Money as Motivator
Apartment firms consider commission-based pay.
To Dave Woodward, the compensation structure for leasing agents is one of the great ironies of the apartment business.
“We call these leasing people ‘salespeople,'” says Woodward, managing partner and CEO for Laramar Group, an apartment firm based in Chicago. “In reality we don’t treat them like salespeople, compensate them like salespeople, or train them like salespeople.”
Others agree. “The vast majority of leasing associates have a pay structure where anywhere from 70 [percent] to 90 percent of their compensation is fixed,” says Jack Callison, senior vice president of national operations for Archstone-Smith, an apartment REIT in Englewood, Colo. “You have a 10 [percent] or 15 percent bonus based on a variety of metrics, including performance.”
WoodwardPhoto: Roark Johnson It doesn’t always add up to very much. Leasing agents earn an average of $26,200 annually, according to NMHC’s 2004 compensation study. (Watch for the 2005 results in an upcoming issue of Multifamily Executive.)
But that could soon change. Several public apartment companies, among them Archstone-Smith and United Dominion Realty Trust, are reviewing their compensation structures, although they won’t reveal more details. Laramar, which is private, is actively pursuing a commission-based program. “We’re going to change our organization,” Woodward says. “To be a sales organization we’re going to lower hourly wages and dramatically increase commission. We’re going to pay our commission as a percentage of the total transaction.”
He believes that the shift will result in less turnover among leasing agents (particularly the ones who are good at sales and might be tempted to look elsewhere for better commissions) and more focus on customers. “When a phone rings or e-mail comes in, it will be worth $300 or $400, so they will jump all over each other to get that business,” he says. “The best salespeople will clamor to work on Saturday and Sunday. They will want to work extra hours because they want extra commission.”
–Les Shaver