The classic real estate business model asks each person to do everything. Agents must master dozens of skills. Managers must know those, plus management ones. The results are polarized: spectacular success amidst widespread failures, even at the same companies. Maybe the solution is to fix an organizational design flaw whose time has come.
Consider the truism: 10% of the agents do about 90% of the business. What does that say about the large portion of the industry who generate few or no outcomes, but still show up to work? Similarly, different managers in branches of the same company produce different results. Some meet their recruiting goals, others miss those marks but hit their profit goals. All have access to the same systems, tools and training.
We could rationalize: different markets, consumers, motivation levels, etc. But suppose for a moment the problem isn’t people. What if it’s the way the people have been organized?
Consider two key social developments in the last two centuries (yes, look at history). Since the mid-19th century, Western society has increasingly valued specialists. General practitioners in medicine, science, education, industry have disappeared. College graduates emerge with specific degrees. A vast array of single-focus technical institutes has emerged: hair design, cooking, computer engineering and lab technicians. We even ask little children are asked what they want to be when they grow up. Bobby wants to become a fireman, Sally an astronaut.
Hardly any child aspires to become someone who does a little bit of everything at varying levels of competence every day.
Which leads us to the second development: hyper-specialized business missions. Few companies try to do a little bit of everything any more, a la Sears. At one time the Ed Sullivan Show featured a variety of talents. Today, there’s a magazine for every peculiar specialty: Running, Walking, Jogging. Success means focus, segmentation, execution, consistency.
Specialization allowed Ford to produce hundreds, not dozens, of cars per month. Specialist teams design different parts of the same computer, then collaborate on the final product. Industry newcomers displace veterans using specialization: By deploying a single model plane throughout its fleet, Southwest slashed costs, time and resources for parts, training, and maintenance. It tackled the problem of scheduling and absenteeism, making flight attendants and pilots interchangeable. Some legacy airlines cycle through bankruptcy still trying to overcome the disadvantages of dissimilar planes, parts and personnel.
Adam Smith, Taylor, Marcus Buckingham have taught and re-taught this lesson for centuries. Successful companies divide the work, train and equip specialists, leverage individual talents, and manage the process. The key technology is properly applied talent, not the adoption of robots or social media.
What if we apply this to the real estate industry?
Traditional operating procedure has focused on recruiting and equipping agents as generalists. Each person is trained to be a duplicate “basket of skills” capable of doing every part of the sale. Rather than consolidate independent cottage workers into a work-divided factory, the real estate industry has opted to replicate the generalist model, building additional cottages (branches) around town, hoping that more generalists would equal more sales.
Moreover, the generalist skill basket is huge. To be successful, agents must master agency representation, prospecting skills, market analysis, pricing strategies, advertising, e-commerce, legal compliance, finance, negotiation tactics, staging skills, transaction management, accounting and relationship management responsibilities. It’s hardly surprising that so few people can manage them all to break the $100,000 income level. And the basket continues to grow.
Some industry specialization exists: Relocation specialists are the most common. Pseudo-specialization is more common: agents focusing on certain property types. Yet this isn’t operational specialization, since they must still possess proficiency in the rest of the generalist basket items.
The case may be worse for managers, many of whom come from the agent ranks. Not only are they expected to demonstrate proficiency within many elements of the sales basket, but they must also master a management basket. Operations, technology, budgeting, recruiting, conflict management, training and strategic planning require other talents, tools and resources.
So what’s the solution?
Move the boxes around on the company org chart. Start assigning people to tasks according to their individual talents, not street addresses. Find that manager who is a talented recruiter and let them recruit all day long, with no other responsibilities, for any branch that needs additional talent. Eliminate recruiting for everyone else with no talent for it. But figure out what they are good at, instead. Can they coach? Let them coach agents in any branch. Is there a great bean-counter amongst them? Assign him to manage the budget for multiple offices. Just don’t ask him to conduct an office meeting or strategic planning session. You get the idea.
Stop thinking of management as a location-based activity and start thinking of it as a company-based allocation of talent. Deploy human resources by proficiency, not street address. One person can coach hundreds of people; manage dozens of budgets or recruit as many new agents as needed each year if you let them stick to it. The pilot doesn’t serve the drinks. The quarterback doesn’t block. The surgeon doesn’t treat a cold.
Reorganizing the org chart of the real estate company is critical to the future. It can release hidden talent in your existing group, and create the structural conditions to attract the next generation of team-oriented, specialist Gen Y’ers. That’s not a contradiction in terms, either. Talent-based organizations improve motivation and morale, too: People don’t hesitate to do things they like to do. Smart companies make it possible for them to maximize what they can do well, and stop asking them to do things they cannot master.
Global business has been taking advantage of the specialist movement in social education and organization for decades. There’s a great opportunity awaiting real estate companies who make the shift from churning generalists to designing specialists (in managers and agents) to deliver the next generation of real estate services in the future.