Building the Right Team
- Jun 03, 2014
The apartment sector has soared in recent years as Millennials have entered the workforce in big numbers and it’s become more difficult to buy a home. But the favorable economic conditions by no means guarantee an individual community’s success. Indeed, with the wrong team members in place, a community or entire portfolio can struggle mightily even when broader trends suggest it’s positioned to thrive.
Simply put, finding the right employees and putting them in the right positions is the hardest task that apartment management firms and their leaders undertake. It’s also the single most important thing they do, as making poor hires will dramatically impact the success of a real estate investment.
Outlined below are my recommendations for building and maintaining successful management teams:
Make use of hiring tools, but don’t solely rely on them—These days, businesses can take advantage of technologies designed to predict how job candidates are likely to behave in the positions for which they are interviewing. These systems represent a valuable resource for hiring managers, injecting some much-needed science and objectivity into a process that for too long has relied on “gut instincts.”
Invest the time and resources necessary into picking the tool that makes the most sense for your firm, but don’t allow the results to be the end-all, be-all of your decision-making. Finding the right talent is a mixture of science and art, and the latter component, i.e., interviewing, still plays an enormously important role.
Don’t base your interview on the candidate’s resume—When applicants come in for interviews, it’s all too easy to simply go through their resumes and ask them about their different job experiences. Easy, but ineffective, because that technique will too often tell you very little about a person’s personality type and how likely she or he is to function well within your firm.
I prefer to use a style based on the Topgrading approach, which fosters more of a conversation by getting a candidate’s answers to such questions as “Who was your favorite teacher in school and why?”, “What was your favorite sport to play and why?” and “What was the most significant challenge you’ve overcome in a job?”
If you ask those kinds of questions, you are probably going to know more about that person than most of his or her family members, and you will have a strong sense of whether the applicant can thrive in your environment and how passionate the applicant is about what he or she does.
Don’t let just anyone conduct interviews—Speaking of interviews, you have to be honest and realize that not everyone in your firm is capable of conducting a job interview. Some people are just plain horrible at it. That’s OK—just don’t let those particular people handle the interviewing and hiring process.
Take the time to identify those who are passionate and skilled at the process, and make sure they’re the ones who meet and talk with the candidates. The interview process should also include several people—no one person should be solely responsible for such a critical decision.
Give managers a stake in the financial success of properties—After you’ve hired the right people, you have to keep them. Doing so obviously requires a competitive, market-rate salary (I don’t think you have to overpay people) as well as providing them with leadership that is based on integrity, open communication and respect.
On-site property managers and regional managers should also be given meaningful incentives when the properties under their purview produce the returns promised to investors. Too often, these employees are awarded bonuses that are disproportionate to the return on the investment and are based solely on meeting budgets. People do what you pay them to do—simple.
Real estate is an investment, and people buy real estate to make money. That’s the goal. Sit down with your operations people; explain to them the underwriting and financial goals of the communities they work on; and really, truly incentivize them to grow the value of their assets.
Be ready to let someone go when you have to—It’s a horrible day when you have to terminate somebody. Nobody likes to do it, but I believe this with every inch of my soul: until you learn how to fire someone, you will never be a superior leader and will never have a superior team that produces superior results.
A lot of times, it’s not that you have a bad employee; instead, it’s that you’ve got the wrong person in the wrong position. Regardless, when there is a performance problem, give the employee swift and respectful feedback, and give him or her a short window of opportunity—45 days or so—to step up to the plate. If the employee doesn’t respond positively, part ways respectfully and appropriately. This should not be a yearlong process.
Real-estate cycles—you can count on those. But this truth will always remain: to maximize the good times and protect your portfolio against the bad, you need the right employees—and finding and keeping those people has to be a top priority at all times.
Melanie Gersper is an executive director with CFLane, an Atlanta-based apartment management firm that manages approximately 40,000 units in 18 states, in a region stretching from Maryland to Nevada. She is responsible for CFLane’s daily property management operations and processes.