I have been toying with the idea for a long bit of time. Then I ran across a report titled: A New Approach to Motivation Mediocre Agents . In reading through it the following quote caught my eye and instantly brought validity to my long-lasting thought about paying zero commissions.
Imagine you could construct a sales robot, programmed solely by the rules in any sales structure. How would it behave? It would steal deals off other sales people, sell customers campaigns they didn’t need, argue with its boss over its commission and back stab its colleagues.” Any of this sound familiar?
Pay Them Right and Treat Them Well
Take the game out of it. And, trust me it is a game. People get down right robot on each other all the time. If they call and I write a guest card and then you show them and they lease, it’s mine. Or, its half mine. Or if they call but show up when I am at lunch and you tour them, it’s yours. Or, any variation you can think of. Every office in America has an unwritten protocol with regard to how commissions get paid out.
Away With The Evil Apartment Leasing Commission
Let’s come up with a good and fair market rate [inclusive of assumed commissions] and be done. It takes the angst out of the picture and leaves everyone to focus on killing people with kindness and good service.
Any thoughts on the subject – would love to read them in the comment box below.
Your – ready to do away with the sacred cow apartment leasing commission – multifamily maniac,
M
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Agree Mike, it’s a silly and distracting dynamic in most Leasing Offices. We haven’t used commissions at Paragon for the last 8 years. And guess what? We still rent a ton of apartments and employ people who love to come to work and make a difference!
Justin
I have a question – did you adjust your base pay rate to capture the loss of potential?
Thanks. M
The simple solution would be to hire adults and tell them act like it.
If you set groundrules to what constitutes as lease, then you shouldn’t have a problem. It’s real simple, the first person to tour gets the credit. If they return and apply, it still goes to the first person who toured them. Everybody knows the rules, nobody stabs people in the back. Now if you wanted to up the pay and better the benefits, then I agree.
Ryan – thanks for dropping a thought.
It’s amazing – I’ve been at this for the better part of sixteen years and the infighting never seems to go away. No matter how clear the ground rules – the debate endures.
That said and to your point about pay, my thought is to look at historical averages and come up with a base rate adjustment that keeps the performers whole. Beyond the performers there are tons of other iterations to consider but at some point you phase commissions 100% out.
I’m open minded on this one under the premise of achieving 100% focus on the people that want to create relationships with us. The people that would live in our buildings and interact with us over a long bit of time. In my head – the motivation should not be a transaction commission – it should be head, heart, mind. In other words – again, to your point, pay people fair and their head, heart and mind will be into the creation of authentic relationships that people will rave about.
Thanks for taking the time – really appreciate it. Look forward to seeing more of your conversation and feedback –
M
Oh how I agree with you Mike! Determine what the job is worth, pay fair and do away with commissions! I much prefer to give bonuses–for the entire team–including the Maintenance staff, based on performance and meeting goals. I would get the team involved in setting the goals.
Bah! This isn’t a Walmart checkout line. Reward you better performers.
If I get 10 leases this month and you get 3 why should you share in my extra effort? Because you’re nice? Because you helped too?
How’s this sound. Do a better job setting appointments. This is life. You win some, you lose some. Don’t cater to the whiners that “didn’t get their fair share.” Reward the winners that may have missed one, but that makes them work harder for the next. That’s the team of people I want. One that understands if they scratch your back you’ll likely return the favor. And even if you don’t, they’ll keep striving to get that next lease. Don’t cater to the bottom feeders.
Sure, no commissions may work for some, but I’d rather have a little competitive spirit and debate than a bunch of order takers.
Mark
As always – thank you for taking time out of the busy schedule. Hope all is well for you and yours.
I can see this from both sides having spent a fair amount of time as a leasing consultant back in the 90’s and now driving business from a regional level. In my leasing experience, more times than not, we worked it out amongst ourselves. And, the wheat separated from the chaff pretty quickly. That is detractors were coached up/out or they just left.
In the same respect, I still have this underlying angst to shift gears and go with a higher base rate – no commission – everyone for the customer all the time model. No commissions to mean – no pools, no kickers, no one offs.
I do think that global goals and rewards are still in order. However, I think those rewards should come in the way of cool experiences, i.e., a day at the go-kart track, speed boats on the river, shopping spree at the mall, Pinterest parties, a day off, bowling parties, picnics, etc.. in lieu of cash. In my experience those are the things that people get pumped about. Those are the things that get talked about when people are asked why they like working for the companies they work for.
All that being said, I am keeping an open mind on this one. And, before we make change, we are inviting feedback from our sales teams. Who knows – maybe they (as a whole) would like a new structure.
Have a smashing week – sir.
