Staff retention is a major challenge facing every real estate business. It’s a well known fact that most sales-based industries have a high staff turnover, but in the real estate industry the churn of people coming and going is particularly significant. It’s not uncommon for real estate businesses to have 100% turnover of staff within a period of just five years.
High staff turnover is expensive on many levels. Conversely, having a good retention rate can have a significant impact upon your business’ profit, culture and market share.
So, how is it done? To be effective in retention, you first need to understand why people might decide to leave. A internal Ray White survey of a hundred salespeople who had had left real estate businesses showed some interesting trends.
Initially, we looked at where these people were going to career-wise after leaving the business they were in. The vast majority left for two reasons; either to leave the industry completely (43%) or to stay in the industry but to work for a competitor (43%). A smaller number were leaving to start a real estate business themselves (14%).
It’s critical to understand each of these outcomes does not have an equal impact upon the business that the person is leaving. And here’s why. If a person leaves the industry altogether, any market share they had is effectively up for grabs. The business then has every opportunity to keep that market share and probably a better opportunity to do so than its competitors.
The survey showed the majority of people (56%) who left the industry altogether did so mainly due to personal reasons such as retirement, health issues or they were simply not making enough sales. Only 20% of these people were leaving due to dissatisfaction with the principal of the business.
On the other hand, if salespeople leave to go to a competitor’s business they are likely to take some, if not all, of their market share with them. Interestingly, only 9% of these people were leaving to go to a competitor because of better remuneration, while 45% were leaving because they were unhappy with their employer.
An even stronger impact is likely to be felt in the existing business if a salesperson leaves and decides to open up in competition. In this instance, they will also take their personal market share with them but on top of that, they are also likely to recruit more salespeople to work within the new business.
And guess whose people make the most attractive recruits for an ex-staff member opening their own business? Yours! Importantly, of the overall survey respondents, this group had the largest percentage of people (61%) that were leaving because they were dissatisfied with their employer, while just 28% left because they wanted more opportunities.
Due to the nature of real estate, there will always be a number of people who join the industry and then leave because they find it’s too hard for whatever reason, or their personal circumstances have changed. Training, support and mentoring can help reduce the likelihood of this outcome. But in any case, this reason to leave is far less costly for the business than the other two possible reasons.
People leaving to go to a competitor or to open their own business are clearly are the most concerning to the business. The survey showed the top reason why people left for a competitor or decided to open their own business was due to dissatisfaction with their current principal (65%). This dovetails with the fact that good leadership is a common trait in any successful real estate business and it follows that in addressing this issue, many salespeople who would otherwise leave may very well stay.
Another finding worthy of note – the vast majority of the people who left the industry completely were gone within 36 months, whereas those who left to work for competitors or open their own business had been employed between two and five years beforehand. This three year time frame can be seen as the “danger period” and beyond that, a salesperson has “survived” the initial stage of establishing their career. In order to keep them at this point, the principal needs to ensure their other needs are taken care of.
It’s important to consider every salesperson as an individual and then tailor solutions to their specific needs. The employee/employer relationship needs to fit both parties, and this means the financial arrangement as well as the working relationship. In some cases it may be best for the individual to remain as an employee with full support and for others, a more independent arrangement may be more suitable, such as the salesperson operating as a contractor.
Whatever the outcome, it’s clear that one arrangement does not suit all and for those principals who try to apply a set formula, the result may not be good staff retention.
It is reasonable to say that creating a good working environment will have a significant impact on staff turnover. It follows also then that the retention rate is a pretty good indicator of the working environment.
It’s common to hear principals with high staff turnover complain that it’s impossible to get good salespeople, that it’s never the principal’s fault when people leave. Easy words to say and expensive to believe – far more effective to listen to the reasons people give when they leave as an opportunity to learn and grow in your ability as a leader along with your business.
Then, you might also find those people who feel dissatisfied in other real estate businesses leaving to join up with you!
Interested in finding out more about owning a real estate business or franchise opportunities in Ray White? Contact Robbie Clarke on firstname.lastname@example.org or 0412 385 106.