and potential. As these brokers discovered, there is an increasingly clear course to improving company profitability and more and more are adopting aggressive, focused profitability strategies.
The other point that rang clear throughout the conference was that now is the time -- as in "you snooze, you lose."
