KPIs: MORE THAN JUST A NUM­BER

KPIS MAY BE ES­SEN­TIAL for pro­duc­tiv­ity and growth, but Cathie Cramp­ton high­lights how set­ting tar­gets can ac­tu­ally help to in­fuse your team cul­ture with energy and pas­sion.

Elite Property Manager - - Contents - Cathie Cramp­ton

ANY SEA­SONED op­er­a­tor knows KPIs and the role they play in sup­port­ing and en­gen­der­ing a suc­cess­ful busi­ness. I would sug­gest that KPIs cre­ate more than that; they are also the fun­da­men­tal plat­form upon which we can all rest, re­lax and put up our feet. Set­ting KPIs can not only boost pro­duc­tiv­ity; they can cre­ate a cul­ture of energy and en­thu­si­asm among the staff.

Prop­erty man­age­ment is no dif­fer­ent to any other busi­ness. It’s very hard to cre­ate the ideal fu­ture state un­less you have a han­dle on the cur­rent state.

WHAT KPIS SHOULD BE MEA­SURED?

To a land­lord, the crit­i­cal el­e­ments re­main rent be­ing paid on time and the prop­erty be­ing main­tained by the ten­ant. Thus ar­rears man­age­ment and rou­tine in­spec­tions are the first two KPIs that need to be mea­sured.

From this, you could then move to re­pairs which would con­sid­er­ably re­duce your com­plaints – for ex­am­ple, no work or­ders out­stand­ing over 14 days, and rent re­views, which will im­prove client yield and your man­age­ment rev­enue.

Fi­nally, tackle ex­pired leases. This gives you and your client the max­i­mum con­trol over the ten­ancy.

A HEALTH CHECK RE­PORT FOR YOUR AGENCY

When it comes to crunch­ing the num­bers, you need to com­pare what you are cur­rently achiev­ing against your new KPIs and what it is you aim to achieve in each area. This health check re­port will high­light the con­di­tion of your busi­ness; depend­ing on how your num­bers look against your KPIs, you may ei­ther be at a health spa or in in­ten­sive care!

Your KPIs should be set in­ter­nally; per­haps some­thing you agree on as a team, framed against your bud­get and of course against in­dus­try av­er­ages. The lat­ter may be pub­lished sources or some­thing you glean from in­formed dis­cus­sions with cred­i­ble sources. Es­sen­tially what you have then is a plat­form in­di­cat­ing de­tails such as num­ber of man­age­ments, com­mer­cial ar­rears (dol­lar value and per­cent­age), residential ar­rears (same), va­cancy rate, over­due ten­ant in­voices, over­due in­spec­tions, work

or­ders ex­ceed­ing 14 days, ex­pired leases (per­cent­age) and over­due rent re­views. Break each one down by lo­ca­tion or pod and pro­vide the in­for­ma­tion as a chart.

It is im­por­tant that not only do you ref­er­ence ev­ery­one’s re­sults, but that they are trans­par­ent. Post them up on your white­board, pub­lish on email and ref­er­ence them in team com­mu­ni­ca­tions. Get some fun stick­ers and re­ally work it into your team en­vi­ron­ment. For ex­am­ple, in our Lane Cove of­fice we have a ‘su­per­pod’. They have a Su­per­man in­signia on all their com­mu­ni­ca­tions, wear Su­per­man T-shirts (pre­sented to them at a team event of their mak­ing) and take enor­mous pride in all their re­sults.

From the PMs’ per­spec­tive, hav­ing KPIs helps them break down their role, have clar­ity and feel as if they are more in con­trol in what some­times seems like an un­con­trol­lable job. It also helps pods work as a team and en­gages all mem­bers to func­tion to­gether to reach the tar­gets.

CRE­AT­ING PAS­SION AND EN­THU­SI­ASM

So now you’ve set your KPIs and got your stats, how can you use them to cre­ate a cul­ture of pas­sion and en­thu­si­asm?

Re­mem­ber, the key to cre­at­ing cul­ture is buy-in. KPIs are merely a win­dow; they are not the an­swer or the re­sult. How you use the in­for­ma­tion is the cul­ture key.

Cre­ate energy around it; talk about it at one-to-ones, weekly team meet­ings and group meet­ings. Pub­lish it to the team in an en­er­getic for­mat.

Be­lieve it and de­liver with au­then­tic­ity. We be­lieve that trans­parency is nor­mal; there is no judg­ment. Above all, don’t hide it.

Set up in­terof­fice or in­ter-team com­pe­ti­tions. Re­ward the achiev­ers with lunch out or per­haps a jet boat ride; re­mem­ber to post those to your team Face­book page or in your of­fice for mo­men­tum. Post on a white­board, make it a fo­cus of the day and wrap your in­ter­ac­tions around it with equal de­grees of em­pa­thy and ex­pec­ta­tion. Per­haps make it a com­pe­ti­tion for PM of the Year, with a prize like a week­end away. We pub­lish ours each month and then at our EOFY we present a tro­phy for the win­ner with their prize – it is hotly con­tested!

