Brokerage management will have to neutralize agent centricity, focus on customer experiences and install metrics-driven management practices.
As the industry continues through conference season, a number of evolving concepts have become increasingly clear. For those who have been tracking industry acceptance of change and adaptation, it would appear that a point of universal acceptance has finally been reached. The traditional brokerage business model is neither functional in today’s real estate industry and market environment nor appropriate in terms of profitability and return on investment.
With very few exceptions, the people and publications delivering this enlightenment have said that brokerage management will have to neutralize agent centricity, focus on customer experiences and install metrics-driven management practices. These practices must be surrounded and driven by standards, best practices, accountability and organizational transparency.
Bucking the Trend
It is no surprise that there are industry executives who are less than excited about this impending transition and the prospect of spending the last years of their careers engaged in a reengineering of their life’s work. They are reporting to company decision-makers that these moves will cause massive disruption within the agent panel. What is of even greater concern is that these announcements are, in many cases, not issued to assist top brokerage executives to anticipate danger ahead as much as to ward off the decision itself. It will allow these veteran and vested managers to skate to retirement. There is growing evidence that senior managers may be the ultimate impediment to brokerage change rather than the more traditional scapegoat, the agent.
Third Parties and Portals
A part of this evidence can be found in the migrations that agents have made over the past few years. Tens of thousands of agents have become subject to advanced (however subtle) management relationships with portals and third parties, such as Zillow. Consider the overall reality of the massive agent team movement. Finally, think about the impact of the industry’s growing coaching movement, such as the MAP program offered by Keller Williams.
All of these programs demonstrate that many agents, especially those who want to be among the now-famous 10 percent that do 90 percent of the deals want to create a new working environment. It is clear that, at the core of this new environment, is a rejection of the traditional agent’s “I-don’t-need-no-stinking-boss” attitude and an acceptance that the best option for today’s successful agent is a more synergistic and structured relationship. This certainly opens the door for more productive and collaborative working relationships between the contemporary agent and the progressive brokerage.
However, the subject of this comment is not the agent’s transitioning attitude, but rather, the fact that the most significant challenge to the brokerage’s attempts to transition to the new relationship may come from the management team and not the agent panel.
Loyalty Questioned?
Many long-time brokers will respond to this possibility with heartfelt annoyance and even anger, declaring that such is nonsense. “Why John and Judy have been with me for 25 years. I trust them implicitly. We have been through so much together.” While this assumed loyalty is possible, the situation still requires a closer review and measurement before the brokerage undertakes a significant transition of management style and operational format. Do not assume that long time-management staff will be the cornerstone of the leadership required to take the journey.
Those who feel they were responsible for that success must now face an uncertain future in the company of a Wall Street driven minion.
The recent experiences of clients within the industry and studies conducted outside the industry suggests that, while long years of management service does create a certain loyalty, it also results in the creation of management spheres of influence. They are better known as empires. Efforts to effect substantial change with respect to these spheres can unleash responses and counter campaigns that are both dangerous to firm stability and lethal to efforts to move the firm in new directions.
Firms engaged in management and operational transitions might give some thought to incorporating the following points into their process.
• Recognize that while traditional business models emphasize individual performance, many of the new business strategies place a high priority upon team environments and tactics. Individuals who have spent their careers getting rewards for managing individual performance are going to require training and motivation to become team managers and players.
• While many traditional models promote and encourage general practice as the key element, moving forward, firms will discover the necessity of specialization. They will seek to drive client collaboration by creating multi-specialty teams that can address the complex and sophisticated demands of real estate clients and customers. Most importantly, the revenues generated by specialty service teams are always higher than that made by the generalists. Obviously, managing this type of group will be challenging.
• The company’s commitment to any new programs must be readily and completely apparent from the beginning. While the value proposition of being positive is always important, it must be equally clear that there will be consequences in the event of failure.
• The commitment of top company management must also be clear from the beginning. This cannot be a cause-of-the-day situation. Long-time managers will be watching to see if this is just another flash in the pan. They will delay their attitudinal implementation in anticipation of top management failing to follow through.
• Collaboration will become a key dynamic on the brokerage landscape. Collaboration doesn’t just happen; it is a learned behavior.
• Brokerage management programs must integrate management and transactional technologies that can monitor, track and respond quickly to energies and directions that run counter to the new company direction. These systems must create near real-time reports that can be used to direct the team’s activities. These reports will be the foundation of the company’s new transparency.
• Management compensation must be tied to collaboration and team production.
• The new programs must be instituted evenly across the board. Demonstrating favoritism by allowing certain managers or departments to work outside the new program will quickly bring the whole program to a halt.
• There must be immediate and meaningful consequences for non-compliance. Counseling and corporal measures must be clear and concise from the beginning.
• The company must stay the course. Failure to follow through and demonstrate cohesiveness and commitment will create havoc on efforts to join subsequent movements. Such a mistake will also negatively impact the company’s external reputation.
It is obvious that the majority of firms, regardless of size and scope, will be either moving to capture, or avoid being captured, by the amazing opportunities available in the current industry environment. Not everyone will be excited about these opportunities. Indeed, there is no duty to be so. However, there is a moral, ethical, and in some cases, a legal duty to either join the movement or remove oneself from the game. As is always the case, it will be the broker’s responsibility to ensure that the team moving forward has done everything possible to ensure victory and success.
This article appeared in REAL Trends Newsletter and is being reprinted with permission of REAL Trends, Copyright 2015.