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In a hot market where houses sell before they even list and the competition
for talent is intense, it can be a real challenge to recruit the experienced
staff you require to grow your agency and take advantage of the market
opportunity. Demand for its raw minerals among developing countries like India and China
had led to a sustained economic growth in Perth (Western Australia). As its
population of two million has grown, attracted by a strong employment market,
housing had tightened. Around two years ago, agencies were offering commission
discounts to acquire listings, and homes were sold before they were even
officially on the market.
Brett Wilkins, CEO and a co-owner of Coldwell Banker Pro Property in Central
Perth, thought his mid-size agency had all the right elements in place to take
advantage of the times: His office was in the right high-profile downtown
location. He'd cultivated connections for years among local developers and
builders. And he'd hired a good mix of agents and sales consultants. But Wilkins
couldn't grow his business as quickly as he wanted to because of excessive
competition in the labor market. Employers from many industries – not just real
estate – were competing for good people.
"Some of the larger real estate companies could offer rates we couldn't
match," recalls Rosemary O'Neill, business manager of the company. "We needed to
develop a more competitive compensation plans to motivate our consultants and to
attract top people to our company."
Adding to management's frustration, she explains, a change to Australian law
required paying a minimum wage to sales consultants of about $32,000 (AUD)
annually, adding to their overhead. Plus, several brand agencies were moving
into town and were actively recruiting their top producers.
At a crossroads and realizing change was needed, the agency turned to
CompensationMaster in early 2006 to give Coldwell Banker Pro the competitive
edge it needed to recruit and retain consultants who would make the business
more profitable.
Finding the Diamonds
Over a period of six months, Graham Crews, based in CompensationMaster's New
Zealand office, Brad Cocks in CompensationMaster's Australian office and Erick
Miller in its U.S. headquarters interviewed the division heads, agents and sales
consultants and also reviewed the agency's financial data. Because of the
distances involved, the interviews were held via teleconference.
CompensationMaster used findings from the interviews and its data analyses to
work with the company's management team in rethinking its business plan,
management structure and compensation package.
Through this process, the company redefined itself as a "boutique real estate
service" that would provide "personalized, hands-on expertise at the highest
level." Profit goals were set for the company's existing divisions and new
opportunities were identified and divisions set up to create new profit centers.
To better support the sales force, CompensationMaster recommended the
creation of a Sales Department that would be responsible for training new
recruits and supporting on-the-ground sales efforts.
In looking at the sales force, CompensationMaster identified several types of
consultants working for the company, ranging from new recruits to top producers.
Some worked in the office, while others worked from home. Each mode cost the
company a different amount and had to be subtracted from the profit they brought
in to determine actual cost.
The agency used this information to decide what type of consultants would
best meet its profit goals in moving forward. Says O'Neill: "Because of the
market we were in, we wanted consultants who were going to list and sell homes
quickly. It wasn't time to be top-heavy with rookies because by the time you
took them on and trained them, those properties would be gone.
"We wanted people with experience, and who were ambitious. We wanted people
with a burning ambition to earn money. As they would earn more, their
commissions could go up to 85%," she adds.
Recognizing the diversity and the need to attract heavy-hitters to the
agency, CompensationMaster worked with senior management to design six different
commission plans. The goal was to create simple plans that would enhance, rather
than threaten, profitability. Consultants would be allowed to choose the plan
that best suited their needs, and they would be able to earn more as they
produced and closed more business.
The plans ranged from providing high levels of support and structure intended
for new recruits, to high-commission options for more experienced consultants.
Explains O'Neill: "We developed a set of incremental plans, each with four or
five levels to achieve higher splits. In each plan, the consultants paid their
share of expenses, so the company would always make its profit regardless of how
many transactions they closed.
CompensationMaster consulted with the company on how to best introduce the
plans to the agency's 10 consultants. Wilkins personally handled the transition,
selling each consultant on the change and how it would benefit both them and the
agency in the long run. "Some consultants were pleased, others were skeptical,"
Wilkins recalls. Those who didn't agree or understand the plan left, including
the sales manager, but most stayed, he reports.
The new and flexible compensation plans had the desired effect. "In just the
first few months, we noticed a shift in our recruiting. We quickly had the
advantage in attracting and retaining the consultants we wanted," O'Neill says.
There was one young lady the agency had been chasing for over two years. "We
approached her again, showed her the plans, and she came across," she adds.
The agency continues to grow and currently has about 20 sales consultants.
Perth's housing market, however, is softening. Properties are staying on the
market longer, an average of six to eight weeks. However, with the retuning of
their business and compensation plan, the agency has the resiliency to weather a
slower market and still offer top-notch support to its consultants. "We're no
longer pulling numbers out of the air. Everything is down in black and white, so
they know what to expect from us and what we expect in return. It's a win-win
scenario that's proven to us over and over again to be a great recruitment and
retention tool for our business," says O'Neill.
"We start every month knowing we'll make a profit….our competitors can't say
that and (that difference) will make us stronger and more attractive to top
talent as time goes and the market normalizes."
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