Retention Strategies for Brokers
Retention Strategies for Brokers
Talk to brokers across the country and most will tell you they have a low washout rate—the rate at which new associates leave within the first year. But is that really the case? Anecdotal reports have estimated about 50 percent of new associates don’t make it to their first anniversary, and there’s agreement with that statistic among brokers—when they’re not talking about their own company. Whatever the magnitude of the washout rate, there are steps you can take to keep it from getting too high.
The money hurdle
Bar none, the biggest pitfall for new associates is that they don’t have enough savings to maintain themselves financially for as long as it takes to build their business, say brokers.
One way to address this is to affiliate people right out of high school or college who are living with their parents and have few expenses. Or try affiliating retired teachers or county employees. Retirees from the public sector typically have a pension that can keep them financially afloat while they build their business, says Scott A. Bloom, a salesperson and mentor to new associates at Coldwell Banker Residential Real Estate Inc. in Coral Gables, Fla.
“In real estate, you can’t appear to be hungry,” says Bloom, and that’s something new graduates and retired people are positioned to avoid.
Once you affiliate new recruits, let them know upfront what it takes to get established and then give them the tools to get them through that first year. That means a frank discussion of money matters and plenty of training. At RealtySouth, a large regional brokerage based in Birmingham, Ala., new associates must attend extensive training once they affiliate with the company. Regional Vice President Jim Dye, CRB, says they typically spend their first month in class.
Planning and prospecting
Another big first-year hurdle is drift, the lack of steady progress toward a sales goal.
To address this, give new recruits challenging but achievable prospecting goals and hold them accountable for meeting them. “Associates fail because they simply don’t prospect,” says Rick Murry, CRB, GRI, regional sales manager of Shorewest, REALTORS®, and sales director of the company’s Brookfield/Waukesha, Wis., office.
A reluctance to prospect may stem from not understanding its importance, wanting to avoid rejection, or preferring to work on the sexier parts of the business like deal making, say brokers.
Requiring associates to craft and maintain a business plan can be a key to keeping them in the hunt for customers. “Right from the get-go, we establish daily contact goals,” says Bob Welsh, branch broker at Prudential Utah Real Estate in Midvale.
Accountability in meeting goals is as essential as the goals themselves. “I touch base with associates-in-training every day about their daily goals,” says Welsh. “I’m not as concerned with how many listings or sales they had this month as I am with, ‘Have you met your goal today?’ I try to know that number for each associate because it’s very powerful as a manager to go up to an associate and say, ‘Have you talked to your 10 people today?’”
Stay alert to trouble signs
You’ve told them about money issues they can expect their first year. You’ve given them training and helped them set prospecting goals. And you’re holding them to their plan. And yet something’s not clicking.
Be aware when new associates are struggling. Aside from the obvious—they’re not making money—Welsh looks for signs that associates’ enthusiasm and involvement are waning. “You don’t see them in the office as much, and when they’re in, they don’t have a game plan for the day,” says Welsh.
It’s important to catch trouble early, before associates’ enthusiasm for the industry is irreparably harmed by the slow pace of success. “If I see associates who are obviously trying, whose motors are running, then they might just need a tune-up,” says Dye. “In those cases, I’ve had more patience and have given them more time.”
A helpful strategy for brokers in these instances is to assume the perspective of a business counselor and probe for areas of improvement. “Are you not talking to enough people?” Welsh asks his recruits. “Are you not getting enough appointments? Are you not converting enough appointments? What part of the process is breaking down?”
Analyze performance data
Before you cut nonperforming associates from your sales force, observe their work firsthand, says Bernice Ross, CEO of Realestatecoach.com, a training and coaching company in Austin, Texas. “Go out in the field with them or have an experienced associate go out with them to see what they’re doing,” she says. “Or have them do a sample listing presentation in front of you.”
Once you know where they’re going wrong, Ross suggests putting them on a “three-month up-and-out program. You say, ‘I can see you’re struggling. I’d like to meet with you once a week for the next 12 weeks. We’re going to outline what you’re going to do each week so that we can get you where you need to be.’ By the end of the 12 weeks, either they’ll decide they don’t want to be there or you’ll have created a situation in which they can win.”
