But according to Jim Collins, author of the #1 bestselling book Good to Great, it turns out that people aren’t your greatest asset. The right people are. Unfortunately, it’s far too common for real estate businesses to have the wrong people in the wrong positions.
Who’s on your bus?
It’s an incontrovertible fact that business success is almost always dependent upon a team of engaged and committed employees, and rigorous but empathetic leadership. These ingredients are at the core of ensuring your business remains both productive and profitable.
The reality is, if you’re managing people on a daily basis for any length of time then at some point you’ll be faced with an employee whose performance isn’t living up to your expectations. When faced with this problem, the common reaction by most managers is to ignore it and hope it will go away. But, all too frequently, it doesn’t! Sound familiar?
Unfortunately the temptation to avoid difficult conversations can adversely affect your business. But why is there a reluctance to have the ‘tough love’ conversation with underperforming employees who clearly shouldn’t be ‘on the bus’? According to Paul O’Halloran and Megan Bowe from FCB Workplace Law1. (a leading workplace legal and HR solutions business), there are a number of reasons. These include:
- Concerns about the implications for future relationships, which may indicate you’re too close to the employee
- Lack of time, because the process is time consuming
- Uncertainty about how to approach the situation
- Lack of faith in the system, because you don’t believe it will achieve the desired outcome
- A desire to avoid confrontation.
So what’s the solution?
Performance management on the road
Performance management is a well-established term used to describe the practice that drives decisions about employee performance, disciplinary procedures, terminations and development needs within the business. It’s a process by which the overall performance of a business can be enhanced by improving the performance of individuals within a team framework. The central goal is to build a high-performance culture for both the individuals and the teams within the business.
Performance management reminds us that being busy is not the same as producing results. It ought to redirect our efforts away from simply being busy and towards being effective. It reminds us that training, strong commitment and lots of hard work alone will not provide results.
The major benefit of performance management is its focus on achieving results; i.e. useful services for our real estate clients and producing income from the sale and management of property. While we typically think of performance management in the context of employee performance, it can also focus on agency processes and systems. For example, how an agency’s technology and processes for the selling and management of property integrate with the performance of employees. After all, the overall goal of performance management is to ensure that an agency’s entire ‘ecosystem’ is working together to achieve optimal results.
Real estate agencies are facing challenges like never before. ‘Disruptors’ are placing competitive pressures on businesses and this means there is even greater need for care in the choice of strategies adopted by agencies to remain profitable. Everyone in the agency must be doing what they’re supposed to be doing to enhance the opportunity for the agency to survive and thrive.
When it’s time to get off the bus
If you fail to manage performance issues quickly and effectively, there’s the risk they may escalate into a major issue with adverse effects on your agency – such as some form of industrial claim. It can also lead to a decline in morale (because both the individual and those around them become unmotivated) and lack of respect for management (because other employees may resent a lack of action against an underperforming employee).
According to Good to Great author Jim Collins, letting the wrong people ‘stay on the bus’ is unfair because the right people inevitably find themselves compensating for the inadequacies of the wrong people. Worse, it can end up driving the right people away. Strong performers are intrinsically motivated by performance and when they see their efforts impeded by carrying extra weight, they eventually become frustrated.
And waiting too long before acting is equally unfair to a person who needs to ‘get off the bus’. Collins suggests that every minute you allow a wrong person to continue holding a seat, you’re stealing time they could spend finding a better place where they might flourish.
If we’re honest with ourselves, the reason we wait too long often has less to do with concern for the employee and more to do with our own inconvenience. We think “they’re doing an okay job” or “it’s a huge hassle to replace them” and we end up avoiding the issue. So, to save ourselves stress and discomfort, we wait … and wait … and wait! Meanwhile, all our good people are wondering “when are they going to do something about this” and “how long is this going to go on?”.
Operating a real estate business requires courage, commitment and determination. And it’s inevitable that you’ll confront important leadership issues that may not be easy to resolve. But it's how you respond to these issues that will determine the opportunity for business improvement and success.
1. O’Halloran, P and Bowe, M, 2016, Performance Management in Education: resisting the difficult conversations, FCB Workplace Relations Review.
Getting the right people on the bus
Effective performance management
There are a number of integrated actions that make up an effective performance management system:
- Implementing an appropriate process to select the right people
- Developing clear job descriptions and key performance indicators
- Measuring performance standards against defined benchmarks
- Determining if employee performance is ‘below expectations’, ‘meeting expectations’ or ‘exceeding expectations’
- Holding performance development discussions
- Providing coaching and feedback
- Identifying training and development needs
- Ongoing observation and measurement to track performance
- Developing and implementing a performance improvement plan where performance is ‘below expectations’
- Designing effective compensation and reward systems to recognise those employees who excel and are ‘exceeding expectations’
- Performing exit interviews to better understand any causes of employee discontentment.
Keeping the wheels turning
Benefits of performance management
A well-structured and implemented performance management system, will provide a number of benefits to your business, as well as your employees:
- Ensuring employees understand the importance of their contributions to the goals and objectives of the agency
- Ensuring individuals and teams understand what’s expected from them
- Linking performance evaluation and employee development to rewards that motivate staff
- Assisting the agency to improve its efficiency and profitability
- Helping to identify specific training needs across the business
- Facilitating improved communication between managers and employees
- Improving guidance and assistance for developing the capabilities and potential of employees within the agency.