Real estate managers have many titles for the jobs they fill and the job descriptions vary accordingly. Rarely does a single real estate manager perform all of the tasks inherent in these responsibilities; nevertheless, it is the manager’s duty to ensure that all of the following work (listed in no particular order) is accomplished:
Real estate managers can accomplish these responsibilities in three ways: (1) hire staff to work on site, (2) assign employees of the management firm to fulfill on-site work, or (3) contract with others to provide the necessary workforce. The real estate manager may serve as a bridge between the site personnel (maintenance, on-site leasing, and site administration) and the employees of the management firm (accounting, marketing and leasing, and clerical workers). Generally, the real estate manager is the supervisor of all of these individuals and report to a senior or executive property manager in the management firm.
The relationship between the real estate manager’s goals and the goals of the property owner are the foundation of the relationship between the real estate manager and the staff. The employees must understand the goals and work toward fulfilling them by cooperatively applying their abilities. They must believe that meeting these goals is a worthy endeavor and that they are treated fairly as part of the team’s overall success or failure. Employees must also understand the relationship between the real estate manager and the owner and the way those goals relate to each other; they must also understand how individual efforts contribute to the success and value of the property. Ultimately, the real estate manager’s success truly depends on how well he or she trains the staff in understanding the goals. Inspiring and instilling the desire to serve clients as they would want to be served will make or break the success of the property.
For a single property, hiring on-site staff is usually most beneficial. Employees of a management firm may provide services to more than one property—their services to a particular property are part of the contractual arrangement with the property’s owner. Outside contractors may perform all types of work, which most often requires specialized skills, equipment, or specific licensing. To manage a property, the execution of necessary tasks requires cooperation among on-site staff, management firm employees, and contractors. Real estate managers should assign each specific task to one or more of these groups.
The type of property, its size and layout, and the number of residents or commercial tenants determine how much work is done on site and how large a staff is needed. Real estate managers of residential properties may have to respond to residents around the clock. For example, office building managers provide services to tenants and their employees during business hours, while cleaning and other custodial tasks are typically done after hours, usually in the early evening. Large shopping centers require staffing not only while stores are open for business, but also after business hours for security and custodial maintenance.
While all properties require on-site work, many are too small to justify a regular part-time or full-time staff member. If a property requires sufficient maintenance and repair work to occupy one or more people full-time, hiring skilled staff is usually the most economical approach. However, an individual with a single skill (e.g., carpentry or plumbing) is usually not hired on a full-time basis. Large properties that include complex operating systems are more likely to employ skilled personnel to maintain these systems.
For small properties that require only occasional repairs—amounting to less than a day’s work—having one or more contracts for skilled labor as needed is generally a better choice. A contract laborer—hired through an employment agency—usually earns a higher hourly wage than a full-time employee; however, a contract for labor as needed means that money paid is for specific work done and actual hours worked. The payroll taxes and forms for the contract laborer are completed by the employment agency—eliminating extra paperwork and expense for real estate managers and management firms. Another benefit is that contract laborers do not require training, and the employment agency normally handles any employee-related performance and/or disciplinary issues. A higher wage might be required in hiring a contract laborer; however, the overall cost may be about equal.
Whether the owner or the management company is the employer of on-site staff is an important question that relates to the assignment of risk, hold-harmless provisions in contracts, etc. The issue should be negotiated beforehand and should be documented in the management agreement.
On-site staff members may technically be employees of the property owner rather than of the real estate manager, which is often the arrangement when an individual real estate manager contracts directly with an owner to manage a single property. However, the real estate manager or other employees of the management firm may actually hire, train, supervise, and terminate the on-site staff in addition to processing their payroll. This sometimes raises questions as to who is the true employer of on-site staff—the property owner or the management firm? Even though a management agreement may stipulate that the owner is the employer of the on-site staff, the U.S. Department of Labor may take the position that they are employees of the management firm because of the circumstances of their employment. Regardless of who employs the on-site staff, their wages are paid out of the operating funds of the property.
On-site staff members normally work only at one site. However, if a property owner or a management company has several buildings that are near each other, staff members may be assigned to all of their buildings and not just one of them. In such situations, the labor cost of work performed may be charged to the respective properties on an hourly basis, or a worker’s total compensation—per month or per year, including both wages and benefits—may be allocated on a percentage basis to each property to account for all hours worked.
The most common on-site work is maintenance, but many other duties at a property may require part-time or full-time staff. If the property has its own office, it may warrant an office manager or full-time clerical worker. In large properties, front desks must employ staff when the building is open—if not around the clock. Larger luxury apartment communities have door attendants and concierges. High-rise office buildings usually have lobby attendants, day porters, and security guards. Major shopping centers and enclosed malls may offer information or stroller rental services to customers in addition to providing personnel to clean the common areas and security for the commercial tenants, their employees, and their customers. Having a large staff may necessitate employing supervisory personnel, such as a director of operations or services manager, all of whom report to the real estate manager.
