PM Collective - The ART of property management
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PM Collective - The ART of property management
Incentivizing Property Managers: Creative Approaches to KPIs and Bonuses
KPI and bonus structures in property management are highly dependent on team structure and should be implemented thoughtfully with focus on rewarding performance that exceeds standard expectations rather than basic job functions.
• The "Keep It Budget" gives property managers their full bonus upfront which gets reduced for avoidable mistakes
• "Profit Per Portfolio" rewards based on total revenue generation instead of property numbers
• "KPI A La Carte" allows team members to choose focus metrics quarterly
• Task-based micro bonuses incentivize specific tasks like routine inspections or 5-star reviews
• Shared bonus pools create team accountability especially in task-based structures
• Creative non-monetary incentives include Culture Coins and mini-CEO programs
• Client experience metrics like NPS scores provide balance to prevent quantity over quality
• Not all agencies need KPIs - many successful businesses simply pay market rates with great environments
I'm always happy to share ideas and brainstorm together. If you have creative approaches to KPIs or questions you'd like addressed, please send them through to me.
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Welcome to today's podcast. Now, this one has come off the back of an email that I've received from another business owner who has asked the question what is the industry doing to incentivize property managers to take on larger portfolios, and what do KPIs and bonus structures look like in other teams? So, instead of me responding to the email replying to the email, I said I'm going to do a podcast on this one, because there's actually a lot to unpack with it. The other thing that I do just want to disclose is that this is very dependent on how many people in your team and how you are structured whether you're portfolio-based or task-based and I want to share a little story of a situation that happened to a conversation that happened with one of my property managers many, many years ago. At full disclosure, I actually don't do KPIs and bonuses inside my business for various reasons, but when we were talking about doing this about, it must have been about 10 years ago, and I remember a property manager saying to me Ash, I'm really offended that you think that I'm going to work any harder if there is a KPI attached to the task, and that was really interesting and it did change my mentality on them. So I think the first thing that I would always say to business owners, and property managers as well, that are listening, is that I agree with that statement. I don't necessarily believe that there should be a KPI attached to your general role Like to do your job. You shouldn't, I believe you shouldn't be getting KPI for that. Where I do believe you should be getting KPI is if you are doing something over and above your standard duties, so not even over the standard duties, over what the average duty would be for a property manager. So that is something that has stuck with me for a while Now.
Speaker 1:The ideas and talking points I'm going to talk about today are just, you know, complete suggestions, ideas, brainstorming, things that I've heard others doing. So they are just very creative. More to just get you thinking about different ideas. If this is something that you think you need in your business. So let's just get straight into it with my brainstorming. So the first one is the keep it budget. So this is something that I definitely have seen in offices before.
Speaker 1:This is where you give the property management department or the property manager a bonus at start of the financial year and that bonus they get given the bonus. So let's just throw out a figure of $10,000. That's the bonus for the whole year. Now, every time there is an avoidable mistake. So we all have them in our businesses where sometimes we make a little mistake, we send out the wrong contractor. Some offices would even go as far as saying lost managements because of bad service.
Speaker 1:If you've had to refund an owner for something maybe low NPS scores, etc. Then what happens is the money is deducted from that bonus that you start with and then at the end of the year, whatever's left in that bonus pool is what's divided by the team or maybe that's an individual one, and that is good from a business owner's point of view because it caps it for you. So you know exactly what that bonus is going to be per year and obviously minus those things. Exactly what that bonus is going to be per year and obviously minus those things. So you know that it's not going to get out of control, with bonuses going over and above, maybe, what you had budgeted for. So that is something to consider. It definitely is a bit more of a psychology flip. So it does change the mindset from earning a bonus to keeping a standard high. So that's something that I have heard good things about and I guess the only concern you're going to have that is what is an avoidable mistake. If you were to put that as one of the penalties, I guess, as one of the penalties, I guess. So if you do something like this, I'd be incredibly clear with how you are treating avoidable mistakes. So I mean, the other idea is that you let the team decide what it is. I mean, at the end of the day it's coming out of their bonus structures so you know they can decide how hard they want to negotiate with an owner to keep their business or they've got a pool there. So that's one idea. So we're going to call that one the keep it budget.
Speaker 1:The second one is profit per portfolio. So this is where you would reward your property managers based on the total revenue of their portfolio. So this is where you would reward your property managers based on the total revenue of their portfolio, and this is where we're not focusing on the number of properties but we're focusing on the total revenue, where, at the end of the day, that's sort of the most important part of the business. So how you could do this is you could benchmark an office average so you could hypothetically say, 120 properties at $2,000 per annum equals $240,000 per year, and then you can pay a percentage of the income above that average or for the increased profit. So not just size. So this is really encouraging smart management, more than just more properties. So if that is a concern in your business and you're hesitant to increase the capacity of the number of properties that they're managing, maybe focus on that revenue and see what they can do from generating more revenue. So things that would count, you know you could have making. I mean, what this would be doing is when you're looking at the revenue, is it really encourages the property managers to make sure that they're charging for all their tasks, they're doing all their routine inspections and not leaving them unscheduled. You know, from month to month they're leasing properties at a good market rate. They're doing good fare increases for the property, lease renewals, all of those things which are really important parts of the role. You know that that's all going to contribute to the revenue for their portfolio. So it's encouraging them to really perform well for their clients. So that is a profit per portfolio, which is something that would be interesting to put in place.
