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

Where Are You Taking Your Company

As the owner of a real estate business, you are its leader. Real estate agency profit consultant, Gary Pittard, suggests that, as the leader, you sh...

Wealthy and Well Adjusted

An interview of William Danko, co-author of Richer Than a Millionaire with Richard Van Ness, will be released this month on Pittard's streami...

That Elusive Thing Called Motivation

Real estate agency profit consultant, Gary Pittard, warns real estate salespeople that they must be sure to learn the REAL reason why property selle...

Numbers and Ratios: A Glimpse of the Future

It doesn't take a genius to figure out when a salesperson is in a performance slump, although many leaders don't appear to notice until the salesperso...

Sack Your Dilberts

While the cartoon series, Dilbert, might be funny, real estate agency profit consultant, Gary Pittard, says that in real life, Dilberts can be anyth...

The Committee in Your Head

You cannot watch, listen to, or read the news for long without being bombarded with bad news, gloomy forecasts and general negativity. Bad news sells....

A Profound Connection

To succeed, says real estate agency profit consultant, Gary Pittard, we must be masters of our chosen fields. He quotes author ...

Essential Actions

If you want to get your new sales recruits off to a flying start, first teach them the essential actions - those neces...

The Right Amount Of Pressure

There is a difference between threatening team members with dismissal for poor performance and applying positive pressure to perform. In this short ...

Hold Yourself Accountable

In an age where people can be quick to assert their rights but slow to live up to their responsibilities, we at Pittard advise our leaders to hold the...

Study For Understanding

Every time clients ask salespeople a question, they are trying to answer the big question they have in their minds, which is, "Why should I list wit...

Activity

Take a minute and look around your agency. Everybody looks busy, don't they? But are you making money? Are they making money? If you're not carefu...

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