The size of a management firm and the range of services it offers depend on the extent of its portfolio. Management firms often begin as two-person enterprises—they usually start as an independent management business with a few clients and most likely hire a second person to do clerical work. Initially, the clerical worker may only work part-time depending on the workload—it might not be enough to warrant full-time employment. The clerical employee of a new management firm may be responsible for several office activities, such as processing correspondence, answering the telephone, accounting and record keeping, payroll, balancing bank accounts, and making bank deposits. As the firm secures more management contracts, additional employees may be hired—a full-time administrative assistant and then, perhaps, a property accountant. As the size of the firm’s portfolio increases, a greater demand for specialization of staff members’ roles becomes necessary. Specialization reduces the number of daily interruptions of one specific assignment by an unrelated task that has the same or greater priority. However, one individual often performs numerous unrelated tasks, especially in small firms with limited economic means.
Two questions must be continually asked regarding the size of the management firm’s staff: (1) Is it the right size to give every client timely and accurate service? and (2) Is it adequate to perform its own administrative tasks?
When a firm’s portfolio is small, one or two employees in addition to the real estate manager will be able to provide tenant services, client services, and routine office administration. However, if the management firm expands, or if clients require additional services at some point, compare the cost of additional staff to both the service requirements of the firm’s clients and the needs of the management firm. There is almost always an imbalance in the amount of staff and work required. Management firms can rarely afford to have too many staff on board awaiting new business; they most likely suffer the reverse—too much work for the staff in place. The number of staff members and their level of specialization within the management firm depend on the following eight factors:
The staff requirements of a management firm can grow for many reasons, particularly in areas of responsibility not directly related to managing properties. Sometimes a mail room supervisor is necessary due to the large amount of mail that comes through a large firm. Data entry and retrieval might require an information technology (IT) specialist. Although IT specialists are not directly involved with real estate management, their presence means that real estate managers can do their job without distraction. The potential for the business of a management firm to expand is great, and the number of people it employs will grow accordingly.
In contrast, the potential for an on-site staff to expand is small—the number of people employed directly at a property rarely increases because changes made to a property are usually not significant enough to alter the size or organization of the staff. However, the addition of leasable space or changing from net leases to gross leases could create some exceptions that could lead to a change in staff size. In net leases at commercial properties, the tenant pays a prorated share of some or all operating expenses in addition to the base or minimum rent, compared to a gross lease—in which the tenant (or lessee) pays a fixed rent and the lessor is responsible for paying all property expenses (e.g., taxes, insurance, utilities, repairs). These costs are factored into the rent the tenant pays. Basically, gross leases require more work on the part of the management company, whereas net leases require the tenant to maintain their own premises.
Because hiring employees is expensive, contracting labor for temporary or intermittent tasks can be economical. The management firm usually hires contractors—the owner may occasionally hire them—depending on whether the work is limited to one property or is needed by the firm’s central office. Real estate managers might hire contract workers to work on site at the property or at the management office, or the work may be outsourced.
On-site Contract Workers. Contract workers at a site perform a variety of tasks. They often perform maintenance tasks that require special equipment or training (elevator maintenance, roof repair) or licensing (pest control). Real estate managers frequently contract seasonal services such as lawn care, snow removal, decorating, exterior painting, window washing, and even daily janitorial maintenance. If the property needs on-site security, contracting for this service can reduce the property owner’s liability in the event of a crime or other incident by shifting the liability to a third-party contractor. (Chapter 10 explains maintenance contracting procedures and the liability the owner and the management company assume under the law of agency when any contractor is hired.)
The management office may employ part-time or temporary workers, especially for administrative work such as filing or accounting. Temporary employees can be contracted for a day, a week, or longer for specific assignments. Companies that specialize in providing skilled labor for maintenance, clerical, or administrative duties are more abundant in large cities, but they are also available in smaller cities.
On site or in a small firm, the real estate manager is a full-time leasing employee of the owner—or of a leasing company in charge of leasing. However, very large properties or those with high vacancy rates or frequent turnovers may benefit from a full-time leasing agent. Initial lease-up of a new or renovated property also demands full-time attention. Leasing is one real estate management task that is often contracted because leasing agents provide specialized expertise. For each successfully negotiated lease, a leasing agent on contract usually receives a commission based on a dollar per square foot of space leased or a percentage of the rental income over the term of the lease.
Outsourcing. Another approach to contracting is to outsource an entire function. For example, a small management firm that does not have a staff member to recruit and process job applicants may contract an outside service on an as-needed basis to perform these tasks. Management company personnel still interview and hire the individual, but the contractor prescreens applicants’ resumes, narrows the field of prospects to interview, and handles all the paperwork, including the reference checks.
Other firms will take over management of all personnel operations, from the hiring process through preparation of payroll and administration of benefits, which the contracted firm provides. For a small company, the outside source can relieve an administrative burden and may expand the benefits the firm can offer its employees (e.g., medical insurance coverage) when the total number of employees is too small to form a group acceptable to an insurance carrier.
