Because it is easy to overlook the little things that work in the beginning, but may not adapt well as a company grows, taking a yearly inventory of the people, systems and processes in place remains critical to running an efficient company ready for growth.
It is natural to get comfortable when on a steady growth track, and things run relatively smoothly. However, great leaders must routinely evaluate their internal processes and those who execute them to ensure they continue to run as effectively and efficiently as needed.
In this article, the term “back-office” specifically refers to software programs and employee procedures brokers establish to manage their operations. While these programs do not appeal as much as those for marketing, social media and content, in many ways they are a brokerage’s engine – a firm cannot hum efficiently without them well-organized.
Here are six tactics companies can use to tune up their back-office systems.
No. 1 Assess Operational Workflows and Set Expectations
A listing or a sale typically triggers office workflow and can be a useful focus point when assessing brokerage back-office processes. So, when evaluating a new listing, ask, for example, What’s the expectation of turnaround time? What happens if information is missing?
Make sure to set expectations early on with agents when it comes to the timing of payment and the consequences of missing information. For example, if they turn the file in before 1 p.m., they will receive payment by 5 p.m. the same day; after 1 p.m., they will get paid the following business day. Setting expectations can help head off arguments or misunderstandings around everything from payment to compliance.
Incentivize agents and staff to follow procedure using rewards rather than punishment. For example, once a quarter, the agent with the most complete files gets recognized at the company meeting. Annually, top agents receive a credit on their bill or a gift certificate to a local restaurant.
No. 2 Gauge Compliance
When a file comes into the office, determine the person who approves it and how many hands can or need to touch it. Establish that a file does not get entered into the system without being completed or signed off by the appropriate person, whether the owner, manager or transaction coordinator. Someone at the brokerage should review and sign off on every transaction a coordinator processes.
Make sure to establish clear divisions in operations to prevent potential fraud. For example, make sure to have different people cutting the checks and reconciling the company’s bank accounts. Not only does this make the company vulnerable to employee misuse of funds, but will jump out at an auditor.
No. 3 Continually Optimize
Survey staff, managers and agents who routinely deal with transactions. Find out what they feel are the areas for improvement and reward the suggestions, especially those which you ultimately implement. The likelihood is that they already know how things can be improved, and their recommendations will prove invaluable.
Also, it is important for brokers to keep an eye on where they are headed. As they grow, systems become even more important – an inefficient process is minor when the company is small, but becomes a huge headache as a company grows. Surveying staff helps uncover some of these potential inefficiencies.
No. 4 Grade the Systems
Systems used to process, coordinate and close out the transaction are quickly outgrown. Grade the systems you use to accomplish tasks. For example, companies should examine the systems they use for transaction management and accounting annually. An alteration with these products to an industry-specific program will likely improve the process and supply more informed reports and analytics on performance and productivity.
A good example of this is that most (not all) brokers start out using QuickBooks for their accounting, usually at the advice of their tax accountant. However, because QuickBooks is not designed for real estate, the broker ends up with MS Excel or some additional program to manage the rest. This is the most commonly outgrown product in an office and one of the industry-specific systems is adopted at the breaking point.
Taking an annual look at the systems used will serve as a more proactive approach to identify the systems that will need to be changed to grow.
No. 5 Look for Bottlenecks
Whether it is in the transaction processing, accounts payable or accounts receivable, hunt for bottlenecks in the operation. Examine the approval procedures, the system for receiving information, and operational efficiency in looking for ways to improve.
No. 6 Evaluate Staff
This line item is often one of the hardest to examine. The reality is some of your team will have limitations in their skillset. The person who processed accounting when the company had only 10 agents is not necessarily the person who can continue in that role when the company grows past 100 agents.
With dedicated, loyal employees who do not fit their original position anymore, consider repurposing them into a different role in the organization. But keep in mind that bringing in someone with a more substantial skillset may be necessary to support a growth strategy. The key here is carefully reevaluating staff on a recurring basis – the right people make all the difference, and those who do not fit drag a company down.
Performing an annual review of the people, processes and systems that support brokerage operation provides a preventative maintenance check-up that prepares brokers for the real estate industry’s inevitable up-and-down cycles. Dedicating focus on these areas allows brokers to build a strong foundation and achieve sustainable growth.
Reach out to Jonathan Peterson at email@example.com for more insights on increasing your brokerage company’s operational efficiencies.