The development of today’s brokerage business model over the past few years is almost as impressive as the performance of the market itself.
Although it seems only a few months ago, it was 2001 that saw the leading edge of the brokerage sector conclude that the full service model was the best direction for the future.
After a number of false starts, including toying with “narrow band full service” models in early 2002, the most successful companies retooled and reengineered themselves to support “broad band full service” programs.
By 2003, the emphasis was on bringing agents along into these programs and a significant percentage of the more progressive companies were taking the risks of doing what needed to be done.
While some companies experienced a high “breakage” rate, overall agent acceptance was well within tolerable limits and the projects went forward. Progress continued through 2003, a year in which at least three national consumer surveys further supported the wisdom of the full service model.
By mid-2003, a number of brokerage executives across the county observed that something was amiss in their firms’ transformation to broadband full service operations.
Although executives, managers and agents seemed to support the new model, participation and conversion rates were not reaching the target levels despite record sales volumes. Additional research by several large firms found that Boomer and Civic generation managers were not supporting the full service options after roll out. While certainly not the only problem, it was prevalent enough to warrant some serious study.
And, while the full service business model was moving toward its destiny, another industry challenge arose – those fairly new “X-er” generation agents were beginning to hit their stride.
For most firms this group was a quiet minority. Then, 2003’s amazing agent expansion found many firms with significant numbers of 28 to 40 year old agents for the first time.
The growth in “X-er’s” has fueled a number of operational issues such as basic training and the challenge to understand these agents’ unique value. The most remarkable issue is a significant increase in the level of complaints from “X-er” agents about Boomer and Civic generation managers.
In fact, in a number of cases these complaints included the threat of moving to another firm if the manager wasn’t removed.
So what’s happening here? How, at this critical time in the industry, did one of the most important members of the brokerage team become out of sync with the times, trends and directions of the contemporary brokerage business model.
There is no simple or one-size-fits-all answer. But, there are clues that could explain what’s happened.
First, basic communications is a likely culprit.
Most of the redesign and development work to launch the full service model was done at the executive level. During development and initial deployment many managers were not only out of the loop, but more importantly were directed to continue operating in the traditional fashion.
It appears that some firms never returned to the managers to bring them up to speed. In the same vein it appears many firms also did not reengineer their manager performance incentive packages to recognize success, nor did they reengineer the basic management compensation package to reward implementation of the new programs.
Research also suggests many firms may not have had time to rework the manager’s job description, nor to provide specific guidance on how managers were to contribute to the success of the new business model.
With respect to the “X-er” agent challenges mentioned above, the issues are clearer.
This column has discussed on several occasions that many new agents have value structures, skills sets and spheres of influence far different from their predecessors.
Nowhere is this disconnect more dramatic than in their basic work ethic. The Civic and Boomer agents’ “live to work” ethic is being replaced by the “quality of life” ethic that is standard equipment for many X’ers.
It now appears some managers have either failed to note this huge difference, or are assuming that proper counseling somehow will transform these “newbies” into the traditional Boomer workaholic profile –an assumption proven incorrect in other industries.
“X-er’s” are making a clear and educated choice about how they allocate their time, especially when it comes to home and family issues. These choices fly in the face of the traditional Boomer agent work pattern and spell disaster for managers who assume these young agents can be “trained” to follow the traditional
Unfortunately this generational and basic value disconnect manifests itself across a number of cultural and work related issues. In the final analysis, these new agents are about to become a powerful force that will drive how the industry operates, especially at the office level.
For many firms this dilemma will require at least the next eighteen months to resolve as both sides continue to be amazed at the lack of understanding on the part of the other.
Meanwhile, a number of preventive maintenance steps are in order:
- Management must determine specifically what they want to accomplish with their full service model and the recruitment of “X” generation agents. This process should pay special attention to issues of company culture, innovation and outcome measurement.
- Those decisions and goals should be incorporated into a very clear system of policies and operating statements. The emphasis here should be on creation of a work environment that encourages creativity and innovation toward the new business model.
- All managers should receive training on the care and feeding of “X-er” agents consistent with the company’s vision. The training should emphasize how to grow and innovate with the business model than how to change the individual agent.
- Outcome measurements should be an integral part of both manager job descriptions and performance reviews, with compensation packages tied to the outcomes. At the same time, existing incentives that reflect outdated or secondary company priorities should be revamped or eliminated.
- Every effort must be made to ensure the company is clearly communicating its current priorities about these programs. A company culture that requires senior agents and management to make significant operational and philosophical changes must let them know clearly that this is the new direction, not just a trend or fad.
- Finally the company must be prepared to make some hard decisions about those who just can’t make the necessary behavior, attitude and outcome adjustments. Allowing any player on the company team to continue doing what he or she has always done can only lead to mixed messages and disaster.
In closing, companies should not underestimate the significance of these issues and their resolution.
While companies must be compassionate, fair and even handed, every effort must be made to avoid the inevitable push backs from traditional agents and managers who may feel the need to become crusaders against the new operational order.
In the final analysis they too must move forward if they want to remain competitive and in a position to add value to today’s real estate transaction.
