From fairly traditional programs to those encompassing every aspect of the property management relationship, there seems to be no end to the range of incentives that employers are offering to their property managers for delivering increased revenues and growing the employers’ property management asset.
Some of the incentive programs I’ve seen include the payment of part of the letting fee or management fee. Others deliver bonuses for increasing rents or achieving a certain number of leases in excess of a specified target. Others still include incentives for converting a management into a sale or vice versa, rewards for new management leads, or incentives for minimising arrears.
Many programs are based on a pooled reward system, where the property management team as a whole is rewarded for exceeding their collective target. Unlike sales, where results are rewarded primarily on an individual basis, the success of most property management teams requires a collaborative approach; team members rely on each other for overall success, so it makes sense to reward the whole team rather than the individuals.
Property management incentive programs have a proven track record of success. They motivate employees and increase the overall performance of the agency, and they show employees that the employer values their work.
KEEP IT SIMPLE
Make sure it’s easy to understand
Many disputes between employers and employees are the product of a misunderstanding about how the incentive is to be calculated and paid. Therefore the incentive program should be easy to explain, easy to calculate and clear about when it is payable. It should give consideration to the relevant PAYG and superannuation obligations that arise from the incentive payment and this should be made clear to employees.
Including employees in the development of the incentive program can help to ensure they value the rewards and see them as worth the effort. Employers should value employee input and put an appropriate incentive structure in place accordingly. Clearly, employees who see the incentives as worth the effort will be more motivated to work hard to obtain them.
Importantly, to comply with obligations imposed by the Award, the agreed incentive program must be in writing. Employers may also want to provide for a process where the program can be reviewed and adjusted after it has been in place for 12-18 months.
MAKE IT MEANINGFUL
Actions must have a direct impact on results
There’s no point having an incentive program in place if it fails to add to the value of the property management asset or increase property management revenues. Equally, the incentives payable should be offset by any corresponding loss of managements or income during the period. In other words, the program should reward employees for net increases only.
MAKE IT FAIR
Make incentive programs fair across the agency
Over the years, I’ve seen many incentive programs where the sales team receive a larger reward than the property management team for bringing in a new management. It just doesn’t make sense. If the incentive program is to be seen as credible by all employees, then it should be applied fairly across the agency in order to incentivise everyone to build the business.
MAKE IT OBJECTIVE
No subjective opinions
The property management team are more likely to embrace and respond to an incentive program where the rewards are clearly defined and are not subject to application in a random or indiscriminate way.
MAKE IT MEASURABLE
Share progress against goals frequently
The best incentive programs are the ones where progress can be measured on a daily or weekly basis. The property management team are more likely to stay engaged if they can see how their performance is progressing. A simple scoreboard or dashboard where they can view their performance in real time will allow them to accurately assess their own performance and have realistic expectations about the potential rewards they may receive.