Creating a Successful Performance-based Company

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By Marylyn B. Schwartz

RISMEDIA, Nov. 19, 2007-Across the country, real estate companies large and small are finding themselves challenged with dwindling profitability margins, low productivity per agent and recruiting challenges. Whenever and wherever there are sweeping trends that challenge the norms or affect stability, there are opportunities for corporate executives to revisit and revamp standing policies and procedures.

One does not need a Harvard MBA to recognize an incontrovertible truth: what we are doing relative to generating profits within the real estate industry is not working as effectively as it must to ensure industry continuance.

Enterprising broker/owners, who were willing to take a hard look at what was and was not working, have made and are making some tough decisions relative to agent’s compensation.

Creating a successful performance-based company is difficult to achieve but worth whatever sacrifices are encountered along the way according to Ralph Ragetté, Ragetté Realtors®, Bronxville, New York. After twenty-five years of running a traditional real estate company, Ralph determined that his personality and goals did not fit well into the customary profile of a traditional company.

MBS: “When you say that your personality is out of sync with the traditional company model, what is that model and how are you diverging?”

RR: “Real estate is not unlike politics. There is a lot of handshaking, flattery, tap dancing and biting of one’s tongue necessary to stay in the race. At this stage of my life and career, what I want is to work in a business environment where people behave like business professionals and where candor, self-respect and a true desire to achieve goals is the norm.”

MBS: “At one time your company was part of a franchise. Over the last couple of years you made a decision and became an independent. For any company, that would require a substantial adjustment. What was the primary reason for that change of business direction?”

RR: “Around 2004 to early 2005, I began to see the handwriting on the wall. With agent productivity lagging and the costs of running a real estate business rising daily, it was difficult to justify the added costs associated with franchise fees. It seemed clear to me that what was needed was more effective recruiting geared to attract people able to run successful businesses and willing to invest the time, resources and effort necessary to do so. When a company is comprised of such individuals then the performance, activities and transactions can be predicted, measured and counted upon. The roller-coaster performance of most agents makes business planning impossible. The only thing that could be planned on was not being able to plan and predict revenue and ROI. That is no way to run a business.”

MBS: “While minimum standards are the way to ensure productivity meets the cost of running the business, implementing and enforcing those standards is daunting for many broker/owners. What are your suggestions for creating and ensuring standards are met?”

RR: “You are quite right. You can’t just create standards and then foist them haphazardly on the team. That would probably result in a mass walk out. Yet, without production standards, you are on you way out anyway. It is a matter of balancing the standards with training opportunities, coaching/mentoring and accountability. The kind of sales professional any broker would covet is the kind of professional who welcomes standards and will only work where people are success driven and not whining experts. One thing I can say without hesitation. The days of being given leads just because you’re in the office or show up for a meeting are gone. Generating convertible leads is very costly. They cannot be lost in the hands of unskilled, unmotivated agents. Leads are earned. This is not retail. You don’t get to work with the customer just because it is your shift.”

MBS: “What other initiatives did you institute to grow your business?

RR: “Every agent received a policies and procedures letter. I offered a menu of commission splits, and the agent could choose the split that best suited his/her business model. I decided that I could not afford to compete for the best agents if I was not willing to be competitive on all levels. All agents producing up to speed or not were given the newly decided upon minimum standards. If he/she decided to enter into a referral program rather than increase productivity, they were encouraged to do so. The only way to measure productivity and to do so with complete fairness is to keep score on transactions rather than dollar volume. Transaction counting is the great equalizer of agent productivity. We reward success at our company and are dedicated to excellence at all levels. ”

MBS: “What are your biggest complaints relative to real estate today?”

RR: “We lack sufficient integrity to assure the public that they are receiving the service they deserve. There is simply not enough training required to get a license and to renew it. During my years in real estate, I have held positions of responsibility at many levels including serving as the President of the Board of Realtors®. I’ve served on the Ethics Committee and have seen deterioration within an industry I care for deeply. We are either part of the problem or the solution. Every person who calls themselves a Realtor® has the opportunity of bettering our collective reputation in the eyes and minds of those we serve. We have to do so now before we find ourselves replaced by computer facsimiles of ourselves. ”

MBS: “I’m sure I speak for all of us who value the lives of our fellow Realtors® when I say thank you for your insights and your willingness to do what so many others have refused to do; raise the bar!”

Marylyn B. Schwartz, CSP, is an expert in real estate and corporate sales training/management and team development. She is president of Teamweavers and a trainer for Leader’s Choice©.

For more information, visit www.marylynbschwartz.com, or e-mail: Teamweaver@aol.com.

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