When you know associates won’t succeed, how do you let them down easy? “I’m getting better at that,” says Murry, “getting better at recognizing that the sooner the person moves on, the better for both of us.”
In fact, Murry says, “most people know. Often, people come to me with the idea themselves. It’s a face-saving thing. They say, ‘I’ve come to the conclusion this just isn’t for me.’ I was on the verge of telling them the same thing, but I appreciate that they’ve come to me.”
Pam Bessette, GRI, co-owner of All Florida Realty Services Inc. in Port St. Lucie, Fla., tries to prepare associates when she meets with them each week so that when an associate’s production becomes an issue, it’s less surprising. “Then we make it a mutual decision. It’s not, ‘You’re not making enough money; you’ve got to go.’ Instead, we talk about how this business is supposed to be putting food on the table and it’s not. Maybe they’ll do better at something else, and they’ll be happier. And we encourage them to do business on a referral basis.”
“Help associates find what’s best for them,” says Dye. “Offer alternatives, like going back to class or doing a coaching program. If that doesn’t work, show them that they’re spending money, but to what end? Then it’s not about you, it’s about what’s in their best interest.”
Once in a while, associates just won’t let go. “Sometimes you have associates who don’t want to leave, and you have to tell them, ‘You need another broker because you’re not succeeding here the way I think you can. Maybe somebody else can help you achieve what I think you’re capable of,’” says Dye. “You’re firing yourself.”
By making that parting the last step in a process that includes preparation and training, goal setting, and accountability, you’ll ensure that, even in a climate of rapid entry into the business, your company’s washout rate remains low.
Avoid exit conflicts
There are a few steps you can take to minimize the potential for legal conflict should an unhappy sales associate file a lawsuit upon departure.
Most brokers have independent contractor agreements with their associates, so be sure to check—and follow—the terms in that agreement. “If there are obligations in your agreement, such as who receives compensation for pending sales, you’ve got to follow the agreement,” says Ralph Holmen, associate general counsel at the NATIONAL ASSOCIATION OF REALTORS®.
If you feel your standard agreement isn’t clear or needs strengthening, don’t hesitate to make changes. “Think about the issues or questions raised when an associate leaves and how you’d like to have those matters resolved in the future,” Holmen says, and revise the agreement accordingly. For example, be sure to address what happens to departing associates’ active listings.
Also, be clear how your state law applies. Even though most associates are independent contractors, they might still fall within the scope of some states’ employment antidiscrimination laws. Be sure you have a record of a legal reason for terminations, such as lack of production, says Holmen, and that there’s no basis for associates to claim they were illegally terminated because of such factors as gender or race.
The benefits of free mentoring
When Coldwell Banker Residential Real Estate Inc. introduced a coaching program for its brokers two years ago, an associate in its Coral Gables, Fla., office, Scott A. Bloom, asked if he could take it a step further.
Bloom acts as a mentor and coach to all new associates, an average of two to five each month, for no charge to the associates. Bloom is paid out of the company portion of new associates’ first three commissions.
“In the past we would take the mentor’s share out of both the associate’s and company’s dollar, so associates were hesitant to ask for advice because it was money out of their pocket,” says Gus Rubio, senior vice president and manager of the company’s 19 offices in Dade County, Fla. “Now, why wouldn’t associates use Scott’s expertise? It doesn’t cost them anything.”
Bloom also gets a portion of the company’s take on all rentals that associates fill before their third sale closes, in addition to a bonus based on company sales, among other things. “It’s not a get-rich-quick job,” says Bloom, who still sells as well as mentoring. “It’s about $1,000 per month. But it’s nice to train people and see them become successful.”
Bloom’s guidance seems to be sound. Of the 13 Dade County Coldwell Banker Rookies of the Year last year (new associates who earned $50,000 in closed gross commission income during first 12 months with the company), four were associates Bloom mentored.
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