Management firms may also outsource accounting. This can be very helpful if the small firm does not have the proper or sophisticated (and expensive) accounting software programs that create reports automatically once data are entered into the program’s forms.
Marketing and leasing are other functions that a firm may outsource effectively. Contracting with marketing and leasing professionals can ensure timely completion of these efforts; it can also ensure that all contacts with prospective tenants meet the firm’s requirements and comply with fair housing laws. Management firms sometimes benefit from specialized outsourcing because it pays for itself quickly—the higher level of experts lease units quicker for maximum rents.
Providing an adequate staff for a property, a management firm, or both requires careful planning and close examination of resources. The first step in this process is to list the essential tasks and estimate the time each requires on a weekly or monthly basis. The initial assessment may be very detailed, accounting for everything from the time necessary to mow the lawn to the time required to collect rent. The final compilation might resemble a budget, except that hours of work per week or per month are the primary quantitative measures rather than dollars and cents. Analysis of the resulting list should indicate how many workers are necessary for efficient operation and adequate service to the tenants and the property owner.
The size and type of the property as well as particular tenant requirements understandably influence the preparation of this list. Once all functions are noted and the average amount of time for each is calculated, the various duties can be grouped by category. These groupings may be the basis for job descriptions or for setting up the maintenance and administration departments. Use the groupings to decide how many full-time and part-time workers the property needs, as well as which tasks outside contractors may complete most economically. To be accurate, any estimate of the number of workers required must also allow for days off, sick time, and vacation days. Such time budgets may be prepared for each property as well as for the management firm. When duties are duplicated, evaluate further to decide whether the duplication is necessary or if consolidation is possible.
Once the list is completed, the payroll costs and benefits of each employee must be included in the property’s budget, and adjustments to salary or benefits that the owner might require must be made for cash flow purposes. It is important to note that not all properties can afford to hire personnel solely based on this “time list.” Most often, the budget is first created and payroll is then determined by the other needs of the property and/or owner. If money is tight, an owner may require that minimal staff be hired to maximize their cash flow—altogether, it is a balancing act.
One of the largest ongoing investments for any property is maintaining a highly qualified and skilled staff. To build a capable, dedicated staff, pay careful attention to the recruitment and selection processes. Beyond that, investing many hours and dollars in continual training and development is an essential component in maintaining a high level of service for the managed properties.
Qualified candidates can be found by creating online job postings, employing staffing agencies, utilizing certain social media websites, seeking personal referrals, or promoting current employees. There are plenty of websites available for posting a job. Some websites cater to specific industries, while others assist potential employers in gaining quick responses for easy-to-fill administrative jobs. There are even websites specifically created for jobs within certain regions or states; other websites post jobs nationwide.
For specific real estate management jobs such as portfolio managers, directors of property administration, associate property managers, and even on-site residential managers.2 There are many ways to recruit highly qualified candidates. With the demographics of the industry and employee turnover rates, real estate management firms have been building their own workforce by creating relationships with community colleges, tech schools, and universities to offer internships and manager-in-training programs.
Online Job Postings. Online employment ads generate quick responses, especially if they are effective and posted on popular websites, in which case, employers may receive hundreds of resumes from candidates. Some of the most popular websites include CareerBuilder, Indeed, SimplyHired, and Monster. Posting fees may or may not be involved. Some websites base the posting fee on a maximum cost-per-click (CPC), which is the highest amount paid for a click on the job posting. The more spent on the job posting, the more the traffic will be directed to the posting. Other websites simply offer a basic flat rate for a job posting; the rate is based on the length of time the posting stays visible online.
In general, many applicants will be over- or under-qualified for the position, and filtering out the most qualified candidates can be time consuming. To facilitate the screening process, the job posting should describe the duties of the job and required qualifications. It should instruct applicants to submit a resume, work history, or other pertinent information that applies to the job.
Social Media. Social media is not only used as a recruitment and networking tool, it also helps to promote real estate management firm in many ways—especially by displaying the brand and logo. In order to be successful with job postings via various social media platforms, it’s important to develop content that helps candidates learn more about the organization. It’s important to educate the staff about the social media outreach and invite them to participate in ways that will improve the image of the real estate management firm.
Staffing Agencies. In order to save time or in situations of hiring director- or senior-level personnel, employing a well-known and reputable staffing agency is a good option. In other situations in which time is of the essence, a staffing agency can quickly gather a selection of qualified temporary workers. For example, in residential student housing, temporary workers might be needed between school semesters when students are signing leases or moving into and out of apartments. Understanding the staffing agency’s screening process is important to ensure that they find candidates with the specialized skills required for the position. Although working with an agency spares the time of conducting interviews, consider the agency’s fee, which is sometimes a percentage of the annual salary for the position filled.