Speaker 1:The third idea would be what we'll call the KPI a la carte. So this is where you could potentially, as a team, go through a huge list of areas of performance and get them to choose them. So basically, you could do this on NPS scores, inspection, completions, arrears rates, new business referrals and what you would do is you could say to the team we're going to choose three focus tasks per quarter and you can rotate them every three months. This makes the KPIs sort of a little bit fun. It keeps them flexible. It also allows the property managers to input what they believe is important and areas that they're going to focus on over the 12 months as well. So that does get the team involved and not a bad one to do, I guess. The only sort of negative thing it's not even a negative really, but for me as a manager it comes down to how easy things are to track. So for me personally, I really find it annoying having to track KPIs all the time. So for me that is one reason why I haven't really done it in the business, because it's just like it feels to me like another job to do. So that's just something to consider that if you do do that option, you do need to make sure that you can access those figures quite easily and be quite specific on them. Access those figures quite easily and be quite specific on them.
Speaker 1:Number four we've got task based micro bonuses. So this is instead of doing monthly KPIs, and these really are more what we'll call micro incentives for certain tasks. So that's where you might have a bonus for each routine inspection. So, for example, for every routine inspection they do, you might want to pay the property manager $25. What this does is it encourages them to constantly schedule their routine inspections. Of course, in WA we get to do more than maybe some other states, but you know it's still something to consider. I know that for me, checking unscheduled inspections each month is something that I do check and keep an eye on. So if you haven't checked that for a while, I do encourage your business owners to keep an eye on that, because that is quite a lot of consistent loss of income.
Speaker 1:So doing a $25 per inspection done on time fee, I think is something that would be good for the business. You might want to do a $50 per five-star Google review, so that would be another task-based micro bonus. You could do $50 for maintenance resolved in 72 hours, or maybe there's a KPI that you can find off TAPI. That would be something that would be reflective to that micro bonus. So it could also be for new business that comes through. So things like that or any of those tasks that are really important for you or important to you in the business. You can always attach a little price to them. So that would be something that you might find good for junior property managers in that it gives them that little bit of confidence boost when it comes to the getting the reviews and also keeps them on track with those inspections as well.
Speaker 1:And the last one number five, is that shared bonus pool. So this is where it's very much department-based bonuses. They're tied into the total department profit. So if you've got task-based property managers, this might be a better one for you because they're not portfolio-based. It really does create that team accountability and you can have a big pool and you can split it based on percentage of their portfolio size, all the responsibility that they have in the team, whether they're senior and juniors, someone that just does routine inspections or someone that just does maintenance, et cetera. So if team environment and things like that are really important to you, then this could be a great option, as opposed to businesses where you've mainly got portfolio-based.
Speaker 1:So those five, just in a quick summary we've got the Keep it Budget, property Per Portfolio, kpi, alicat, task-based micro bonuses and shared bonus pools. So they are five ideas that you might like to use, or maybe you just want to like use them to trigger a conversation, but I hope that helps. And now of course, you know, for everyone listening, if you don't do KPIs and don't want to do KPIs, that's totally fine as well. So there's a lot of agencies out there that pay a good market rate for their property managers and offer a fantastic environment and don't feel the need to introduce KPIs. I don't think it's something that should be expected in a business. And so that goes for employees and employers listening, I don't think it should be expected. It is just something that some business owners choose to do as part of their ethos in the business. So you know, I do just want to declare that. So people you know know that it's not normal in all businesses to do it, and I've got a couple of just like little tiny bonus creative ideas that you could also do.
Speaker 1:That might not necessarily be money driven and an exchange for money, so things like culture coins, so internal currency for small wins and the property managers can redeem it for time off or vouchers or extra training or CPDs, things like that. So just as like an idea, culture coins, you could create coins that like a bit like a casino coin you know what I mean when you have like little jars for each property manager on their desk and I don't know, maybe managers or people whenever there's a good deed or have small wins, they get a culture coin and I don't know you could play around with that idea. Something fun there. You can create like a mini CEO program. So that's where you could give like senior property managers a mini business unit to run and profit share from, so giving them a little bit of control to run the portfolio as their own little mini business and take you into account you know liabilities and running costs and things like that as just something fun to play with and to potentially grow and to potentially make a profit out of.
Speaker 1:You could also have client experience bonuses I'm seeing this a lot lately, so rewards that are triggered by the NPS or the Google reviews, so things like lease renewal retention rates. I've got a friend who pays extra per property that the team manage and her only KPI is NPS scores. So they have to be at a certain point for them to maintain their numbers of properties that they want. So making sure that we don't find ourselves in a situation where property managers are taking on more because they want more pay but not delivering that service. So that's client experience I think is a really great focus point to have with a lot of these KPIs, a lot of them, at the end of the day, they are driven by either the end dollar for the business owner from a profit or for the business from a profit point of view, and the client experience. I mean, they're the two things really. Ultimately we're tracking in a business and you could also have quarterly reward bonuses or quarterly reward challenges, I guess, for process improvements that are saving time and money to the business as well.
Speaker 1:So they are just a few little ideas and I hope that it's a little bit of food for thought. So take it as you wish and if it's something that you found helpful, please send me through a message and let me know If you are doing something a little bit more creative or different and want to send that through to me. I can keep it all anonymous, would love to share your ideas. I think when we share all these ideas, we definitely are able to brainstorm and create better businesses, not only for ourselves, but also for the team that work with us as well. So hope you enjoyed that one and if you have any questions just like this sender did like this question please send them through to me. I'm always very happy to share my opinion on it, share some ideas and hopefully that helps everybody listening.
