One of the greatest challenges facing multifamily operators today is employee turnover. As a record number of new apartments come online across the country, the problem becomes more pronounced with each passing month. Multifamily leaders in all markets are wrestling with how to retain their team members in such a competitive job market. Let’s look at three reasons why high performing multifamily associates are flying the coop, and what you can do to minimize voluntary turnover.
Money isn’t the only driver when it comes to job satisfaction, for sure. But, the impact of compensation on satisfaction and morale can’t be overlooked. Today’s hard working economy means that your employees may be tempted by higher paying opportunities at your competitors’ communities, corporate offices, or even in other fields. No matter how much you may like your job, a bigger paycheck can be hard to resist.
The Swift Bunny 2018 Multifamily Engagement Study analyzed feedback from multifamily professionals in all positions, including on-site, regional, and corporate roles. The study reveals that across all roles, the two factors that are of the greatest importance to employees’ satisfaction are compensation and raises keeping up with inflation. While those topics are of the greatest importance, however, respondents also indicated a dissatisfaction with compensation and raises. On-site associates are the least satisfied, with nearly 23% of on-site employee respondents reporting they are dissatisfied or very dissatisfied with compensation. Simply stated, while compensation and raises are very important to apartment industry employees, most feel that their employers are missing the mark.
Are they dissatisfied enough with their pay and raises to switch jobs? Maybe so. According to the 2017 Glassdoor research report titled Why Do Workers Quit? The Factors that Predict Employee Turnover, when employees change jobs, it’s usually an upward move. Glassdoor’s data shows workers on average earned a 5.2% pay raise by changing jobs and employers.
What does that mean for a typical apartment community employee? CEL & Associates’ 2018 Real Estate Compensation Survey indicates the median annual salary for an on-site community manager overseeing 150 – 300 units is $61,000. A 5.2% pay increase would mean an additional $3,200 annually. Is that enough to drive an associate out the door? It could be, especially if the team member is not optimistic about the probability for increased pay with their current employer. Based on the Glassdoor findings, a team member may reasonably conclude that switching employers is the most effective way of improving their compensation.
So, what’s a multifamily supervisor to do? Even if you wanted to, you’re probably not able to offer pay raises across the board in an effort to stem turnover. Here are some less drastic strategies to consider.
Take a look at how your company approaches annual raises. Do you treat all employees the same with a tenure-based compensation strategy applied across the board? While this may seem evenhanded, the downside to such an approach is that you are rewarding your high performers and your low performers equally. Shouldn’t you be doing more to reward your high performers? After all, these are the people you care most about retaining at your organization. And, they likely have the most options in the job marketplace.
Many multifamily owner/operators use commissions and/or bonus pay to incent and reward performance. This can be a powerful technique for satisfying top performers. According to an SAP study of workers in 27 countries reported by Harvard Business Review, high performers cared significantly more about competitive compensation than did average or low performers. Using commission and/or bonus pay is a classic win-win strategy: the high performer is in control of their earning power, and the company benefits from the extraordinary efforts these team members put forth while trying to earn the maximum commission and/or bonus.
The Swift Bunny study reveals 25% of multifamily regional and on-site team members say they are dissatisfied or very dissatisfied with their employers’ performance incentives, indicating that multifamily employers have tremendous opportunity for improvement in this area. Take a look at the incentives you have in place at your organization. Are there adjustments that can be made to help you reward the team members who contribute most?
Another reason for high employee turnover in the apartment industry is that team members often find it necessary to jump to a new employer in order to achieve career progression. The Glassdoor study showed that among the résumés examined, 73% of job transitions were due to workers leaving their employer, while just 27% stayed for their next role. For multifamily operators, career stagnation seems to be a bigger problem among on-site associates than for regional or corporate personnel. In the Swift Bunny study, only 57% of on-site respondents indicate they are very likely to continue working for their present employer, compared to a significantly higher 63% of regional and 76% of corporate employees.
Employee churn at the apartment community level seems likely to continue to vex multifamily owner/managers. While team members hunger for increased responsibility, they are often unable to find it with their current employers. The challenge for multifamily firms is one of supply and demand. Especially for operators with small portfolios or a limited presence in a market, there may be more on-site team members seeking promotions than there are roles to promote them into. High-striving multifamily professionals who feel stagnant and stuck in their current role may reasonably turn to employment opportunities elsewhere.
To combat the problem of career stagnation, get creative in your approach to roles and responsibilities. When promotion options are limited, consider layering added opportunities on top of existing roles. Could you designate a tech-savvy leasing consultant to be your property management software troubleshooter, for example? How about tasking an outstanding community manager with onboarding new hires in her region? Or, enlist your safety-conscious maintenance supervisor to run safety meetings for the portfolio.
Ambitious on-site team members are likely to welcome such added responsibilities for the new challenges they present. If you’re able to pay associates a little extra for their added effort, all the better.
How often do your supervisors meet with their employees? Chances are, not enough. 50% of high performers in the SAP study say they expect at least a monthly sit down with their managers, but only about half say their manager delivers on their feedback expectations. The communication disconnect can be even more pronounced between supervisors and their greenest team members, who are often accustomed to near-constant feedback loop from parents, teachers and peers. When these new employees don’t have the opportunity to speak with their managers and receive regular feedback, they can grow restless, frustrated, or even fearful.
The Swift Bunny study revealed an alarming communication breakdown in multifamily workplaces. While all employee groups surveyed indicate they rank honest and candid communication regarding important issues from their leadership team as extremely important, many respondents feel their supervisors aren’t delivering. Regional employees were the least satisfied of all groups, with 25% of regional respondents indicating they were either dissatisfied or very dissatisfied with transparent communication about important issues by senior management.
Frequent communication between employees and supervisors is critically important to good workplace morale. It’s not enough to rely on annual or semi-annual performance reviews as the primary feedback mechanism with your employees. Prioritize ongoing and open communication between supervisors and team members using a wide variety of methods, both formal and informal. Regularly scheduled team meetings and one-on-one meetings between employees and supervisors should be required at all levels of the organization, including among senior leaders. The more opportunities colleagues have to interact, the fewer unresolved communication issues there will be. Even a team potluck lunch provides an opportunity for conversation. Don’t underestimate how important that can be for good working relationships and morale!
Constant, varied communication will ensure the leadership team’s vision is conveyed to associates at all levels of the organization, and that all team members have ample opportunities to ask questions, raise concerns, and provide input. Without transparent communication, your multifamily firm is at risk of losing valuable team members who don’t understand the mission, or worse, feel unheard and underappreciated. Associates who feel their contributions don’t matter will inevitably head for the exit.
With new apartment communities on nearly every corner, experienced multifamily professionals are in high demand. Focus on satisfying your team members’ expectations in terms of compensation, career development, and healthy communication at all levels of your organization to keep your top multifamily talent plugged in and high performing.