A common question we are asked by agency principals, "is there is a single KPI within the area of property management that is an indicator of profitability”? Much has been said about how to become more profitable, especially with fee maximisation, and this is definitely one of the secrets to strong profit growth. The other side of course is minimising expenses, and in property management what is the number one key expense the department incurs? Staff wages and salaries! They can make up between 40% to 50% of total expenses of a property management department.
So, lets look at the forgotten KPI that will enable you to monitor profitability improvement on an ongoing basis. Yes that KPI is the income produced per property management staff member.
It is important we start from the beginning and determine or define who should be included as property management staff? The property managers are clearly included, but what about a leasing or administration manager perhaps even the receptionist who spends time assisting with property management activities?. So you need to list all staff who have an active roll in the department even if not full time. Finally, don’t forget yourself as the principal, If you spend 25% of your time in property management then you need to list yourself as .25 of an employee of the property management staff.
Now having defined the total staffing for the department all you have to do is divide the gross income by the number of staff. This will give you a dollar value of income per staff member, therefore this figure becomes your starting point to benchmark future changes. The secret of course is to now look at how you can increase the dollar value of income per staff member.
Some simple ideas would be;.
Incorporating new technology to become more efficient.
To rationalise staff by reorganising your departments activities.
Look at reducing any other department expenses.
In our seminars we have had participating agents assess their agencies, including their income per staff member and believe me, the variation is quite surprising.
However, it is not so important as to how you compare with the agent down the street as to what you will do by going through your agency, working to wards maximising income and minimising expenses to get our forgotten KPI (income per property manager) going upwards each month and each year so you can be confident you are maximising your agency’s profitability.