Commercial Real Estate Mastery: Episode 48
How To Keep Good Managers Around
Virtually every commercial real estate sector requires a property manager. And when you find a good one, you need to develop a strategy to keep them around. In this Commercial Real Estate Mastery podcast we’re going to explore the methods required to keep superior talent from defecting to other properties.
Episode 48: How To Keep Good Managers Around Transcript
We've owned commercial real estate for over 40 years, and in that time, we have literally had hundreds of property managers, some good and some bad. Now, the bad ones we're not too worried about, because if we lose them, well, that's okay. The next one might be better than what we had. But sometimes you come upon property managers who are exemplary. They are superlative. They are far superior to all other property managers. And when you come upon those people, you don't want to lose them, because your competition will always be trying to steal them away, and you've got to find a way to make them stay.
This is Frank Rolfe with the "Commercial Real Estate Mastery Podcast." We're going to explore the concept of how to keep good property managers around. And let me say, in the property management business, you can have a very high rate of attrition. It goes with the kind of property that you own. It goes with the market. It goes with what your level of pay is.
And it's not uncommon, if you own a bunch of properties, to have managers leave. In some years, you could lose 10% of your managers, 20% of your managers is not impossible. And it's okay if you lose managers, but the key is you got to keep the good ones. So how are some basic ways you can keep a good manager?
Well, the first one is to understand what we call their currency. Let me run this by you. I once talked to a guy that managed factory turnarounds. So he was a guy the big companies would bring in when the factory was not producing as many widgets as they hoped that it would, or if someone bought it and wanted to increase the production of widgets, they would bring this guy in to make it happen. And the very first thing he would do is he would figure out who were the key people to get production higher, which in most real estate properties is simply the property manager, and then he would try and unlock what they really cared about.
For example, you could have a manager who doesn't care about money. You could say, "Oh, I'll give you this bonus," but it may be they don't care about a bonus. What they want is more free time. So their currency is time. They want time off. Now, the next manager, they may be just obsessed with baseball. So what do they care about the most? Baseball tickets.
Their currency therefore is baseball tickets. You can't really motivate people unless you understand their currency. Once you have a lock on their currency, you know how to get at them. You know how to make them really try hard. Now, another thing you can do with a manager is to constantly heap praise on them, because the really good managers need praise.
They need to be told, "You are doing a fantastic job. You are the greatest manager I have ever worked with." Because all of us like praise. We like hearing that we're doing a good job. We like knowing that the boss thinks that we are valuable to the business. And sadly, a lot of owners don't heap enough praise on the managers.
They think, "Well, they know that I care. They know that I think they're doing a great job." Well, really, how do they know that? Do you know any industry, do you know any sports franchise where there are not constantly awards given out? So give praise to people. It's free. In many cases, that does the trick. When someone gets praise all the time, it makes them happy. When someone wants to hire them away, they're going to say, "Nah, I don't think I want to." Why? Because they like all that praise that that owner keeps heaping on them. They make them feel like that makes them a VIP.
Another thing you have to do with a manager to keep them around is you have to watch their back. In any property, there will be customers, there will be tenants who complain. They'll say, "This is a terrible manager, and here's why." And you always have to take the manager's position in the battle of the customer versus the manager.
Even though we're always taught the customer is always right, with a good manager, your first inclination needs to be, this customer is not telling the truth. This customer has an ulterior motive. 99% of the time when you really investigate issues of a customer or a client saying the manager is not doing a good job, you're going to find out that customer has not been paying their rent.
That customer is being evicted for some other reason. You can't go where your default judgment always goes in favor of the customer. If the customer tells you, "Well, the manager is never there. Worst manager I've ever seen. They're never in the office." Don't think to yourself, well, I've got to fire this manager. They're not in the office.
That customer may be completely lying to you. That customer may be going over there at times when the office is actually supposed to be closed based on office hours. So you always have to support your manager first. You have to hear their side of the equation. And if you have to guess because the stories are completely conflicting, you have to go with the manager. Because no one likes working in an environment where the owner does not have their back. Also, you've got to listen to them when they come to you with questions about their compensation. Even if you heap a lot of praise and you understand their currency and you give them bonuses based on their currency, they will, if they're really good, get other offers.
Everyone's always trying to get that really good talent over to their property. So when they come to you with this, you got to listen to them, and you got to see what really is fair. Sure, maybe you have the manager at a really low rate, and you think that's great, and you think that they should make $50,000 a year, and you're only paying out $30,000.
But yet if you lose them, you'll have to pay out $50,000, and you'll never get them again. You won't get anyone nearly as good. So be fair. Listen. If you can't do it in your current budget, explain to them what the problem is, but see if there's a workaround. If they say, "Well, this person offered me $50,000, but I love working here, but I got to make at least $40,000." And you say, "Well, my budget right now is only $30,000, but here's the deal. If you can wait until next year's budget comes out, which is not that many months in the future, then okay, I'll get it up to $40,000."
But listen to them. Don't immediately say to yourself, "No, no," I'm just going to tell them, "No, I can't afford it." Because what's going to happen is they're going to leave, and then you're going to lose your really, really good manager. Also, we have found that really good managers love to work on stats. They like to be numbers-driven.
Nothing bums out a really good manager when things go from being objective to subjective. And if they're performing, don't be that tight on things that don't have any impact. One of the biggest ones is just office hours. If you've got a manager who has exemplary production, but they're frequently late, give on the lateness. The lateness is not making you money, nor is it costing you money.
The big driver is what a good job they do when they're there. And often the managers who do phenomenally well, they may have some strange dark side, some flaw in their personality. Overlook those flaws. Look simply on the statistics of what they're doing. Because the really good managers are the ones who actually have the best numbers, the most sales, the most collections.
That's what you need to focus on. Over the years, we've had some very, very odd people as managers, and some of them have been really, really good. And we are more than happy to overlook any strange part, whatever, how eccentric of their personality, if they are truly performing. Look at the NFL, for example. Wide receivers, running backs, often with the strangest issues on and off the field. But it's all tolerated because every week they show up and do a terrific job.
That needs to be the same system that you use on your managers. The bottom line is, if you like a manager, if you think they're really, really good, you're going to have to fight to keep them. Because every other real estate owner is always going to want to steal them and bring them over to their property. This is Frank Rolfe with the "Commercial Real Estate Mastery Podcast." Hope you enjoyed this. Talk to you again soon.
