How to encourage Property management employees to stay with you for a long time.
The biggest challenge for Owners of property management companies is employee turnover.
Our goal will be to address this issue and make some suggestions that might help slow down your turnover.
The average employee turnover rate for property management and the real estate industry is around 33%, which is significantly higher than the national average for all industries. This rate is considerably higher than the national average for other industries, which is roughly 22–25%.
See appendix for age group distribution.
Why is the turnover so high?
According to according a 2022 study by the National Apartment Association**, the following factors affect employee turnover:
Burnout: Property management staff often face a high-stress workload with demanding hours and two bosses ( the property owner and the manager of the property management company).
Job demands: Employees manage tenant satisfaction, maintenance issues, and financial investments simultaneously, leading to stress.
Career path: A lack of perceived opportunities for growth is a common reason employees give for leaving.
Compensation: Salaries and benefits in the industry often struggle to keep up with the demands of the job.
To identify your employee turnover you need to calculate your annual company turnover.
How to calculate your turnover numbers
To calculate employee turnover rate, use this formula: (Number of employees who left / Average number of employees during the period) x 100 = Turnover Rate (%). First, find the total number of employees who left (quit, retired, or were laid off) over a specific time, and divide it by the average number of employees you had during that same period. Multiply the result by 100 to express it as a percentage. (reference Google AI)
What can you do to reduce your annual employee turnover?
There are many things a leader can implement to extend employee longevity. We have listed some below. For example:
Job Structure and efficiency
Hire an HR Manager – who focuses on reducing turnover and is compensated for reducing your annual company employee turnover
Work Life balance - this feels squishy , but people need flexible working conditions to take kids to the doctor etc. They may need to work four days a week to manage their workload and not get overloaded.
Maybe they want to share a job:
The “twin” model: Both employees have identical duties and responsibilities, which they complete as a team.
The “islands” model: Responsibilities are split between the two employees based on their individual skills and strengths
Build strong departmental teams – encouraging all team members to help each other and work together.
Working by remote - This may help reduce the weekly commute hours and enable staff to reduce their stress.
Implement Automation – Reduce employee stress by automating as much of their tasks as possible. Make sure your team members have the best tools available to reflect corporate professionalism .
Compensation and benefits
Compensation – creating opportunities to not only hit key performance indicators but also receive monthly or quarterly incentives ( bonuses) to increase the base wages.
Robust benefits for health insurance, 401K matches and tuition reimbursement for example as well as a plan for time off that grows with increased employment tenure.
Career growth and Job development
Create a career path – tie promotions and annual wage increases to successfully job completion.
Train your key employees to be good managers. Make sure they know the employment regulations and laws in your industry and how to keep their staff happy. Create a budget line item so that they can take their teams to lunch and build Espirit de Corps.
Ensure that your department heads and key supervisors don’t have more that 10 to 12 direct reports – to facilitate communication
Quarterly (or better) communication with your direct reports - as in reviews and feedback track and set goals. Regularly scheduled one-on-one meetings help ensure employees feel heard and that their voice is valued
Setting a direction and employee recognition
Make sure that your team knows where you are taking the company. Employees appreciate leaders that know where they are going. Stage no less than monthly updates for your corporate team to show you are on track. If you are not on track, tell them and tell them what you are going to do about it and how they can help. I.E. asking clients and tenants for positive 5-star reviews; Better reporting to clients; Improve property cashflows.
Recognize and appreciate staff: Publicly celebrating team achievements and individual milestones, even with simple notes or gift cards, makes employees feel valued and boosts morale. Don’t forget about Maslow’s hierarchy of needs.
Build a strong team environment: Promoting teamwork through collaboration, celebrating successes, and having regular meetings helps employees feel connected and supported.
Develop marketing that recognizes your employees as professionals in the marketplace- Employees like being able to reflect that they work for the best company in their industry in the local marketplace.
Conclusion
Of course, all of this costs money and is not implementable on founding day, but as you look over these items, start with the easy to reach low hanging fruit and as you put these employee benefits into place. Remember your margins will increase as you attract quality clients. Clients crave quality staff and long-term professional relationships. They hate employee turnover. Long-term staff ensures task follow through at the property level, and generates a higher rate of cash return for the client.
As a business owner you cannot ignore the regular monthly cycle that increases employee stress, the collection of rents and reporting cycle, in addition to the challenge of keeping the properties you manage fully rented.
It is in your best interest to implement all of the ideas you can, to reduce employee turnover because your business margins will also improve.
Appendix: Years of Tenure by Age Group
** (The Great Resignation Challenge, By Kent Elliott and Erika Daniel | June 14, 2022)
Clifford A. Hockley, CPM, CCIM, MBA
Cliff is a Certified Property Manager® (CPM) and a Certified Commercial Investment Member (CCIM). Cliff joined Bluestone and Hockley Real Estate Services 1986 and successfully grew and then merged with Criteria Properties in 2021 to establish Bluestone Real Estate Services.
Cliff is the managing member of a real estate consulting practice. He has successfully coached real estate investors and CEOs located throughout the United States since 2015. He has acted as a sounding board to help untangle knotty issues that need an experienced outside opinion. He guides leaders who find it is “lonely at the top” and need an experienced hand to help set a strategic direction, sort out operational problems and want to talk through challenging business decisions. Cliff Hockley Consulting, LLC. designed to help business owners and managers grow their business and improve their bottom line.
Cliff holds an MBA from Willamette University and a BS in Political Science from Claremont McKenna College. He is a frequent contributor to industry newsletters and served as adjunct professor at Portland State University, where he taught real estate related topics.
Cliff is the author of two books 21 Fables and Successful Real Estate Investing; Invest Wisely Avoid Costly Mistakes and Make Money, books that helps investors navigate the rough shoals of real estate ownership. He can be reached at 503-267-1909, Cliffhockley@outlook.com.