Internal Promotion. Promotion within the company is an effective way to retain and increase the value of excellent employees. Some people believe that promotion from within doubles the cost of training because the person who is promoted and the successor must be trained simultaneously. However, promotion can be highly rewarding and is often more efficient even though the initial training expense can be slightly higher. Internal promotion is not only excellent for morale, it’s also a great motivator for employees to know there is room for growth within the company. Another benefit is that the promoted employee is already familiar with the company and most likely understands the new position quite well. If time allows, the person promoted may be able to train their successor, which reduces the demands on the trainee’s supervisor. In addition, the newcomer enters a lower-level position, a situation that provides room for their individual growth within the company rather than fostering a need to seek outside opportunities.
A well-written job description consists of more than a laundry list of the tasks and responsibilities the job entails—it reflects a sense of priorities. The following list provides a few ideas to keep in mind when writing a job description:
Personal Referrals. Personal referrals from current employees of the company or from acquaintances are also valuable resources. Such prospects usually have some knowledge of and a genuine interest in the company, and are most likely capable individuals. However, be careful not to depend too much on personal referrals because they might not attract a diverse workforce or provide a fair workplace. Other sources for referrals are through professional activities. Membership in professional organizations can provide many contacts that allow other professionals to keep up to date on local business activities—including who is working for what company and how well those people are doing. Established professional relationships can help locate the right person for a position and quickly check their credentials.
Unsolicited Applications. In addition to a company’s active recruiting, the property or the management firm may occasionally receive unsolicited resumes and applications. Examine these applications when they arrive—even if no positions are available. Information sent in this manner is often evidence of an applicant who has sound qualifications and a sincere interest in working for the property or the firm and who may even have researched the property or firm in advance of applying. If such an applicant appears to have the proper credentials, keep their resume or application on file for two to three years.
Regardless of how a prospective employee is recruited, all candidates should complete an employment application form, which organizes and standardizes the information needed to make the hiring decision. A personal interview is necessary before making a final decision on employment. In addition to showing if the candidate is capable, interviews help in ascertaining if the applicant is compatible with the requirements of the job and willing to work toward the goals of the owner or the management firm. Individual applicants should be evaluated based on the requirements for the particular position.
The overall goal when developing interview questions is to find the right candidate for the job—someone who is trustworthy, outgoing, and passionate about what they do. The following lists examples of questions that will help reveal certain behavior types:
Verify Information. Before making a formal offer, verify the employment application information. To acquire all the information needed, have applicants sign a separate waiver—to be copied and sent to former employers—that releases previous employers from liability for information given in references. Request a copy of the applicant’s driving license and obtain a copy of their driving record if they are going to have to use a car in the performance of their duties.
Verifying information provided on job applications can be a time-consuming activity, and the information gathered may be incomplete or inaccurate. Privacy laws require employers to safeguard personal information that applicants supply. Using an employee-screening service, which has more resources available to it, has the advantage of distancing the employer from liability related to the screening process.
One of the goals when conducting an interview is to determine whether the responses display a personality type or potential value system that closely mirrors the ideal candidate. The following lists additional questions that can be asked for supervisory positions:
1. If candidates are new to these positions, this question would allow real estate managers to correct inaccurate assumptions and better explain the specific roles so the candidates know exactly what the jobs entail.
Formal Job Offers and Rejections. The formal offer of employment should always be formalized, even after an offer is made and accepted over the phone or in person. Generally, within three days of hiring, the new employee and the employer must complete an Employment Eligibility Verification form (Form I-9), which verifies the employee’s identity and right to work in the United States. Employees can present a number of documents to verify their identity and right to work. Employers are required to retain I-9 forms in the employee’s personnel file for three years after the date the person begins work or one year after the person’s employment is terminated—whichever is later. Applicants who are not offered the job should promptly receive rejection letters as a matter of business goodwill, but not until after the selected candidate is employed and performing the job.
Ensure Nondiscrimination. Although some reasons for selecting one candidate over another are subjective, the promise of capability combined with demonstrated reliability are usually the main factors in selecting a new employee. Certain outside factors should never influence the compensation offered to an applicant, a current employee, or any other decision that affects an applicant or employee. Title VII of the Civil Rights Act, which is enforced by the United States Equal Employment Opportunity Commission (EEOC), prohibits discrimination against employees and applicants for employment. Various state and local laws may also prohibit discrimination in employment, and their requirements may be more stringent.
As a standard practice, all employees should be required to sign a statement acknowledging receipt of the employee manual. The following lists some of the basic contents of a items in an employee manual:
The manual should also include a policy that requires any employee to take any conflict with their employer to binding arbitration instead of immediately going to court.
The importance of nondiscrimination in the workplace goes beyond legal compliance. People of all races and creeds own and rent property. To provide owners and renters with superior service, the staff of the property and the management firm should reflect the diversity of the community. The owner and the management firm should provide diversity training to the property staff. The ability to work with people whose backgrounds are varied is an asset of incalculable worth. To stay up to date on the laws that apply to all types of work situations, including hiring, firing, promotions, harassment, training, wages, and benefits, visit www.eeoc.gov.
