|
CompensationMaster Newsletter Article, January 2003 Nine years ago, C. Keith Flouhouse was the president and
co-owner of Coldwell Banker Flouhouse, Realtors. His company, with 86 sales
associates, had recently acquired another company of about the same size.
Both businesses were profitable, so they thought it would be
safe to let their associates choose which company's compensation plan they
would prefer. The result was disastrous.
"It was a gigantic mistake," says Flouhouse. "It sent the
combined company into being unprofitable." He and his management team
struggled, trying to figure out what had happened. The situation was so complex
that Coldwell Banker came in and worked with them.
It was through Coldwell Banker that Flouhouse first heard about
David Cocks. "I had a lot of faith in Coldwell Banker's
recommendations," states Flouhouse. "I've always found them to be
very reliable and 'right on it.' The other factor was when Dave showed us some
of the new compensation plans he had to offer. I felt the agents would be
excited about them."
"You almost have to have blind faith," continues
Flouhouse. "Most of us are not mathematicians. The average broker would
have a very difficult time getting everything mathematically correct. With the
companies so huge and so many people being involved, I felt we needed an expert
like Dave to help us."
Flouhouse asked their sales associates how much profit they
thought the company should make. On average, the associates said 10 percent was
a fair profit. Flouhouse and his wife and co-owner, Ann Flouhouse, told them
they only wanted five percent.
"We explained that we wanted to introduce new compensation
plans that would give the company a five percent profit and return everything
else to the agents. That five percent profit would allow the company to grow,
to reinvest in technology and other office equipment that the company uses, and
keep it upgraded," says Flouhouse. "They thought that was more than
fair."
Working with David Cocks, they designed seven basic
compensation plans that they thought the sales associates would like. "We
told them that if they didn't like any of the seven, we would custom-design a
plan that would meet their needs, as long as the company made a five percent
profit," explains Flouhouse.
"It went very well," says Flouhouse. "I don't
know that we lost any agents over it."
In fact, the plans acted as a tremendous recruiting tool,
according to Flouhouse. "Agents saw that they could go from 50 percent to
90 percent very quickly with the program. Experienced agents saw they could
jump on high commissions almost immediately. We could position effectively
against 100 percent companies. We were able to attract a lot of agents."
Within six months, the Flouhouses' firm had returned to
profitability. "Having that profit allowed us to open other offices and
expand into new markets," states Flouhouse.
Within a year, they were profitable enough to acquire a
175-associate firm. The following year, they added a commercial division with
20 associates. Two years after that, they acquired a 200-associate company. The
Flouhouses also made a number of smaller acquisitions along the way.
Each time they acquired a new company, Coldwell Banker
Flouhouse hired Cocks to analyze the acquired company's compensation and change
their plans over to CompensationMaster's strategy. "That worked extremely
well," says Flouhouse.
In 2002, Coldwell Banker Flouhouse was the number one Coldwell
Banker affiliate in the southeast for the fourth year in a row. Keith and Ann
Flouhouse received the Cendant Mobility Cup in recognition of their company's
outstanding performance, the Thomas Spence Griffin Memorial Award, and several
other honors.
When the Flouhouses sold the business in September 2002, it had
grown to 600 sales associates in 14 offices across two states, and had become
the seventh largest Coldwell Banker affiliate.
"It was one of the most profitable companies in the
country," says Flouhouse. "That ultimately enabled us to sell the
company."
"Brokers are so afraid the agents are going to
leave," says Flouhouse. "But they don't. Agents are business people
too. Most of them understand that a company needs to be profitable. Treat the
agents like business people, and give them the facts to base their decision on.
If they believe in the business and the broker, they make the right decision.
They stay with the company, move forward, and prosper."
"I don't know why any broker would not consider
CompensationMaster's approach," concludes Flouhouse. "It's a
fantastic program."
Back
to Newsletter Archive
|
