Incentives to Inspire Commercial Real Estate Professionals Go Beyond Money.
Commercial real estate brokers at IPC Commercial Real Estate in La Jolla, Calif., are motivated by fear of missing the boat — literally. Last year, top brokers in this office and their spouses were treated to an eight-day cruise through the British West Indies, Tobago, and Martinique, says Robert Vallera Jr., CCIM, the company's senior vice president.
It's a yearly event at IPC, which is headed by Jay Diskin, CCIM, president. In 1999, they went to Kauai, Hawaii, and this year they will be lounging on the beaches of the Yucatan Peninsula, near Cozumel, Mexico.
The trips' purposes are multifold, Vallera says. “Most obviously, it's a carrot to get things done today, to make the calls and put the points up on the board. And, we want to join our associates on the trip.”
Beyond that, “The trip rewards spouses and significant others for putting up with the brokers' work hours that can sometimes run well into the evenings,” he says. The social aspect “helps to strengthen relationships within the office and foster teamwork. It also provides a break to recharge the batteries and gain some perspective.”
Determining what motivates members of a company to push a little harder or work a little longer is one of the more difficult jobs that CEOs, presidents, and managers face. While the human resources world is full of advice for attracting good talent and boosting employee morale, figuring out what drives already hard-charging, well-compensated commercial real estate practitioners is more of a challenge.
Self-Motivated by Nature
Commercial real estate practitioners by nature are highly self-motivated. To succeed in this business, practitioners must keep those commission checks rolling in. But after achieving a certain sales level or completing an especially difficult deal, some brokers may be content to rest on their laurels — at what may be a particularly untimely moment for the company. How do managers rally solid performers to pitch in and complete one more deal or tackle time-intensive projects back to back?
In the near future, the challenge may become even greater. Compensation structures are changing, and the once-sacred commission check is disappearing in some commercial real estate offices. Companies report that, as property information becomes more widely available through online commercial databases and other sources, they rely less on broker-initiated transactions and more on adding value to deals as well as offering other services.
For example, Jones Lang LaSalle has paid salaries and bonuses for a number of years, because “most of our business is driven by long-term client relationships,” says Sam Foster, CCIM, director of the corporate advisory group in the company's Los Angeles office. “We all get a reasonable wage on a regular basis, but none of us know if we've had a really good year until the books are closed and net proceeds are distributed.”
Jones Lang LaSalle represents a change in culture, one that probably will spread, given the continuing challenge presented by the Internet and other industry changes. As this occurs, motivating commercial real estate professionals without the commission-check carrot may become a greater factor in a company's success.
Motivation, Retention, or Morale?
A big part of motivation is retention, something that increasingly is harder to achieve in a hot job-market mentality. Tales abound of employers offering everything from cars to cash bonuses to keep their well-trained workers happy. Why? Because the cost of constant hiring and training is a drain on any company's bottom line.
For example, training new property managers can cost between $10,000 and $30,000 per new hire, according to the National Multi Housing Council. Lost clients can add to this cost in a brokerage company, where personal relationships help to foster deals. When unhappy practitioners leave, clients sometimes follow.
Bosses sometimes confuse morale with motivation. There are numerous ways to boost morale — a company day at the ballpark, use of a company car, doughnuts at the staff meeting. These little perks make workers feel good about their company and may be good team builders. But because they are not tied directly to employee performance, occasional perks do little to motivate individuals to greater success, human resources experts say.
Managers and employers also sometimes misinterpret what works. For example, managers and workers were asked to rate what motivated good performance in a survey taken in the early 1990s. While workers rated appreciation for a job well done as their top motivator, managers ranked that eighth and gave first place to good salaries and job security.
Experts contend that competitive salaries and good benefits packages are not motivational tools. They help to attract talented workers, but most people expect these items to come with a job.
The Almighty Dollar
What does motivate commercial real estate practitioners? As the old saying goes, money talks, nobody walks. Although a number of human resources specialists decry the idea of monetary compensation as a motivator, commercial real estate practitioners see it differently.