All new employees should receive training and orientation regardless of their competence or familiarity with their new duties; this is also known as employee onboarding, which is a comprehensive approach to bringing in new hires that goes beyond simple orientation. Onboarding plans are intended to make new employees familiar with the overall goals of a management company or specific property and support them as they embark on early projects in an effort to achieve success.
The ultimate payoff is to reduce turnover and encourage workers to stay with an organization for a longer tenure. Since every company has a unique culture and particular procedures, new employees should be properly introduced to the work environment as quickly as possible. An employee manual stating the company policies reinforces an orientation program. An employee manual should include but is not limited to the following:
Once employees are established in their jobs, schedule regular performance reviews and conduct them as promised. These sessions should be structured to help employees increase their value to the firm. They are also a great opportunity to discuss any deficiencies or performance corrections that may be needed. Businesses commonly review employees’ performance at least once a year. In addition, new employees may receive employment reviews after their probationary period, or the first three months. A review early in the period of employment can be an opportunity for both employer and employee to reaffirm their employment decisions—or to agree that the decision was not right and go their separate ways.
Employees adapt to their new work surroundings and obligations at their own pace. Depending on the job and the individual, some employees require as much as a year on the job before their productivity reaches the level the employer expects. Conversely, the employer may realize early that an employee is incapable of doing the job assigned.
A comprehensive review of the employee’s performance may indicate that his or her talents lie elsewhere—refer to the recommended performance appraisal methods in the next section. Review of the job description may also reveal that the work is too much for one person to accomplish. Additional training or a transfer may be a way to retain an employee who shows promise but is not qualified for the job they were hired to do.
A talented and dedicated staff is an employer’s most valuable resource. Developing qualified staff requires great effort, and continually rebuilding a staff because of turnover is extremely expensive. An employer can minimize personnel costs and increase the value of individual employees by retaining responsible, dedicated people. Appropriate compensation, open communication with employees, and consistent encouragement of individuals to grow in their jobs are factors that facilitate employee retention.
One of the main components of retaining valuable employees is through appraising their work performance. A few of the most effective and widely used methods utilize the following three components: (1) graphic rating scale, (2) weighted checklist, and (3) management by objectives. These are just a few ways of determining the strength of the staff and evaluating and reviewing their performance. Essentially, through the review process, employees learn areas in which they have improved or in which they still need improvement. Such a review is meant to help motivate employees.
Graphic Rating Scale. There are a variety of ways to gain honest and constructive feedback from employees based on their performance appraisal. Using the graphic rating scale method, there is an appropriate place on a scale for each task listed. A typical scale has a five-point rating: 1 is significantly below standard, 3 is standard, and 5 indicates performance significantly above standard. A comments section is typically included for providing additional information about the employee’s performance in each dimension.
Weighted Checklist. Using the weighted checklist method, the appraiser is given a list of statements and checks the items on the list that describe or apply to the employee. Some items may be weighted higher than others to arrive at an overall tabulated result. This system is limited because each appraiser may interpret statements and words differently.
For example, the checklist might have the following items:
Management by Objectives. A process in which employees help set objectives for themselves is known as management by objectives (MBO), which defines what they intend to accomplish within a given period. The employers and employees mutually agree on the goals and objectives. When employees are involved in setting goals, a higher level of commitment and performance can result. Employees clearly understand goals they helped to set, and that fosters an increased sense of accomplishment and dedication to the company.
Pay and benefits are the tangible rewards of dedicated service. Compensation must meet market levels to keep employees satisfied. It must also offer employees security and incentives to strive for greater rewards.
Wages. The federal Fair Labor Standards Act (FLSA), which the government revises from time to time, regulates the minimum wage per hour and the maximum number of hours employees can work per day and per week in positions that are paid an hourly wage. If the maximum hours per day or cumulative hours per week exceed those prescribed, the employer is required to pay overtime—standard wage plus 50 percent. In addition, employers are required to pay employees for all hours worked in a workweek, including time worked in the workplace, time spent traveling as part of the job, training, and work performed at home at the employer’s request or with the employer’s permission. While employers must follow the minimum wage law, market demands generally require a higher wage rate to recruit qualified employees. Other incentives such as double-time pay for working on holidays may also be necessary.
To be exempt from the Wage and Hour Regulations of the FLSA, a position must meet several specific tests. Among them are supervision of others and performance of office work directly related to business operations. Determining whether an employee is exempt from overtime requirements under the FLSA has long been problematic because the rules were confusing. Under the rules put into effect in July of 2009, the U.S. Department of Labor (DOL) issued specific guidelines for determining exempt status, including salary level. In addition to hourly workers, real estate managers working in the corporate setting whose annual salary is less than a certain dollar amount ($47,476) must be paid overtime when they work more than 40 hours in a workweek—in the past, the hours per day or per week maximum did not affect exempt employees. The new rules also spell out the duties that define the roles of exempt employees.
Employers should schedule salary adjustments regularly, budget them routinely, and administer them fairly. Reliable, dedicated employees will continue to provide quality service if their good performance is noted and compensated. One incentive to excellent performance—and cost-consciousness—is to link a portion of the employees’ compensation directly to the employer’s annual profit. Instituting such programs places more ownership on an employee because they now have a “personal” stake in how well the company fares.
