How many retention programs do you have in place?

Early on in my career I worked for an organization with two strikingly different reputations. The first was an uncompromised attention to detail and quality. In the markets where we competed, we honestly felt we had no direct competition. Our product was superior from design to construction. The details were not always things the prospective resident would spot, but a seasoned multifamily professional would see them right away. The other reputation was a bit different. To put it lightly, it was not the easiest place to work. On-site associates were often in fear of an appearance by the owner or a property supervisor, unsure of what face they would see that day. Our starting pay was considerably higher than our competitor’s, but many in the industry looked at it as combat pay – you had to earn that to endure the uncertainty and stress. I learned very quickly how to, and most importantly how NOT to, treat my people.

Both of these reputations taught me great lessons that I still look on today. As I have gone on to consult with property management companies and build a few businesses of my own, I have never forgotten just how important it is to create a working environment that people seek out, a place where employees actually stay put – happy in their careers, sold on the collective mission and thinking like problem-solvers and solution providers rather than just people who have punched in and shown up.

In the recession, we have put much emphasis on the importance of a strong and effective resident retention plan. This is important, no question. But how much emphasis have you put on developing an EMPLOYEE retention plan? This may seem contradictory if you have been reading some of my earlier posts. In a post last month, entitled “Did you profit from this recession?” I asked if you had cut the dead weight, gotten rid of the people who aren’t team players or just don’t cut it. That is important, but so is showing the people who are making the grade, the ones impacting your profitability, that you want them to stick around!

I have seen property management companies with excellent training programs eventually train most of the good leasing consultants in a market area. How? They have put terrific emphasis on getting their leasing teams up to speed and well-poised for success, but then don’t follow that up by providing a pleasant and rewarding work experience. Our teams aren’t stupid. They know that if they have a good skill set and a great track record, they can take these skills across the street. A good initial training program is crucial for creating a quality associate, but the follow-up and a focus on work environment and quality of life is just as key.

This post was inspired by a topic discussion posted recently on Multifamily Insiders about compensation. The number of times I have come across a property manager running a $2 Million, $4 Million, $8 Million dollar asset and being paid a wage more in line with a toll-both worker has never failed to surprise me. Why would an owner of an asset like that put someone in that position who had no financial incentive to perform? If they only make a meager salary, with no bonus plan, commission structure or skin in the game, they won’t perform. They will care-take. Is that what you want? A property on auto-pilot? Not for me, thanks. I want as many people invested in the success of my assets as possible.

How much does training a new manager cost you? How much does constant turnover in the leasing staff eat away at your operating budget? If you have regularly pay overtime to the one employee who picks up the slack, wouldn’t it be more effective to put that person on a nice salary and bonus program, as both a thank-you and an insurance policy?

Is there an acceptable salary range? That is like asking how much a car costs. There are way too many factors to make it that simple. What is the condition of the asset? What is the market like? How big is it? How many people round out the team? But if you start the calculations by looking at the minimum wage step-up sheet sent out a few years ago, you have already missed the point. Don’t start with what you can get away with, compensate in a way that will make you less likely to make the calculation again 6 months from now.

Retention is crucial in any successful enterprise. I have often spoken about the challenges that BMW has given itself. BMW has the lowest repeat customer purchase ratio in the luxury car industry. Lexus has the highest. Are Lexus’s better than BMW’s? Totally depends on who you ask, but the automotive press tends to be much more impressed by the German company. Consumers? They heavily prefer the Japanese one. Why? Service. Lexus as an organization doesn’t want to sell a consumer one car. They want to sell them all of the cars they need for the rest of their days. This is a focus on retention. Talk to the service department and you’ll see the same philosophy. Lexus knows that service is enhanced if the team is constant, loyal and knowledgeable. As you plan your budget for the 2011 year, consider your approach to both retention goals. You will find that an investment in your people will be an exponential investment in your asset.

Christopher Higgins is The Apartment Guy, a professional speaker and owner of multifamily assets with 19 years of experience in the field. His latest session, entitled Flip the Switch: Transitioning from Recession to Recovery is now available for firms and associations.