“I disagree with the experts,” says Jackson E. Pierce, CCIM, a senior associate with Trammell Crow in Atlanta. “A pat on the back is nice, but it doesn't help to feed my family.” After a building Pierce worked on received a national award, his company gave him an unexpected bonus. “I know incentives are sometimes defined in advance of a project or goal, but it certainly gains loyalty and gratitude when you are not expecting it,” he says.
Steve Collins, CCIM, a consultant with NAI Finn & Associates in St. Louis, says that brokerage splits between the salesmen and brokers escalate as sales increase each year, “which helps keep us moving toward the next closing.”
In addition, James F. Finn, CCIM, president of Collins' company, reimburses staff for half the cost of all training and education events. He also sends practitioners to national meetings every year that offer networking opportunities, Collins says. “These may not seem like big deals, but I feel they help keep our firm well educated and knowledgeable about changes in our business. They also help us feel like a team.”
Human resources specialist Robert Hoffman agrees with Collins that providing opportunities for employees to learn new skills is one of the best ways to reward workers who already are strong performers. This happens in the high-technology industry, says Hoffman, who is CEO and founder of HRAdvice.com and writes columns for Inc.com, an online source of business information for entrepreneurs and small businesses.
“The turnover rate for technology positions is generally acknowledged to be almost twice as great as other professional positions. Surprisingly, most turnover is not a result of seeking higher wages, but the quest to learn something new,” he says.
He suggests offering practitioners the opportunity to improve their marketable skills, particularly in technology. For instance, a hard-working broker might relish the chance to hone Web marketing skills or develop a company's online property database. “People want to learn new things and be better at what they do,” Hoffman adds.
He also suggests varying assignments. “Many individuals express frustration in performing the same responsibilities over and over,” he says. For example, offering a multifamily leasing broker a chance to expand into office or retail leasing, or moving a trusted associate who's been a support person in leasing negotiations to the head the negotiating team are ways to provide new opportunities as well as learn something new.
Giving people more responsibility in team assignments also helps them explore new areas of leadership. “Providing opportunities to learn new technologies, methods, and accomplish new achievements is significant” when working with a “high-potential” staff, Hoffman adds.
Another way to reward strong players is to pair them with new associates. “Put them in a mentoring position,” Hoffman says. This not only allows them to pass on their experience and skills, but it also recognizes their status within the organization.
Mentoring dovetails with Hoffman's second suggestion for rewarding hard-working professionals — giving them star treatment. “Public recognition is a great motivator,” he says. “MVP awards, employee of the month — all these programs acknowledge a worker's potential in a public display. It's a status designation.”
Many local and state commercial real estate organizations have competitions for deal of the year, and affiliate companies often provide award programs for largest or most complicated deals, or most sales within a year's time. These provide an opportunity for peer recognition within one's market.
In-house awards programs also can be effective. Human resources studies have shown that, at all levels of employment, praise and recognition also build loyalty among employees. “Opportunity and recognition of accomplishments can prove to be a much more lucrative incentive than any financial considerations a company may offer,” Hoffman says.
A formal recognition program for honoring truly significant events takes on symbolic value over time, while a more spontaneous recognition — for example at a monthly sales meeting — catches employees in the act. It immediately reinforces and rewards desired behavior, such as good performance or solid teamwork.
But in both cases, the emphasis should be on performance, not the award. To be most effective, recognition should be given publicly, which has the added benefit of creating role models. It demonstrates for other workers what kind of behavior wins praise.
Experts say that recognition also should be presented in a context: Whether it's topping the year's sales goals early, hearing from an extremely satisfied client, or pulling off a multi-city deal, recognition should be tied to the company's overall goals.
Finding What Works
In the final analysis, motivation is a personal decision. While broker X may be moved by the thought of a bigger bonus that will put him into a higher-status automobile, broker Y instead might value the opportunity to take a sabbatical to finish his novel. Managers who truly value their commercial real estate professionals should ask what motivates them, how they would like to do their jobs differently, and what new challenges could be provided to keep them engaged.
In an industry that changes daily, commercial real estate companies always will add value to their own worth by investing in those that work for them. Offering solid workers a chance to increase their marketable skills, helping them learn new skills through career path planning, and recognizing the extra effort they put forth always will pay extra dividends in the form of a company ready to succeed in tomorrow's new marketplace.