BUT WHAT ABOUT REAL DE­LIV­ER­ABLES?

Cre­at­ing cul­ture will get you those real de­liv­er­ables! You can­not be ev­ery­where and nor can your team, so fo­cus­ing on the cul­ture will min­imise the re­quire­ment for re­ac­tive man­age­ment. When your team is en­gaged, they will take pride in their re­sults and gen­uinely see them as a re­flec­tion of their iden­tity. They will chal­lenge you, and this is great be­cause it means they are treat­ing their role and your busi­ness with pride.

LINK­ING PRO­DUC­TIV­ITY TO EARN­INGS

You may won­der about real-time ac­tiv­ity and real-time earn­ings for a team mem­ber or your­self. A key way to en­gage the team is to link pro­duc­tiv­ity to their earn­ings. Pro­vid­ing in­cen­tives means they share in the re­ward and are fur­ther con­nected to the suc­cess of the out­come. For ex­am­ple, a team mem­ber could earn a bonus by run­ning ex­cel­lent port­fo­lio sta­tis­tics, such as in the ex­am­ple be­low (per­cent­age can be var­ied depend­ing on your bud­get) and could fur­ther in­crease their earn­ings by cre­at­ing so­lu­tions be­yond day-to-day ex­cel­lence, such as the iden­ti­fi­ca­tion of new leads.

EX­AM­PLE KPI STRUC­TURE

Avail­able in­cen­tive pool

1. 1 % of man­age­ment fees for the quar­ter 2. Iden­ti­fi­ca­tion of a new busi­ness lead that be­comes a new man­age­ment: $300/man­age­ment.

All the fol­low­ing key per­for­mance in­di­ca­tors must be met to qual­ify for the above in­cen­tive:

• Over­due rent re­views less than 2%

• Ar­rears at less than 1% (of to­tal monthly rent due)

• No pre­ventable lost man­age­ments per quar­ter

• No out­stand­ing rou­tine in­spec­tions

• No work or­ders over 14 days

Some caveats

• KPIs must be met on a monthly ba­sis to qual­ify for the bonus

• Bonus is cal­cu­lated and paid quar­terly

• Each pre­ventable lost man­age­ment in ex­cess of the above num­ber will re­duce the bonus by 25% (and fu­ture bonus amounts if cur­rent bonus is re­duced to nil)

• Any con­tin­gency/com­pen­sa­tion pay­ments that are made to a land­lord or ten­ant will be de­ducted from cur­rent and fu­ture in­cen­tive pay­ments.

Ex­am­ple cal­cu­la­tion as­sum­ing all KPIs are met on a monthly ba­sis

Non-pod struc­ture with man­age­ment fees of circa $22, 000 per month (135 man­age­ments at $615 per week av­er­age rent with av­er­age man­age­ment fee of 6%). Prop­erty man­ager iden­ti­fied three leads from their port­fo­lio that be­came new man­age­ments dur­ing the quar­ter. Thus 1% x $22,000 x 3 months = $990 plus 3 x $300. To­tal quar­terly in­cen­tive $1, 890.

BEN­E­FITS ALL ROUND

The ben­e­fit of this to you as an prin­ci­pal or leader is that you are max­imis­ing your rev­enue and cre­at­ing a cul­ture that is about ex­cel­lence on all lev­els. You will also find that your com­plaints level will de­crease, leav­ing your team mem­bers with more ca­pac­ity to fo­cus on what it is all about: build­ing health­ier re­la­tion­ships and sus­tain­ing them­selves in prop­erty man­age­ment.

As buy-in in­creases, your team mem­bers will also chal­lenge their re­sults (a very healthy mea­sure again of their en­gage­ment), ad­dress ev­ery one of these with pos­i­tiv­ity and ref­er­ence their re­sults against the KPIs you have agreed are your Team KPIs. You can also ex­tend this by ap­plaud­ing this ex­cel­lence – which is just ex­cel­lent KPI de­liv­er­ables that all have a points sys­tem – with some­thing like a ‘PM of the Year’ award, as I men­tioned ear­lier.

On top of that, the com­mis­sion out­lay is out­weighed by in­creased re­fer­rals from both your sales team and your client base: re­ten­tion and rev­enue. When the av­er­age man­age­ment is worth $7,000 to $8,000 on your bal­ance sheet in metro Syd­ney, this is sub­stan­tial.

KPIs im­ple­mented only for the sake of vis­i­bil­ity will not en­gage; they will un­der­mine your team and af­fect qual­ity ten­ure. But KPIs that are ex­e­cuted with true vigour and as the path­way to a fun, calm PM space will be the ab­so­lute pil­lar for your busi­ness suc­cess.

THE KEY TO CRE­AT­ING CUL­TURE IS BUY-IN. KPIS ARE MERELY A WIN­DOW; THEY ARE NOT THE AN­SWER OR THE RE­SULT. HOW YOU USE THE IN­FOR­MA­TION IS THE CUL­TURE KEY.

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