Employee Benefits. If the employer’s goal is to retain employees, it’s important to have a benefit plan that gives a sense of value to employees’ jobs and increases their economic security. Typical employee benefits might include but are not limited to the following (listed in no particular order):
Depending on the type, some of these benefits are based on seniority or level of responsibility, and their distribution is often complicated by the effort to avoid or defer tax payments on them. In addition, some employers provide accommodation and enhancement benefits that include employee assistance programs such as smoking cessation or weight loss. Employees want stability in their jobs; therefore, it’s essential to provide a benefit plan to retain valuable employees.
The United States government requires employers to participate in federal programs that provide for workers if they are terminated, retire, or become disabled. Those programs are presented in the sections that follow.
Federal Unemployment Tax Act (FUTA). FUTA and various state unemployment programs are intended to ensure compensation if an employee is laid off or terminated. The employer alone makes the contributions, and the amount or rate is based on the number of employees and the number of claims made. Usually minimum and maximum amounts are paid—on a per-employee basis and related to the employer’s history of layoffs. The federal government collects the FUTA taxes, but the state usually administers the unemployment compensation.
Worker’s Compensation. Employers must also provide workers’ compensation insurance to compensate employees in the event of a work-related illness or injury. Employers purchase the insurance through the state or from a private insurance company. As a rule, firms with five or more employees must be covered, although contractors with even one employee must also buy coverage.
Social Security/Medicare. In addition to these employer-paid programs, workers collect Social Security and they may collect Medicare benefits when they retire. Funds for these benefits are collected and administered under the Federal Insurance Contributions Act (FICA), and the employer and employee contribute funds equally based on the employee’s income.
Clear communication with employees is a basic and valuable retention tool. Many employees’ only source of information about their company is their coworkers. Their reliance on such news source creates the potential for damaging rumors to spread. To avoid such rumors and their consequences, employers should disseminate information that affects the business in a timely manner and explain it fully. News of particular significance—that is, items that the press may publicize favorably or unfavorably—should be released to all employees at the same time it is released to the press—or even beforehand to avert speculation.
Companies might use a Facebook page, a blog, an e-mail update, an intranet site, or a newsletter to communicate with their staff. Employees welcome recognition of service anniversaries, promotions, and personal news items about their fellow workers along with news about the company’s activities. Management most often publishes and controls these communications. However, they should be directed to all employees, and the writing style should be friendly and personal.
Central to the communication program of any company is the policy manual or manuals—previously mentioned in this chapter. This material provides all employees a reference to consult for information on company benefits, work hours, and minimum performance standards for particular procedures. Individual departments may institute policy or procedure manuals for the tasks they perform, but all employees should receive some definitive source of information regarding their relationship within the company.
Unfortunately, grievances are a natural part of life and work. Misunderstandings can result in the loss or dissatisfaction of reliable employees if the employer does not address their concerns promptly and sincerely. An open-door policy for airing work-related problems can preserve an excellent working relationship if it prohibits recriminations against those who use it. An open-door policy allows employers to examine their working relationship with their employees. If employees belong to a union, the union contract usually outlines specific grievance procedures. Maintaining good relations with the union can make the process more workable.
Managers should expect all workers to use their skills and talents to the maximum in their work. They should treat all coworkers with respect regardless of the tasks they perform or whether their position is that of a supervisor or a subordinate. Managers should openly welcome dialog on grievances because it leads to opportunities to take corrective actions or make improvements. Employees who feel they have a voice and are really heard are more likely to have an increased sense of investment and commitment to the firm.
Effective communication is only part of an overall program to maintain employee morale. Developing teams for managing properties, having a mentor program within the company, and helping employees interact with one another on a positive level helps to foster good morale among employees. Recreational activities among coworkers should also be encouraged. Employees who are dedicated to their jobs yet balance their hard work with recreational activities—and can differentiate between the appropriate times for each—usually have a positive attitude toward their careers. Company-sponsored baseball teams, golf outings, and bowling leagues are common pastimes among coworkers. The cost of such sponsorship may be very little—a set of matching T-shirts is a nominal investment to foster employee enthusiasm.
Managers should expect excellent performance of every employee, and they should compensate their employees for such performance. However, occasional thanks for a job well done is also important to an employee. Dedicated employees want to know that their employer appreciates their work and that their efforts contribute to the organization’s success. An expression of gratitude, whether oral or written, can add greatly to good morale.
In the normal pace of business and family life, time is rarely available for additional training or education. As a result, formal education for many employees ends with high school, trade school, or college. As an incentive to continue learning, many employers institute education reimbursement programs for their employees. The rules and incentives for these programs vary greatly, but the benefits to the employer can be substantial.
