Matthew Ferrara, Philosopher
 

Managing Real Estate Talent

The classic real estate business model asks each person to do everything. must master dozens of skills. Managers must know those, plus 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 ’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.

  • Well said, most will agree, do what you’re good at and have others do things you’re not. At the end of the day, you’ll get more done, provide better service and ……..Surprise “MAKE MORE MONEY”.

    Like I’ve said for years, “stop trying to do it all, be it all”. Funny, how in this market, most of our clients this month have had amazing success, many closing more than 4 transactions each. Guess what, they are focused on sales, not transaction coordinating, we’ve got that covered for them.

  • Every time I’m tempted to expand my geographic area, I read something that reminds me why I shouldn’t. My team hears time and time again from our clients who find us online that they chose us based on the fact that we *are* focused on a smaller set of communities and know them in and out.

  • Deborahheffernan

    Hi Matt, You are so right. We have a team of 4 owner/managers who specialized in their core proficiencies. Our agents know whom to consult for their various needs and all of the managers love what they do.

  • Super! Glad to hear of more companies who are effectively implementing this model. It’s something more of our clients are trying every year…

  • Harris-peppe

    Super article Matt. I am going to send it onto our upper management…Thank you as always for sharing your wisdom. Hope all is well with you. Chip and i are slammed in Naples and need to come up with improved systems and streamline current systems…

    Have a GREAT day!

  • Thanks! All is well; if I can be of help improving your systems and processed, please let me know. Would be fun to work together!
    Matthew

  • Joni Albert

    Matt,
    This is so well written…and offers much thought especially as a manager trying to “do it all” in a very successful and productive office. I may read this a few more times and work with my coach on some implementations!

  • Thanks, Joni! Glad to help and if you need any ideas on implementing, let me know, as we are helping our clients in this area every day.

    Matthew

  • Great post Matthew. I am a big believer/fan of Marcus Buckingham and really agree with his “focus on your strengths and manage around your weaknesses” approach. I think if sales agents expect to succeed in today’s challenging market, they need to be able to make “business development” activities a strength. There’s just too many agents focusing on “business support” activities because they are easier and there is no rejection involved in them. The MLS is never going to tell you “no” and changing the font on a property flyer doesn’t require any objection handling techniques.

    I am excited that our company as created some e-Marketing postions that will assist the managers and agents with some of the advancing social media skills and needs to stay advanced so they can spend more time on those “business development” activities. In fact, many of those activities can be driven and deployed through e-Marketing strategies. This is a big movement to alleviate some of the burden of “knowing all things tech” from many of our managers and associates who are really strong at the other areas of the business.

    We’re really making an effort to “focus on our strengths and manage around our weaknesses.”

    See you in June.

    Sean

  • This is exactly what I mean when I say companies need to manage as a whole! And specialty dividing the work is critical to the management plan… and hopefully someday the agent plan too!

  • Thoughtful and thought provoking. Thanks.

  • Even the designations require that we still bring a chock-load of generalist skills: Buyer Specialist, Senior Specialist, Investor Specialist and so on. Interesting ideas for a paradigm shift, Matthew.

  • Well Said!

  • Thanks! Glad you enjoyed it!
    — Matthew

  •  Thanks for sharing such a wonderful article and I look forward to reading your article blog.
    privately selling your home

  • Thanks for your comment. The most common traits of high performing salespeople today are very easy to identify: Goal clarity, high achievement drive, emotional intelligence, and strong social skills. These combine with high ethical standards, a positive view of selling and a strong belief in their worthiness of success, to create their outcomes. Ironically, it has little to do with technology, tools, money or marketing, as people with little of those often succeed wildly, and more people with lots of those likewise fail consistently.
    In the future, the model needs to support these traits as much as it supports operational tools. Companies that understand that will produce winners and best results.

  • I do not believe I could have read a more timely, inspirational and pragmatic solution to what we are currently experiencing in this market and within our organization than this article! Matthew, you are truly amazing and the fact that you wrote this two years ago speaks volumes!

  • Thanks, Christan! Glad this article will help – would love to hear how you’re able to put any of the ideas to work!