M
I think you have to have some type of measurable system for rewarding employees that excel beyond the norm. In sales, a monetary reward makes sense. I see your point about shifting to a service strategy/mentality though. As long as people feel they are being compensated fairly, and you also have an opportunity to consistently reward individuals for their extra effort I think it could work. My fear is complacency. Especially with the scale of your portfolio, measuring people’s effort is a must. If you don’t have those checks and balances (like a commission structure can allow you), I fear some individuals will slip through the cracks and open up other issues.
There will always be issues with personnel. I’d rather have them fighting over commissions than fighting over other performance related tasks that indicate their work ethic.
Hey Mike,
Spot on, Edward Deming preached to Toyota (25) years ago to drop bonuses and commissions, they just do not promote a cohesive unit. We only tried leasing commissions for a very brief time at Urbane and quickly abandoned them for the exact reasons you state.
On a separate, but related matter why are the leasing folks the lowest paid in the lot? Perhaps that is one of many reasons that this position becomes a Churn and Burn, because the other thing that happens when you are on the lowest rung of the ladder everyone, (insert property managers) push lots of undesirable tasks upon you.
Maybe we have this chain of command thing confused, and at a minimum each position should be less lopsided.
Hi E –
Thank you for chiming in on this one.
I think it is the difference between a sales driven organization and a good but status quo organization. The model is a bit marred in the sense that the biggest producers of revenue are the least compensated. On that note – let me stress that I am not discounting the efforts of the team. I would agree that if it were not for the service team completing tickets in a timely manner – there would be more apartments to turn. If it were not for excellent turns – there would less closing and so on and so forth. Nevertheless – I think the comp model could be better.
M
When we had commissions, I heard the.expression “your people” much to often!!! Even after the move in process, when they were now considered tenants. I find employees less likely to go out of their way for someoneelse’s client. Just prefer a pool type bonus system where everyone works for the common good.
Hi there Laf7744!
Thank you for taking the time to chime in here. Appreciate it.
Your points are right on and well taken.
I am suggesting something a little more aggressive in that I would be doing away with bonuses all together – no pool, no extras, no cream, no crop. Just service the customer. And, get paid accordingly. My offset would be to increase base wages as to offset the loss of commissions.
Mike,
Always love your creative thought and spurring the industry to do better.
OK, so I haven’t given a per lease leasing commission, well, EVER. And I never will. And I would say I have some of the BEST and most effective LEASING PROFESSIONALS in the industry!
Leasing commissions become an addiction. So in low leasing seasons, our team members who are addicted become demoralized. In effect, they get a pay decrease at the time of year most people spend more (like the holidays). The perceived pay cut can even increase staff turnover, because the grass IS always greener at the other property, right?
Periodically I have given a carrot/financial reward for achieving a bigger goal. No matter how clearly I think I’ve defined the “rules” for achieving it, it often ends up being quibbled over, and I think often becomes a dis-incentive rather than the big financial high-five I intend it to be.
Your Already Done with The Sacred Cow Business Friend,
Mary Gwyn
Good Morning Mary –
You are way too kind! Thank you for the remark.
You make some good points and ones that I will consider as I kick this around. Pay is one of those emotionally loaded subjects and one that can not be taken lightly. And, the more heads the better.
I really appreciate you taking the time and would love to see you back here again when you have time. Take care and have a compelling week.
M
I am torn. I have worked under the “group bonus” strategy as well as the individual commission process. I have seen both work well or burn. I prefer the group bonus model with lots of checks and balances to hold people accountable for performance. Team is hard to create when you have uber competetive individuals motivated by each $40!
I am pretty surprised at the concepts and comments here. I only hire ‘sales’ people who are money motivated. I have taken companies with below average salespeople to hiring super stars because we put commissions in place. The secret is to have a very set policy on how commissions are paid, that no bickering is allowed and hiring mature people who get it! Pretty simple really. The commission is split among all who handle the client. I encourage a team effort…so if I get ‘part of yours, you eventually get part of mine.’ We place renewal bonuses in a kitty and the entire team split, including service department. This industry is notorious for paying the leasing associates the poorest rates. These are the team members who are the first impression of the property and take responsibility for selling and marketing a multi million dollar asset. As a professional sales person myself, I want to be part of a team that is rewarded based on ‘sales.’ Just my opinion…which has been working for MANY years 😉
I have worked under this system and it is great. We leased like crazy because we still had to perform and produce like any other job. This allows for a great atmosphere that translates into leases. The company often had leasing contests where we could earn extra money. It made working there so much fun. The other model brings out the selfishness in the most selfish and makes good people turn on each other more often than not. It often creates an working environment that cut throat. If I get 10 leases and my co-worker gets 3 could easily translate to me focusing more on leasing to the neglect of the residents. There is so much more involved other than leasing that benefits the property that has to get done. Usually the really good people will give up a lease to see that the property and the residents are also attended to which takes up valuable time. They are likely to get less leases than the selfish cut throat leaser but they are actually more valuable in the long run.