How Are Your Staff Performing?
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Brad: Welcome to another edition of Rent Roll Insights I’m Brad Miller from Real Estate Dynamics where we help Property Management businesses build buy and sell through our Rent Roll coaching, Property Management training and Business Brokerage right across Australia. So, in this 8 part series you’ve been noticing that we are talking about how to protect the value of your Rent Roll and how to get yourself robot ready. Once again as always, I’m joined by Nathan Brett from the Real Estate Dynamics leadership team and today we’re going to talk about what I feel is a horrific statistic for our industry. So, 99.6% of Property Management people have no idea how they’re performing in their role. How’s that costing agencies big-time as far as personnel goes and profits and growth? We’re going to find out in this session. Firstly Nathan can we start with the 99.6% where did that statistic come from?
Nathan: Thanks, Brad and you’re right it’s a horrific statistic isn’t it? That statistic came from the last 77 business diagnostics that we’ve completed in agencies across the country.
Brad: And the business diagnostic what does that consist of?
Nathan: Absolutely. So basically, we x-ray the business to find out what leaders want more of, what they want less of, one of the things we do is interview all of the team members. Where that result came from is the question that we ask, how well is your performance monitored on a scale of one to ten.
Brad: Right okay very good. What other things are done in the diagnostic? It’s a fairly comprehensive report I believe?
Nathan: Look it really is what we do is we get very clear with the leaders about why they have Property Management, what purpose does it serve, how they want it to feel and how they want the team to feel. And then what we do in a nutshell is go right through the business; look at data, interview the team, look at structures, systems, processes and give them a report that measures the gap between where they want to be and where they are currently.
Brad: So, when we go back to the HR component where you’re asking that question and we’re getting very low scores on that question about feedback. How is that directly contributing to the high turnover of Property Managers in our industry? Do you think it’s a major thing?
Nathan: Look absolutely if there was one factor it would certainly be that that Property Management people have no idea how they’re performing in their role. And some of them think Brad that feedback is the occasional pat on the back when something goes well or a stern conversation when something goes poorly. That is not performance feedback.
Brad: No, I don’t think it’s going to make anyone feel sticky in your business as far as staff goes. Can we talk about, you know, what does performance feedback look like for our audience and some things I should consider there?
Nathan: Absolutely. Well what we noticed is that most agencies, most Property Management businesses will measure some stuff. They might measure arrears, or they might measure vacancy, they might measure new business or lost business and that’s all well and good, but unless it’s attached to a standard or a benchmark it’s relatively useless and the question is often beckoned, “well compared to what?” So, if our arrears are less than 2%, or their 2% today, is that good, bad or indifferent? And so first of all, the benchmark or the standard needs to be set and that needs to be set with the clients in mind. What are the client’s expectations?
Brad: So, seeing the benchmark first is key. How does that look, or do you have some examples of how that might look off the top of your head as far as setting those benchmarks in place?
Nathan: Yes absolutely. So, what you do is you start off with a list of standards which I guess is your tolerance around certain processes and actions in your business and then what you do is you set standards that a client-centric. So, for example let’s look at leasing. You know, what’s the minimum turnaround time that’s acceptable or the tolerance level for application processing in your business? You know, a lot of our clients set that standard at four hours because they know in 24 hours they’ve lost a quality prospective tenant to another agency. So, again so if it’s less than or equal to four hours what we can do is measure the result and see if there’s a gap and that’s where the performance feedback lies is the gap between the standard and the actual result.
Brad: Okay great so of course a leader out there would want to go through each of the key functions and set those benchmarks, those standards, against each function or each system in their business, that’s correct?
Nathan: Absolutely and do it with your team because what you want to do is get everyone on board so set the standards first and then continually review them. You know, are they working, are we delighting our clients with this service standard or does an adjustment need to be made?
Brad: Challenge the standards.
Nathan: That’s correct.
Brad: Can we talk about feedback and so taking those standards, taking the workflow and then bringing it back and giving that feedback to that 99.6% of people who don’t know what they’re doing in their role? How does that work?
Nathan: Absolutely. Well first of all Property Managers should be able to assess their own performance so our clients will use a dashboard with the operations of Property Management, it’s displayed on a flat screen somewhere in the business and it’s nice and simple. Red is bad and green is good so everyone can see transparently what’s happening with the different functions in Property Management. So first of all they need to be able to see feedback themselves. Second of all leaders need a reason to sit down and have a conversation in the weekly Property Management meeting and the one-on-one meetings with their team about the individual performance and that’s really a result of, you know, the standard and the actual measurement of that standard.
Brad: Yes very good. So, give them their own ability to measure themselves and get their own instant feedback, but then as a leader use that Property Management meeting once a week maybe a monthly, fortnightly, I’m not too sure, or one-on-one meeting with your team to have more private feedback. It sounds like a really good recipe.
Nathan: Well it drives high-performance when you drive high performance what we’re seeing is profits increasing, growth for business increasing, the stickiness of the staff increasing, and it ticks every box doesn’t it?
Brad: Well how does the feedback loop; setting those standards and benchmarks, how does that determine or affect profit and growth in the business?
Nathan: Absolutely so with the turnover of staff comes a massive cost to a Rent Rolls bottom line and it comes in a cost obviously just with the resources devoted to recruitment, the training of that person, the more sticky the staff the longer-term team you have, the more efficient they are at what they do. So, when people leave, you lose that efficiency in the business as well. So, it really does affect your profitability in a very large way by not having long term engaged team members.
Brad: Not to mention there’s the “hairdresser syndrome” in the Real Estate Property Management space. Can you tell us a little bit more about that?
Nathan: Yes absolutely. So, if your business is not structured properly and by not structured properly what I mean is that it’s a people centric business versus brand centric. So, if your landlords are attracted to one or two people in your business and not your brand, if someone leaves it’s just like a hairdresser moving salons and what they do is they unplug at the salon A and they plug back in at salon B, their client base follows them and within 10 minutes they’re up and running and we see that happen far too often in our industry with Property Management people leaving.
Brad: Very good. So, good performance measurement, some feedback is going to be vital with Rent Roll growth and we also as we start to look forward of course where we’re looking at an AI or robot ready industry, obviously those things are going to be very consistent, you know, in an AI nature that service delivery, those standards are going to be like a conveyor belt; quite consistent. Would you agree?
Nathan: Absolutely so what we’re going to have to do is measure the performance of our people and measure the performance of our robots.
Brad: Yes exactly, very good and thanks again Nathan for tuning in today and sharing some insights with us. In the next video we’re going to look at technology and take a good look at that and we’re going to work out and ask you some questions. It’ll make you think, is what you’re paying for the technology making you money and growth in your business? I’m Brad Miller thanks for tuning in to Rent Roll Insights.