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CompensationMaster Newsletter Article, July 2004 Wallace Perry knew that Coldwell Banker United, Realtors®
wasn't as competitive on agent commissions as it could be in the Houston
market. Other companies in the area offered a variety of types of commission
plans, and he felt that their "one plan fits all" was not sufficient to
compete. "If agents wanted something different, they felt they had to leave
our company," said Perry, who is the president and COO of the Houston
Region. "We also had agents asking for higher commission levels that we
simply could not afford."
David Cocks, managing partner of CompensationMaster, worked
with Coldwell Banker United to design a program that would help the company
compete more effectively.
The new program was introduced in 2000. "It's a fairly
complicated system," explained Perry, "but when the agents understood it,
they liked it."
The program was particularly popular with top producers. "A
real hard-charger can come in and make a lot of money," stated Perry. "Other
companies don't have that." Perry stated that it was also good for new
people coming into the business; "they could quickly advance to commission
rates up to 85% in a short period of time."
"We did get push-back from lower producers, and we lost
some," continued Perry. "We had some people who wanted to simply hang their
licenses or work part-time. We willingly allowed those people to go. They
weren't paying their fair share, and with this system everyone has to pay
their fair share."
"One of the best parts is that if agents don't like any of
the plans we can do a custom plan for them. They can tell us what commission
level they want—they can get up to 95%—and we'll design a plan around that.
There may be some fees, but they'll get the commission they want."
Coldwell Banker United, Realtors' plans are designed to make
a 5% net profit. Some of their offices have achieved that; some have not. "You have to decide how many people you are going to allow to stay on board
who aren't making breakeven," explained Perry. "If you don't monitor it
carefully, you won't hit your profit. You have to have everyone at the fully
productive equivalent to hit your profit target, or you have to place enough
agents at a desk to make it a fully productive equivalent."
It was not inexpensive to have CompensationMaster develop
this commission program. According to Perry, the company invested well over
$220,000, but it was worth the expense. "Overall it has been very
successful," stated Perry. "It has helped us recruit agents and retain them.
It has also helped us be much more efficient in handling commission plans."
"There's no guesswork anymore," continued Perry. "It's
almost impossible to do a plan and see how it will affect the bottom line on
your own, but Compensation Master's software lets you know ahead of time
what the impact of changes will be."
Some managers have now begun using the online version of
Compensation Master's software to aid in agent recruiting. "They love it
because it's so convenient. They can sit with agents and show immediately
what commission level they qualify for and what we can do for them. They can
put in 80%, put in fees, create a plan. Managers have the authority to
design plans, which they love. As long as the computer doesn't flash red,
they've got it."
Coldwell Banker United, Realtors®, Houston Region has 860
real estate agents.
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