Training middle management is the most critical thing an owner of a property management company can do to reduce employee turnover.

Leaders of businesses always wonder why some companies stumble along and others don’t.   They coast along until somebody points out to them that they have had a lot of employee turnover.  The constant turnover becomes an impediment to a successful operation, making it more difficult  to offer consistent services or products to their clients. (See 2024 employee turnover charts: https://www.bls.gov/news.release/pdf/tenure.pdf) https://hubstaff.com/blog/employee-turnover-statistics/?utm_source=chatgpt.com 

In this article we will be addressing the concept of employee training and leadership training  as a way to overcome employee turnover and improve operational success.

Span of control

In many companies, including property management companies, it's hard to keep in place what has been accepted as a seven and one supervision ratio. In other words, most supervisors can manage about 7 to 9  direct  employees,  though some manage as many as 15 or 20. The more employees a supervisor is responsible for, the more challenging it is to supervise.  “The optimal span of control can vary depending on the nature of the work, the skills and experience of employees and supervisors, and the complexity of the tasks involved.” (https://www.performancemagazine.org/kpi-human-resources-management-staff-ratio/) (https://www.thefivecoatconsultinggroup.com/the-coronavirus-crisis/span-of-control)

Self Actualization

Let's also remember that in order not to lose employees they need to be happy with their job. Which means they need to be happy with their supervisor as well and with the direction the company is going in. They also need to feel challenged and engaged and that they're part of the solution for helping grow the company, that is if the company is actually growing. Abraham Maslow's “Hierarchy Of Needs”  summarizes what an employee is looking for. They're looking to be self-actualized, which means that they are self-content and self-fulfilled and have the opportunity to choose to grow in their jobs.  It's the job of the supervisor to meet the needs of the employees. Let's work our way through some important steps that might help us reach our goals. (https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs)

Employment laws.

As we rely on our supervisors to lead the next tier of employees, let's call it the front line, we need to make sure that they have received sufficient education in the employment laws of their state. Every state in the union has different case laws that apply for employment. Most states are “employment at will states,” but Montana  is a little different.  It  requires "just cause" for termination after a probationary period. Even in at-will states, it's best practice for supervisors to document performance issues, provide warnings, and follow a progressive disciplinary approach before terminating an employee, to protect against potential lawsuits. A good rule of thumb would be to complete a series of reviews and requests for corrective actions as part of the probationary period before you terminate an employee. Company policies will define the current procedures.

Goal Setting and Evaluations

Every company has a different approach to employee evaluations. Some companies don't have any at all. Other companies have either a 45 or 90-day review after hire and then an annual review after that. Clearly new employees need to have a sense of where they're going, and a clear sense of what is required as far as job description and goals they need to reach. They also need to understand what the corporate goals are in addition to the department goals. Supervisors must be given tools and trained in those tools to reach those goals.

It's helpful if supervisors are involved in formatting or framing departmental and company goals.

The bigger the company, the more challenging that process is, and the harder it is to focus. Growing training skills and staffing skills takes time, and the longer you hold on to your supervisors typically the more skilled they become. 

Of course, the best employees are the ones that are motivated and have a sense through the job description and employee screening what is expected from them. Understanding the corporate vision for growth and their role in it makes for a happy well supervised employee and a successful company.  They can learn this from their supervisors by reviewing the department’s one page business plan.

These one-page business plans can then be translated into employee specific key performance indicators, which can be used both as a structure for motivating and directing employees, as well as setting financial rewards as in pay and bonuses. This can be done on an individual basis or as a team to achieve the results that the company is trying to achieve.

Examples

A good example for an accounting department would be the completion of financial reports by the second or third day of each month. This would call for an early end of month cut off but would give results to upper management that would make it easier for them to make decisions quickly. 

