Bonus v. Base Compared to American business in general, apartment firms are staying competitive as far as compensation, says P. Jaine Jacobs, director of survey operations for Rochelle Park, N.J.-based Watson Wyatt Data Services, NMHC’s consultant. “The apartment industry is not too far off the merit salary increases when compared to general industry,” Jacobs says, adding the percent increase in any apartment salary category is only slightly different than its general industry counterpart.
On the pay side, Jacobs notes that both American companies in general and the apartment industry are changing base salaries, instead opting for incentives in sales-based positions to inspire higher productivity. “We found they are changing the mix of base salary to change the behavior of the big salaries,” she says.
Eighty-six percent of multifamily companies studied had annual incentives or bonuses for property management employees while 66.7 percent had an annual incentive with formal payout targets, according to the study.
Cynthia Y. Thompson, senior vice president of Memphis, Tenn.-based Mid-America Apartment Communities, says her company keeps base salary increases at 3.5 percent and relies on a quarterly bonus program based on performance. She adds that the rewards seem to inspire productivity and help with retention.
Danner says that while Riverstone still uses incentives to keep corporate employees productive and happy, that strategy is no longer effective with lower-level employees. So, the company has moved away from incentives and boosted base pay instead. “We changed our compensation structure to put more in the base salary and less in the incentives,” Danner says. “We found that people would leave because they were guaranteed 50 cents more an hour. It really did help us by moving more compensation to the base.”
–Erin Massey is a freelance writer in San Diego, Calif.
Data Details
For more information, visit National Multi Housing Council (NMHC).
Moving Target
Multifamily firms continue to battle turnover.
Apartment firms may be losing more employees than in previous years, but not without a fight, according to the NMHC’s seventh annual apartment compensation and salary survey.
Turnover rates, which had waned in recent years, rose dramatically in 2006, reaching an industry-wide average of 59.2 percent, up from 37.2 percent in 2005, according to the survey. “There has definitely been a jump in turnover,” says Elizabeth Feigin Befus, NMHC’s director of property operations. “But it is too soon to say if it will be a trend.”
She adds that changes in the overall job market have affected turnover in the apartment industry but that increase in turnover is still within apartment executives’ control. She urges apartment firms to be vigilant in their recruitment and retention programs from the top down.
Corporate and regional administration positions had lower turnover in a 12-month span than positions such as leasing consultant, assistant property manager and even bookkeeper. While those ranged in the 40 percent to 50 percent turnover range, total turnover for corporate administration was 20.8 percent.
As always, the main culprits in troubling turnover statistics are leasing consultants, whose low salaries and high-pressure jobs lead many of the often-young employees to leave.
Other firms have managed to staunch the flow–at least for now–thanks to special programs and other retention efforts. “We think what keeps leasing consultants is the reward and recognition program and a culture of being a nice place to work,” says Linda Ricklef, the vice president of human resources for Atlanta, Ga.-based Post Properties, where the turnover rate for leasing consultants has remained between 20 percent to 21 percent. Post has conducted studies that show the age group of most leasing consultants value the social aspect of work as much as the pay.
Post isn’t the only company tapping into new programs to keep employees happy. “To reign in turnover, companies are attempting to make those jobs more professional,” NMHC’s Befus says. “They are trying to provide a positive corporate culture with rewards and recognition and by taking a look at compensation packages.”