Running a business is a complex undertaking. A successful business has so many moving parts that all have to be kept operating in sync that it's not surprizing that sometimes they don't work.
It's also not surprizing that often it is the "squeaky wheel" that gets all the attention and business owners feel like they are not getting time to think about some of the aspects of the business that lead to stability and growth.
All too frequently the demands of daily operations result in the control room of the business remains vacant and even becomes derelict.
This discussion and analysis of your particular situation will guide you through an explanation of what a business requires to run it and the categories that those heading Real Estate Agencies fall into.
Not Leadership Training (yet)
This is not a course on leadership although it may lead you to understand that you could benefit from some investigation, training and development around your particular leadership attributes, skills and application.
Hardly any business leaders have undertaken any formal education on the aspect of leadership and yet most will tell you that one of the most important parts of their business is the “Culture” of the business, and this is largely related to the leadership present in the organisation.
While there are a number of different Leadership styles, what we are analysing here the functional positions that the Principal of an Agency may be operating in.
After many years of consulting and working with hundreds of businesses we have analysed the types of people and the way they operate across the businesses we have interacted with.
The result is that we shall discuss 3 types role that Real Estate Principals fall into.
The idea is that if you understand which role you are in, you will be better positioned to evaluate how the other required roles are being fulfilled ( and if they are at all). Then you will be in a better position to design and put in place a structure that will lead and drive your business in the way you want.
Definition of the Roles
The three roles we shall call:
- The Chairman
- The CEO (Chief Executive Officer) and
- The Ace Sales Agent
Defining the roles.
A chairman is in a role where there is an advisory and senior capacity. A chairman may have a number of business interests or other interests outside the Real Estate Business. They may not be present in the office for much of the time.
While their focus is more about the results and strategic level thinking the chairman is less likely to get into the daily running and structure and systems that function within the business.
The Chairman will usually rely on one or more people in the organisation to keep it running daily and report back to them or consult for advice.
The Chairman has usually got a large financial stake in the business, if not complete ownership, that gives them the ability and right to direct their time to their perception of the best use of it (or indeed, sometimes the way they just chose to spend their time.)
Running the day to day and delivering the strategic outcomes to the board or the owners is the domain of the CEO.
This is a hands-on role that includes the tripod of components;
- Thinking and strategy formulation
- Implementation of the strategy
- Running the operations to deliver the sought results
Successful delivery of the CEO role requires the ability to motivate and structure others because virtually every organisation in our industry finds results through harnessing the power of the abilities of a number of people in a team working in an integrated fashion.
The CEO is likely to be physically present in the business most of the time and have a detailed understanding of what most other roles in the business are doing and how well they are doing it.
The balance to be sought in this role most of the time is that between getting bogged down in sorting out urgent and important trivial items and being able to devote dedicated time to rise to formulate strategy and direction.
Ace Sales Agent
Many agency principals became so because they were extremely good sales agents. So good in fact, that they knew they could sell enough to make their own business work.
So they started one, or took the opportunity to take one over.
Invariably their background has not been through the formal training of management, or coming from structured corporate backgrounds, or even having an entrepreneurial spirit.
But they CAN do deals! That is often what they love. The chase, the success, the pressure and the accolades.
All the duties and complications that come with owning a business can be frustrating for people in this role and the consequences are that they can be running a business that is less efficient than it could be, but it survives because they are contributing a large amount of income.
These people have short attention spans for aspects of the business that are not directly related to deals, and get frustrated with things like sorting out personnel issues for example.
Typically there is not enough time in the week to do all three of these roles. That is why the control room is vacant and why we are prompting you to consider where you fit in these definitions.
Elements of the Roles
Let's now take a look at what happens within each of these roles. How their time might get used and what they apply themselves to,
While reading this, consider which one you identify with in your recent activities.
Deliverables and KPI’s of the Roles
|Chairman Activities ||CEO Activities ||Ace Sales Agent Activities|
- Not always in the office but does attend regularly
- Has other interests as well as the real estate agency ( these could be personal as well as business)
- Has ownership in the business – often significant or all the ownership
- Fully Understands that the "Buck stops here"
- Ensures the sales team delivers revenue to budget
- Ensures the rent roll grows at the agreed rate
- Ensures all statutory compliance is maintained
- Ensures that all services to clients are delivered to contract – Eg property Management to Managing Agency Agreement with appropriate standards of service.