Another good example would be for a property manager to rent units quickly, since the more units they rent is a revenue generator for the company. It equals a positive upside for everybody. In order to achieve that, they would have to coordinate with other departments to get units turned and cleaned and utilities handled, new carpeting installed, and repairs completed. This coordination effort is not simple and therefore compensation needs to be formatted so that everybody receives a reward that is turning the unit quickly. Of course, this reward would need to reflect that this must be done in a professional workmanship-like manner that makes the property quick and easy to rent. This applies to both commercial and residential properties. 

Other education 

Remember, typically supervisors get promoted. Part of their training needs to give them tools to be upwardly mobile. Getting technical training through The Institute of Real Estate Management (IREM), Building Owners and Managers Association (BOMA), or National Apartment Association (NAA)  to name a few, gets you some basic industry focused education. They need to learn not only about goal setting, but about how different personalities work together. There are many tools, the DISC, The Hogan Personality Inventory and Personalysis to name a few. We used a tool called Personalysis to help us figure out if employees and their supervisors could work together. You could have a great interview, and a future employee could pass all the prescreening tests, but if they don’t fit in, there could be a disaster in the offing. Developing a cohesive company and team culture is part of the key to a successfully operating company. If an employee does not fit, then it is going to be difficult for a supervisor to manage. I had a key person working for me for five years. A great person, but our personalities did not jell. In the end we lost a great employee because the personality fit was not there.

Accounting

Successful leaders will also need to learn basic accounting skills. The most successful leaders will have a basic ability to read and understand annual and monthly financial statements. They also need to translate the financial information into key performance indicators for themselves and their staff. Property managers should be able to read property financial statements to  make sure their clients are making a profit and that they are doing their job correctly. Inability to decode operating statements could be disastrous for a property management company .   

Benefits

In the government sector for example, employees often stay for 6 years or more, because their benefits are significantly better than business benefits. As a business leader, your goal is to  ensure health insurance, and potential pensions, health insurance and other insurance is in  place. Vacations need to be competitive, and educational benefits are helpful as well. In our current economic environment, employees tend to move from company to company to earn more money. Your job is to keep as many people as you can and pay them as much as the company can afford. 

( Employee Tenure charts:  https://www.bls.gov/news.release/pdf/tenure.pdf)

Summary

The constant employee turnover is a significant impediment to managing a successful company. Business leaders can increase the tenure of their employees. Candidly they must increase the length of time an employee works for them, given the cost of recruiting and training new employees.

Leaders need to care about their staff. It does not take much to celebrate successes, announce promotions, highlight important wins, which includes rewarding those that have happy clients.  Caring leaders can help build a stronger company and reduce employee turnover and extend employee tenure from three point six (3.6) or six (6) years or more years. Remember Maslow and his self-actualization. People want to feel that they are successful in their job.  

They can also do this by investing in middle management training. These managers are the key people running your company, and their success equals your success. It is business owners’ responsibility to make that happen, and when they do the bottom line will shine.  

Clifford A. Hockley, CPM, CCIM, MBA

Cliff is a Certified Property Manager® (CPM) and a Certified Commercial Investment Member (CCIM). Cliff joined Bluestone and Hockley Real Estate Services 1986 and successfully merged that company with Criteria Properties in 2021.

He has extensive experience representing property owners in the sale and purchase of warehouse, office, and retail properties, as well as mobile home parks and residential properties. Cliff’s clients include financial institutions, government agencies, private investors and nonprofit organizations. He is a Senior Advisor for SVN | Bluestone.

Cliff holds an MBA from Willamette University and a BS in Political Science from Claremont McKenna College. He is a frequent contributor to industry newsletters and served as adjunct professor at Portland State University, where he taught real estate-related topics. Cliff is the author of two books, 21 Fables and Successful Real Estate Investing; Invest Wisely Avoid Costly Mistakes and Make Money, books that help investors navigate the rough shoals of real estate ownership. He is the managing member of a real estate consulting practice, Cliff Hockley Consulting, LLC., designed to help investors and commercial brokerage owners successfully navigate their businesses.  He can be reached at 503-267-1909 or Cliffhockley@gmail.com.