All businesses large or small need to plan for the year ahead and set realistic targets for their business. A key part of the planning process is to identify the key performance indicators you will use to measure success and what that will mean to the business. John Goddard – CEO of Rockend explains.
For the past three years Rockend has formally used the Balanced Scorecard model to assist plan and set goals for our business. The process we use is simple and could be used by any real estate business to develop a clear and communicated view of where their business is heading and most important, what KPI’s you will use to measure success.
Developing the plan
We start the formal planning cycle in April when leaders first meet to discuss their ideas for the new annual plan. Over a series of formal meetings, we draft a plan for each part of the business (sales, product, client service, and finance and administration) plus HR and IT support functions. All plans follow the Balanced Scorecard structure to address the team’s individual financial plan, customer plan, people, learning and development plan, and process plan. We craft the individual team plans to ensure that they meet the goals established by the Board and CEO. We then use the scorecard model to document the goals completion target. At Rockend we box the goals into financial year quarters.
Implementing and communicating the plan
Rockend leaders share their plans within their team and across the company in July. We organise a company day where all employees meet to receive our new plan, talk about the stretch opportunities and to have some fun. At about 100 staff and 20 contractors, this gathering is a major event in our year and it provides the perfect opportunity celebrate and make sure everyone knows where the company is heading.
Every employee at Rockend has a Personal Development Plan (PDP) and team leaders link their key goals and KPI’s to the individual team member. We complete this task during July and August as it also assists the leaders reinforce the most important parts of the company plan and our shared KPI’s.
Measuring and communicating success
Team leaders meet every month to review the plan by team and then consider the 15 KPI’s that span the four components of the Balanced Scorecard we have established at Rockend.
Following the leaders meeting, each team leader will brief their team on progress and issues and address other operational topics that arise. We also produce a two to four minute highlights video after most leaders meetings to provide an update on current activities. A number of other meeting opportunities are used to keep all staff apprised of business issues and progress.
Implementing a similar process in a Property Management Department.
Many Rockend clients utilise a similar approach to planning and goal setting in both sales and property management teams. So we know it works – and can be applied even in smaller businesses. Sometimes an external advisor is required to establish the process and assist monitor progress. For me a key source of useful documents and targets are the resources produced by bestpractice.com.au. Not only do they outline planning processes, but also they establish the KPI’s for the property management team based on their extensive research and surveys. One resource in particular – PL95 – is a gem. It is a 24-page guide with a supporting audio CD that outlines the key elements for running a successful property management business.
The document includes a KPI schedule based on the 2009 Interfirm survey that addresses ten KPI’s of interest to any business owner or property management department leader. The table identifies the best and worst performers using data from a business income and expenditure report, and provides an opportunity for any business to benchmark and set targets for growth.
KPI Top 10%Performer Average Bottom 10% Performer
Total revenue $628K $717K $617K
Net advertising 0.95% 1.62% 3.51%
Facilities 4.62% 5.11% 6.22%
Employee salaries 36.42% 47.44% 57.29%
Operating surplus 41.46% 26.43% 7.48%
Surplus/principal $183K $154K $49K
Tenancies managed 414 548 466
Tenancies/PM 153 157 128
Tenancies/owner 1.22 1.22 1.24
Surplus/tenancy Managed $629 $346 $99
For me, the $629 surplus per property managed or net operating profit per property managed is the critical financial goal. If you were to take $629 as the financial goal, what are the other KPI’s you need to consider for the Balanced Scorecardmethod of planning and goal setting?
Customer based goals could include rent roll growth from existing customers, satisfaction survey targets based on regular phone or internet contact, providing more self service options or better reporting of property condition.
Staff learning and development goals could be based on hours available to training/week, a defined training budget, time to work in the community, coaching/mentoring targets and attending specific events.
Process goals could be based on a specific project such as electronic document management, reducing the time to respond owner/tenant requests, improving telephone or messaging processes.
Conclusion
You have probably heard the phrase “failures don’t plan to fail, they fail to plan”. Implementing a formal process as outlined may seem daunting at first look, but when you do a little reading and talk to some businesses that plan it really is not that hard. It may take a year or two to perfect the process in your business, but give it a go – 2012 is fast approaching.
John Goddard has been the CEO of Rockendsince 2004. He leads a national team dedicated to helping Rockend clients grow their business and leverage technology to build profits and client success.
