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CompensationMaster Case Study, June 2005 Six years ago, Gary Griffin was looking for a way to grow his
company. Griffin Company Realtors was a boutique firm that had held steady at 14
agents for almost 20 years. But his region was becoming increasingly
competitive, and Griffin felt he needed a stronger presence in the market.
"We had purposely stayed small so we could handle what we were
going to do and do it well," explains Griffin. "But it became apparent in our
marketing that to compete against 100+ agent companies we needed to grow. We
couldn't get noticed in the paper; we couldn't afford the ads."
"I was also under pressure, as most brokers are, from the
agents," Griffin continues. "The question from the agents was 'What's a fair
compensation?' and the only thing I could say was that this is the way it's
always been done."
"Most agents think they are making the broker rich," says
Griffin. "Whereas the fact is that the broker is in a mad race to finish the
year with enough money to pay the bills and make a profit."
When Griffin first started looking for a solution, he heard
statistics stating that 55% of real estate companies were not making a profit,
and of the ones that were, the average profit was 2.9%. "That's too much effort
for too little profit," says Griffin.
He turned to the National Association of Realtors (NAR). "If
anybody knew how to structure real estate companies profitably, it would be NAR,"
Griffin states.
Among the suggestions he received from NAR was that he attend a
course on compensation. The instructor at that course, Drexanne Evers,
recommended CompensationMaster.
"I was searching for a realistic or tried-and-true way to come
up with a commission program, other than what I could think of myself," says
Griffin. "Most brokers get wind of a program and either adopt it or don't based
on whether it sounds palatable. I wanted something that was proven to be
effective."
Griffin bought the software and began working with David Cocks
to learn how to use the system. "The basic premise of CompensationMaster made
sense to me and it also made sense to my agents," says Griffin.
Griffin started with one plan that he felt was competitive and
would appeal to his agents. Since then, he has added a few more plans to meet
different scenarios, including one that rewards longevity and several designed
specifically to compete with other companies in his market. "With
CompensationMaster, when you have companies that offer a little different
wrinkle, you can adjust your plan to provide the wrinkle and still be
profitable," explains Griffin.
"When I sit down with an agent and show them our plan, I can say
that we are maximizing what we are paying you," says Griffin. "You can decide
how to spend this money on your career. You can use it for additional
promotions, for advertising."
"A company that uses CompensationMaster can give their agents a
good enough deal that there's no money reason for the agents to look elsewhere.
There are a lot of other reasons people leave one company and go to another, but
this will eliminate the money reason. CompensationMaster's program makes it
understandable and allows you to have better splits than a company would
normally be able to give."
In the six years since implementing CompensationMaster's system,
Griffin's company has grown significantly, increasing the number of agents by
almost 50% each year. Today, Griffin Company Realtors has 76 agents.
The firm's revenue growth is even more impressive. Griffin began
setting ambitious goals—and surpassing them. Previous, their biggest year had
been $34 million.
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For 2002, they set a goal of $50 million and achieved $69
million.
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For 2003, they set a goal of $100 million and achieved $108
million.
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For 2004, they set a goal of $180 million and achieved $191
million—an increase of 78.6% over 2003.
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For 2005, their goal is to exceed $300 million. As of this
date they are on track!
"Our profit didn't increase as much as the overall sales," says
Griffin. "But we did make more money each year. CompensationMaster's system
accounts for that." Griffin points out that most companies reduce their profit
percentage as their revenue increases; total profit is a combination of the
profit percentage and the volume.
Griffin has become more open with his agents and staff about the
company's profitability. "I wanted them to know they weren't making me rich,"
says Griffin. When he shows his agents the numbers, he says, "They are typically
shocked to see how little a company makes and how much effort it takes to
generate a profit. It brings them into the real world."
Griffin credits his success in part to CompensationMaster, and
in part to other changes he made. "CompensationMaster is a good system," says
Griffin. "As with all consultants, a certain amount of responsibility still lies
on the business owner to take the advice and adjust it to fit the company and
the area's competition. Some things that work in some cities aren't necessary
here, and vice versa. That's where the experience of the owner comes into play.
You can build the fastest car out there, but the driver still has to add skill
and expertise and ability to get around the track. If he's not successful, it's
not the car's fault."
After Griffin introduced the initial compensation plan changes,
he was surprised that "the whole world didn't flock to us." David Cocks
recommended some consultants who helped him work to optimize office operations
and hire the right people, including a new sales manager. "I can't minimize the
impact of the other structural things," says Griffin. "If someone is just
looking at the commission to solve all their problems, it won't do it. But in
the area of commission, CompensationMaster will eliminate it from being one of
the reasons you're not growing."
"Commission is one area that's got to be right or the whole
structure won't stand," concludes Griffin. "It's essential, and if you want to
figure out how to do this, I suggest you contact CompensationMaster."
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