- Hire Train Remove staff
- Set pay and commission rates
- Resolve team issues
- Ensure adequate qualifications and compliance by all staff
- Control all financial aspects
- Co-ordinate all meetings and communication systems in the business
- Deals with all the daily operational issues of the business
- More List
- More Sell
- Input to improvement of the sales material – Listing kits and site signs etc.
- Input to the marketing methods – DL flyers, Social media, company branding etc.
- Mentor to some sales Agents
- Active in sales meetings
- Instrumental in setting sales commission structures
- Input to catchment areas
- Understands the cashflow reliance of the Agency rests predominantly on his performance
- Prefers others to run the business and do all compliance and production work
- Lead sales team by example
- Capitalise on the name above the door – particularly in an independent agency that carries the Principals family name
- Exploit the referral base built up over years and the networks
Each role has a different purpose and therefore each has its own KPI’s and deliverables.
Here are examples of what each role should be responsible to deliver.
|Chairman KPI’s||CEO KPI’s||Ace Sales Agent KPI’s |
- Ensure the business maintains probity and operates legally.
- Reports to the shareholders on the results of the Agency
- Ensures the CEO delivers the operating results agreed and budgeted.
- Ensures key executives are operating in the scope of their responsibility and meeting their KPI’s.
- Provides support to the CEO in strategy and planning to enable a clear achievable plan and method to deliver the agreed outcomes – both financial and tactical.
- Deliver the Financial results per agreed budget
- Deliver the agreed growth in the rent roll
- Maintain a full competent team according to the Agency Organisation chart
- Implement all the elements of the Business Plan
- Maintain the culture of the business
- Ensure smooth daily operations
- Deliver Gross Commission income to the Agency of $xxx (minimum $500K)
- Maintain a database using the Agency software.
- Participate in Sales Meetings
- Maintain the culture of the business
- Mentor newer Sales Agents when directed to
- Have input to Marketing and sales material development
Which are you now?
It may be helpful to look once again at the lists above and tick off the duties that currently rest with you
Which do you want to be?
In the Ultimate Agency that we are building – where do you want to be?
What are you good at?
Most people enjoy playing to their strengths. The analysis above may show that you are working in one role but you feel that your skills may be better used in another way that you would enjoy more. For example, you may know you are an amazing sales agent and that is what you love to do, but at the moment you are dragged into the daily running of the business because there is nobody else to do that.
What is missing?
Are the three distinct roles being properly covered in your organisation?
The contentious one here is the CEO role.
Not all businesses need a chairman.
Some Agencies have a sales team that is structured to provide enough revenue without heavy reliance on the principal as an Ace Sales Agent.
But an Agency cannot evolve quickly towards the vision of the principal if it does not have someone actively implementing the changes required or driving the growth to get the business to transform into the ultimate agency.
Actions from the analysis
Reading this page is useless unless something changes as a result of your new knowledge and thinking.
There will likely only be a few actions emerging but they will be significant.
Write your list now (and integrate it into your Current year goals on the Ultimate Agency List)
What you should emerge from this discussion with:
Here are a few example scenarios with actions:
I am held back from earning a large amount for the business as an excellent Sales Agent because I spend my days sorting out administration (and I LOVE sales)
- Calculate how much extra could be brought in to the business if I devoted all my time to sales
- Determine if this is more than enough to pay a very competent CEO for the business ( probably the CEO would need a salary of $120k plus)
- If yes – set the time to hire the CEO
- Commence searching for the CEO
- Create the elements of philosophy and culture that the CEO will be trained in or possess.
I want to stay as Chairman with flexibility to do things outside the business but there is no clear CEO driving improvement in the business.
- Calculate if the business can support the salary of a CEO ( $120k pa +)
- If yes – commence the search
- If no – Determine what revenue producing moves need to be actionmed in order that the CEO can be paid for – such as get another sales agent
I have no cashflow to make any moves
- Work with the incremental opportunities – eg. If YOU called your landlords with a message about it possibly being an opportune time for them to consider selling.
- Stop giving the leads that come from the rent roll to the sales team and you sell them for a few months to keep all the commission and put it towards financing this solution.
- A clear understanding of the three Roles
- Clarity on which role you are in now and where you want to be
- The actions to put that structure in place