The real estate industry is continually driven to do things better, strive for more and improve.
It’s one of the reasons I love working in the real estate industry so much.
But there’s one area which, in my mind, never seems to get enough attention – staff mix.
It is easy to focus on top line income and commission structure (they are both very important), but staff mix is a hidden driver of profitability in your business.
You need to be aware of your staff mix if you have different commission rates payable depending on performance.
We have all heard warnings about not having too many gorillas in the office.
They can bring significant market share and brand awareness, but often their strength and confidence build so much that they can (not always) start to hurt culture.
Don’t get me wrong, gorillas can be great for an office.
But when a business becomes too reliant on one or two big gorillas, it can undermine the business’s stability and the team’s camaraderie.
You also need some chimps and monkeys.
Gorillas are big, dominant individuals in the office. Often they are responsible for 20-30 per cent of the total office sales.
They probably have a few assistants running around after them, ensuring they are happy and helping them complete their tasks.
Often the percentage of profit you make on these guys is low, but the volume makes up for it when you look at profit by dollar contribution (but keep an eye on this because it can change the other way).
Some are known to exert their strength with force when they want something.
Other team members may whinge about them, but the principal may find it hard to have difficult conversations with them.
Chimps are hardworking team players – always focused on what is best for the group.
They still have ambition and one day may challenge the gorillas in the group.
These guys come into their own when the gorilla leaves and often one or two will step up in such an event.
Smart enough to know they still have a lot to learn, chimps are usually very good at taking on board feedback and thrive on quality training and development, especially from the principal of the office.
These guys are usually quite profitable but still need a minimum volume to make a reasonable dollar-profit contribution.
Chimps pay their share of the costs from just keeping the doors open, and when they perform, you see a strong contribution to the bottom line.
Sorry, but sometimes the monkeys are a little annoying – they steal your time, and it can take a long time to trust that they are team players heading in the same direction as the rest of the team.
They are very important to have around the place though. They often fill in the gaps and one day will grow into chimps.
If they perform, these can be the most profitable as a percentage, but while they are still on a retainer or salary, they are always at risk of slacking off and being distracted by the next shiny new thing.
Not all monkeys are in it for the long haul, but those that embrace the culture and the investment in their skills will be a great asset.
The perfect staff mix
I have seen it all, from the pyramid to the hourglass.
There is no one right structure, but the one I am always uncomfortable with is the upside-down pyramid.
When most of your team are gorillas on the top of the food chain earning big bucks, getting paid a higher average percentage of the commissions, you can end up at their beck and call forever.
Do you have a target staff mix?
First understand how much profit you make as a percentage and dollar value from each person.
Group them into three bands – those that do less than 5 per cent of the office sales, those that do between 5 and 10 per cent and those that do more than 10 per cent of the sales in the office.
If you wanted to grow profit, who do you want to make that extra sale?
The gorillas on the top commission rate, or the monkeys that earn the highest profitability percentage?
Don’t underestimate the importance of having some chimps and monkeys around the place who do one or two sales a month.
As long as they pay their way, they will be the future of your business.