Insights

I am often asked the above question by estate agents who seem to think that choosing the right pay scheme for their staff will automatically result in increased performance and a huge uplift in revenue.

These agents are also likely to be those seeking the Holy Grail of a canvassing letter that will have clients falling over themselves to give them their business based on a magical single side of A4 or glossy postcard landing on their doorstep!

My answer to the commission question often disappoints as I simply don't believe that pay schemes in isolation will manage performance, good, bad or indifferent. Any more than sticking a few leaflets through doors will be a guarantee of marketing success.

People need managing, motivating, directing and challenging.

Incentivise and reward of course but remuneration is always a poor second to how somebody feels about working for you, whether they feel recognised, whether their career and personal needs are being met by what you have to offer.

After all, it is not always the commission paid staff in a business who are the most committed or even the most successful.

Maslow's hierarchy of needs stated that people need physiological and safety needs first. Put simply they need to survive, they need security, to be able to feed themselves, live somewhere and clothe themselves.

Then come social and self-esteem needs. Interaction with others, friendship, love, together with recognition, respect and status.

Finally comes self actualisation. The fulfilment of personal potential, growth and success.

A good pay scheme will provide a combination of incentive and reward whether on a personal or team basis. It should also have some security built in. It is however how individuals are managed that gets the best out of them.

Pay schemes that reward the 'top performers' and punish 'weak performers' show no better outcomes than schemes where everyone shares in the team success.

I believe that people are far more motivated by success and recognition than money. It is crucial that managers encourage and recognise performance both good and weak. Everyone in a team knows who the good people are and, if poor performers are not managed, it will be the good performers who leave. Weak performers can, in many instances, be helped to become good performers.

Estate agency is a team game and, like a football team, they need to play as a team. A team of OK players will often beat a team of superstars by playing as a team rather than as individuals.

Of course, success should be rewarded and a business can pay more out of the top slice of income than the bottom slice. But beware, businesses shouldn't just keep loading incentive and reward on top of each other as very soon remuneration will be out of line with income.

What percentage of your turnover is paid out in remuneration? 40%, 50%, 60%, more? If it is at the higher end of these numbers than it is likely that your performance is not at a level commensurate with what you are paying to achieve it. This is likely to be a performance and management issue not a pay scheme one.

To conclude, remuneration schemes are clearly important but not in isolation. They should be looked at holistically as part of the business performance management approach.

Michael Day MBA FRICS FNAEA

Michael Day is the Managing Director of Integra Property Services and has forty years experience in the residential property industry (he says he started when he was three!).

Michael is a Fellow of the Royal Institution of Chartered Surveyors and National Association of Estate Agents and holds a Masters degree in business from Reading University.

Michael provides a range of business mentoring and consulting, sales, management and compliance training and marketing and social media support.

Michael is also a Director of traceWise a property owner data business and supplier of online ID checks for money laundering compliance.



Michael can be contacted on 01753 889287 or 07717 295369 by email at msd@integra-ps.com or via his website at www.integra-ps.com