In addition to formal course work, many associations and corporations sponsor seminars and courses in aspects of real estate management as well as other disciplines such as accounting, maintenance, and human relations. Seminars that teach management and interpersonal skills foster both personal and professional development. Before sending employees to any workshops or seminars, the employer should investigate the cost and quality of such programs. The size of a company and the resources available to it determine the extent to which it can offer such educational programs.
While a job description is a valuable reference for both employer and employee, it can hinder the employee’s progress if interpreted too narrowly. The job description should define the basic functions of a position but should not set limits on what the person performing the job can do. Employees commonly desire definite boundaries to their duties. However, boundaries can limit more than the number of hours that an employee must work—they also permit employees to concentrate only on the minimum the employer expects them to do. While boundaries help create a sense of security, they can also be stifling—people begin to think they are in a rut at work. In establishing boundaries, balance is important. If workers resist change too much, their department can stagnate and hinder a thriving business. However, if they pursue every new opportunity and ignore fundamental procedures, the department or company can flounder from lack of direction. In other words, allowing the employee some latitude to be creative and try new ideas provides more opportunity for career development and growth for both the employee and the company.
Most job descriptions gradually change as a business evolves, so workers must increase their knowledge to be able to keep up the pace. As previously mentioned, communication and training enable workers to grow with the demands placed on the business—so does encouragement. If an employer encourages employees to undertake new tasks, and if they are legitimately capable of mastering the work, they will be productive workers. In such cases, the employer may not have to hire additional staff in order to expand its operations. The employees also gain if they develop more self-confidence and can base their sense of security on their own growing abilities.
Those new to managing staff might struggle with the issue of establishing disciplinary action when it is needed. The most common mistake is ignoring a problem—doing so will have a domino effect. Assuming the problem will “get better” by ignoring it will most likely cause the problem to get worse, while also losing the respect of other employees. Addressing issues early will assist in maintaining a professional work environment.
In spite of the efforts an employer may make to retain valuable employees and to develop their talents, situations unfortunately occur in which employee discipline becomes necessary. When an employee disobeys a firm’s policies, the employer has the following three steps to take: (1) warn the employee and remind them of the policy, (2) establish disciplinary action, and (3) finally, dismiss the employee. Discipline implies reform, and dismissal precludes the possibility of reform. Choosing which action to take depends on the infraction involved. The desired result is the same regardless—the employer hopes to remedy or undo any damage from the employee’s actions and to prevent any recurrence.
Supervisors sometimes are not properly trained in conflict management, dealing with difficult people, or even approaching an employee who is having issues.3 From time to time, reputable managers will take a look at their own performance and evaluate how they are doing as supervisors and make corrections, too.
The employee manual should state company policies regarding employee behavior, discipline, and termination. Even small companies must have some form of employee manual or list of procedures and policies that is presented during the onboarding process to establish the general guidelines of the company’s expectations of their performance. Employees should sign a statement that they have received and understood the company’s policies. Most work rules are absolutes, and they should be easy to enforce.
Some of the most vexing disciplinary problems are a result of minor disobedience. The circumstances that require discipline can provoke anger, but employers must restrain their anger. It is important to preserve impartiality and respect for the employee. When a supervisor learns about or witnesses an infraction, they should write down what is known about the incident and interview the employee regarding the matter. Any required disciplinary action should take place as soon as possible after the offense, and the matter should be discussed in private. Accusing an employee of wrongdoing in the presence of coworkers neither rectifies the problem nor serves to rehabilitate the offending employee. Moreover, other employees who witness the exchange between supervisor and subordinate may lose respect for the employer.
Although the employer should establish a thorough and impartial system of discipline, writing a comprehensive set of disciplinary measures to cover every possible circumstance is impossible. Regardless, the employer must deal with all employees individually and fairly, based on the nature of the incident. To ensure fair treatment, all comparable incidents should be handled similarly—that is, disciplinary measures should be applied consistently.
The employer should establish a system of progressive discipline to provide ample opportunity for the employee to change or correct their behavior. Such a system usually involves (1) oral warnings, (2) written warnings, (3) probation, and (4) termination. The first three steps are discussed below. The employer should carefully document any disciplinary action against an employee—even a verbal action.
The typical American employee no longer makes one place of business a lifelong workplace, as was common with previous generations. Seven to 10 company changes and four or five career paths are common. Turnover is a way of life because of resignations, corporate takeovers, layoffs, and changing client needs. When change occurs, employees should never feel they are just another commodity. Whether an employee retires or resigns or whether the employer must lay off or terminate the employee, such a departure is always stressful for both parties. Nevertheless, dealing with such matters is a part of managerial responsibilities.
When income decreases or expenses increase, or if tenants or clients are lost, a layoff may be the only way to counter the financial shortfall. Whether permanent or temporary, a layoff can be devastating to the employees and their families. The stress on those who remain will increase; they will be concerned about their job security and might have to perform additional work without additional pay. The personal feeling of responsibility and the work to salvage the business exact a high toll. To be effective and lessen problems, organize all the details ahead of time. Severance packages, layoff letters, explanations of benefits, and all other relevant documents must be prepared. Making corporate outplacement services available to departing employees will soften the blow and offer compassionate support to help former employees.
