Bloated and Unprofitable

succesful_teamIn Warren Buffett Speaks, Buffett’s business partner, Charlie Munger, said:

“Name a business that has been ruined by downsizing. I can’t name one. Name a company that has been ruined by bloat. I can name dozens.”

Team size is important, so is team balance.

Competence balance

In a real estate business, the more sales you want to make each month, the more salespeople you need. This makes sense: you couldn’t expect one salesperson to make 20 sales every month, so if you want to average that number of sales monthly you will need somewhere between 5 and 6 salespeople. If you need many more for that level of sales, you risk being bloated and unprofitable.

Large teams with too high a balance of new and/or incompetent people can also see the wages bill climb with too few results to show for it. The competent/incompetent balance needs to be watched.

I realise that we don’t want incompetent people on our teams at all, but sometimes people are in performance slumps, or have personal problems that cause them to lose focus. This is an inevitability. You just can’t have too many people like this, and you must quickly turn around the performances of such people and get them back to acceptable levels, or you must remove them from the team.

Producer to support balance

Real estate agencies can also subtly shift their balance from producers to supporters.

As the sales or rentals team grows, you can appoint more support and administration people to assist the teams. But if too many producers on a team leave, you could see a balance shift, resulting in the agency becoming too admin-heavy – bloated with non-producers.

Hire and develop producers, or downsize your support team, or be bloated and unprofitable.

Leader’s role

As leaders, we not only must keep an eye on our team size, competence and balance to ensure there is no bloat, but we must remember that we can be part of the problem if we are not productive.

Leaders who do not list and sell add to the imbalance unless they produce income in other ways. A leader who hires productive people for the rental and sales departments, who weeds out the non-performers, who sets standards of excellence and ensures that all team members reach those standards, is extremely productive. In the absence of that contribution to the company, the leader is also excess baggage that adds to the bloat.

A paradox

There is a saying that says, “You cannot shrink your way to greatness…” I believe this and it may appear to contradict my comments on bloat leading to unprofitability, but this is not so.

Provided you keep an eye on the competence balance, and on the producer to support balance, and provided you as leader do your share, your company can grow, it can be profitable, and have no bloat.

It’s all in the balance.

Recent Articles

Let's Look At The Real Problem

In some markets, real estate agents often say that they have plenty of listings, but need buyers. Real estate agency profit consultant, Gary Pitta...

The More You Learn

Show me an industry where you can earn six-figure incomes without knowing what you are doing. I'll bet that you cannot name one. Yet this is what many...

Is Door Knocking Still Effective?

In a real estate industry poll, over 65 percent of respondents said that door knocking is no longer an effective method for finding new listings. In...

Strict or Soft: the problem with extremes

Some leaders are too strict with their teams. Others are too soft. There are problems with being at either extreme. Soft leaders Soft leader...

Salaries: Expense or Return?

Many real estate agency principals suffer from 'salary phobia': they view salaries as an expense instead of an investment. Real estate agency prof...

A Little Word Salespeople Should Use More Often

Good salespeople are always on the lookout for new lines and for new ways to deliver their messages, but there is one word that many should consid...

Clueless Negotiating

"Transparency" is all the rage, but as a negotiation strategy it is full of holes. Real estate agency profit consultant, Gary Pittard, says that tra...

Why Do We Do It To Ourselves?

There would not be one business leader who doesn't know that it is easier to lead the right people than it is to lead the wrong people. Despite th...

Stop Slumps Before They Occur

Any real estate agency leader can tell when a salesperson is in a slump, but according to real estate agency profit consultant, Gary Pittard, the re...

Visual Aids

An age-old question for presenters is, "Should I use visual aids?". While I agree that people can become overly reliant on visual aids...

High But Not Out Of Sight

Goal setting needs to be done properly if it is going to work. Statistics show that only five percent of people set goals. Those five percent earn m...

Getting the Team to Focus

One of the top three complaints from agency leaders is that they cannot get their teams to focus on actions that produce results. Some have been compl...

Want to reach your profit potential? Contact us now.

Pittard


Suite 71, Level 4
330 Wattle Street

Ultimo NSW 2007
Australia


Mailing Address
PO Box 2045
Strawberry Hills NSW 2012


: (02) 8217 8500
Fax: (02) 9281 4198
AUS Free call: 1800 663 600
NZ Free call: 0800 448 065
International: +61 2 8217 8500

: info@pittard.com.au

Contact Us