Monitor performance
The average rent for an AEC property runs about $975 a month, so if someone signs a 12-month lease, that’s nearly a $12,000 sale that the AEC employee is trying to make or renew. With that kind of money on the line, the last thing Friedman wants is for an employee to pick up the phone when he or she is talking face to face to a prospective renter or a current tenant.
“You would expect that if you’re at a drug store and buying a magazine … you may be able to wait while someone answers a call when you’re checking out,” Friedman says. “But when you’re thinking about spending (about) $10,000 a year, it really does make a difference in how you’re treated.”
To ensure that employees are doing the best they can to convert those searchers into tenants, he has to motivate them to do well and then monitor their performance.
“Combine the regular contact with the career development with the pay, and then you have to keep a close handle on how they’re performing,” Friedman says.
To start, AEC ties performance to salary. Every employee is eligible to receive a bonus, and more than 85 percent of AEC’s employees have some part of their compensation based on incentive. For people who may be lower in the organization and may rely more on a solid salary, they may only have 5 percent tied to incentive, but as you get higher in the organization, so does the amount tied to performance incentive. For Friedman, 80 percent of his total annual compensation is tied to his performance.
“It’s motivating, but it’s also important from a strategic perspective because that incentive compensation has to be tied to a very specific strategic plan and very specific ways to measure that performance,” he says. “We have to make sure the basis by which we’re incented drives those objectives from a corporate perspective.”
Friedman is careful to make sure that incentives reflect long-term goals versus short-term goals. For example, at the property level, a property manager may be incentivized based on how their property performed against their budget for the quarter because at that micro level, the quarterly numbers are critical; however, on a regional level, it may be how the region of properties performed against their budget for the whole year. Then at the corporate level, executives may be incentivized based on how they performed that year against the multiyear strategic plan.
Ultimately, it’s this combination of looking at specific location performances and then zooming out to see the big picture that will give you a true image of how your people are doing.
“If (a location is) performing well, it’s reasonable to assume that the people at the property are performing well, and it’s the responsibility of the manager to determine if we could be doing better but for lesser performance of someone,” Friedman says. “Conversely, if the property is not performing as expected, it’s practically always about people.”
To measure which properties are performing and which aren’t, the company puts out a list of its top 10 and bottom 10 properties each quarter. Before jumping to conclusions, though, it’s important to properly evaluate those bottom performers by looking at the market and region and seeing if they’re performing low relative to the whole company or if they’re performing low relative to their market or region.
For example, in Northern Atlanta, AEC has an excellent team, but it’s a very soft market, so while the Northern Atlanta properties may not be performing as high as other AEC properties, they’re doing excellent compared to that market.
“Where there is a disconnect between how we’re doing against the market is where managers have to manage poor individual performance because typically it relates to people,” Friedman says.
One way AEC does this is by using those “shops” that academy instructors do when they visit the properties. While they do this at the competition, they also do this for AEC employees as well to grade their job performance, and employees are aware that they may be shopped at any time during their employment.
Instructors use hidden cameras to record the language — both verbally and physically — to illustrate good and bad techniques. When someone doesn’t do well, then instructors and managers take a deeper look at the situation so they can educate the employee and help him or her become better.
“It’s not just important in regard to a video shop, but it’s important with any type of mentoring and part of a career development pattern,” Friedman says.
If someone has a bad performance, one of the first things the instructor or manager looks at is the person’s personal circumstances.
“It may have something to do with the personal life of the employee or issues that may have been going on in their life that day,” he says. “That happens in all of our lives. The role of the manager is to determine if that was a one-off situation or it may be something deeper and of greater concern.”
If the manager or instructor determines it wasn’t a one-off situation, then he or she will personally work with the employee to show both what the employee did and also examples of how it can be done better. For example, instead of just showing the employee everything he or she did wrong, the employee is also shown examples of excellent video shops so he or she can actually see how to do things better instead of just being told.
On the other end, when someone gets a perfect shop, the entire company is notified so that that person is recognized for an outstanding performance.
“Employee recognition is really important,” he says. “Pay practices are important, and most business leaders recognize that there is definitely a relationship between pay and performance, but also, I think we all recognize how important recognition is.”
How to reach: Associated Estates Realty Corp., (800) 440-2372 or www.aecrealty.com