The most valuable assistance involves being direct with employees about the condition of the business and giving them as much warning as possible about the economic situation. Before notifying any employees, however, the employer must review the personnel list to preclude discrimination against any group because of the layoff.
The most extreme action an employer can take against an employee is termination. In many states, employment is at will, meaning that either the employee or the employer may terminate the relationship at any time for any reason (with or without cause). Exceptions to this are anti-discrimination (protected classes), anti-retaliation (whistle-blower) statutes, and specific contractual arrangements, including collective bargaining agreements.
A primary concern for the employer is protection from an unjust termination suit, so termination is usually a last resort. Employers should seek advice of legal counsel before adopting specific employment policies—especially those regarding unacceptable (i.e., dangerous) behaviors and their consequences.
In implementing discipline and termination procedures, the employer must be sure to administer their system consistently. Discrimination claims are based on misconceptions and disparate treatment of differently situated individuals. To avoid susceptibility to such claims, the employer must carefully document all disciplinary actions and terminations. Prior to taking any action under a policy, the employer should review their files for any past instances of similar conduct, and where similar conduct has previously been the subject of disciplinary action or termination, the employer should administer its policy to preserve uniformity.
Before terminating an employee, the employer should thoroughly document the event or behavior prompting dismissal. Documentation should concentrate on the work performed (or not performed), not on assumptions regarding its cause (e.g., substance abuse). The meeting during which an employee is to be terminated should also be attended by a third party—a member of management—who can attest in writing to the conversation between the supervisor and employee. Third-party attendance aids in preparing a defense if the employee should later file a lawsuit for discrimination or wrongful termination.
While terminated, employees are usually entitled to collect unemployment compensation—unemployment benefits may be denied in certain circumstances. A dismissed employee could sue the employer for denied unemployment compensation or for damages based on discriminatory or other unfair practices by the employer. To avoid such a suit, an employer should establish and fairly apply a policy of progressive discipline and carefully record reasons for dismissal.
Understanding the potential liability involved in the role of employer is important. Employers may reject applicants or terminate employees who pose a direct threat to the health or safety of others in the workplace. In real estate management, the workplace includes not only the managed property, but also the property of residential and commercial tenants, as well as the latter’s employees and their customers, and even the management employee’s coworkers.
Apart from the problems that arise directly from an employee’s actions, the potential exists for legal action by others. If a pre-employment background check would have revealed a prior conviction for a felony (e.g., assault), the employer of an individual who assaults someone on the job could be sued successfully for negligent hiring. If an employee who exhibits dangerous behavior on the job (e.g., showing a weapon, making or carrying out threats of harm) is allowed to repeat the behavior and someone is hurt, a lawsuit could be filed based on negligent retention. If training and oversight of an employee is inadequate and an incident results in injury to another person, employee, tenant, or visitor, the employer could be sued for negligent supervision.
Criminal background checks and drug testing are some of the tools available to help prevent and reduce problems caused by employees, but none will ensure the absolute prevention of harmful acts by others. In terms of firing an employee, paper trails and documentation are critical. In the courts, real estate managers may need to provide support for their actions. To ensure that behavior, policies, and procedures are all accurately and professionally presented, a clear documentation of all procedures will keep the manager on the right path.
In real estate management, good relationships with employees are central to maintaining good relationships with tenants and the property owner. All staff members, whether supervisors or subordinates, are colleagues and should always work toward fulfilling the owner’s goals for the property. The size of a management firm’s staff depends on the specific attributes of the properties managed as well as the attributes of other properties in the firm’s portfolio. People who work at a property may be employees of the management firm or sometimes of the property owner. In some cases, contractors may be hired for specialized work. Regardless of who hires them, all workers must perform their duties harmoniously and cooperatively.
A wise selection of staff members is as crucial to successful real estate management as it is to any other business. The key to hiring superior employees is searching for qualified candidates who possess the appropriate skills and are willing to share the goals of the manager of the property. Continual training and encouragement to pursue additional education fosters individual productivity. Such programs are good investments when companies can afford to implement them.
Employers can retain employees by treating them fairly, respecting them, and regarding them as colleagues. This includes providing fair compensation and benefits. Honest communication and genuine concern should be at the forefront of employer-employee relationships. It is essential to consider how effectively the supervisor communicates with his or her staff. Communicating through e-mails or other alternative methods is, without a doubt, the quickest and most reliable method of communicating. By balancing communication with the staff between e-mails, phone conversations, and face-to-face meetings, the stability and security of the relationship is enhanced.
1. A good resource for developing an emergency procedures plan is the IREM publication, Before and After Disaster Strikes: Developing An Emergency Procedures Manual, 4th Edition (2012).
2. Careers.iremjobs.org is a good source for finding qualified candidates through posting jobs, searching resumes, and tracking activity.
3. The IREM White Paper on Leadership Development: Conflict Management is a great resource for employers needing to learn how to deal with conflict in the workplace.