Ask George S. Quay how he won the 2003 Multifamily Executive Executive of the Year award and he is quick to correct you. Quay will say he didn't win the award. It was the leasing agents and maintenance technicians at Village Green Cos. that won the award. And the people in human resources and accounting at the company's headquarters in Farmington Hills, Mich., won it, as well. "I always say I am kind of like a conductor in an orchestra where my role is to create an environment where talent can thrive," Quay explains. "I don't rent the apartment. I don't clean the hallways. I don't service our residents day in and day out. I just put an organizational structure together that allows people who do the work at Village Green to succeed."
But it was Quay who lead Village Green, which owns or manages 27,000 units in eight Midwestern states, through some tumultuous change during the past three years. When Quay took over as the company's president and COO in 2000, after almost two years away from the company, the portfolio faced a big challenge. The recession was beginning. For the company to remain competitive, Quay had to make some tough choices.
He started by trimming organizational fat in some departments. Then he revamped the recruiting, hiring, training, and evaluating of employees; centralized the company's buying process; and reorganized the corporate office. Three years later, these changes, even though their full impact hasn't been felt, can be considered a financial success – net income is up 58 percent and revenue 24 percent.
Homecoming Coming back to Village Green was not easy for Quay. It's where he started his multifamily career in 1989 after serving as an assistant general manager for a Hyatt hotel. Serving in a variety of managerial capacities, Quay rose to general manager of Village Suites, the company's corporate housing arm.
He grew the once-shaky enterprise nearly 800 percent in nine years. Then, in 1998, Global Business Resources Inc., an extended stay provider in Cincinnati, acquired Village Suites. As part of the agreement, Quay moved with the company to Scottsdale, Ariz.
A year and a half later, though, Quay left Global Business. He raised capital to launch Leading Apartments, a company that matches employees of Fortune 2000 companies with luxury furnished and unfurnished apartments throughout the world.
Village Green happened to be an investor in this venture, so Quay often met with Jonathan Holtzman, the company's chairman and CEO, to go over Leading Apartments' financial progress. In July 2000, Holtzman had another agenda item on his mind at their meeting. Holtzman wanted Quay to replace the recently departed president and COO Terry Schwartz, the 1996 Multifamily Executive Executive of the Year.
Initially, Quay said no, for a variety of reasons. After growing up in Pittsburgh and living in Detroit, he enjoyed his life in sunny Arizona, and he didn't want to uproot his family. Also, he had a good relationship with Holtzman, which he didn't want to jeopardize.
But perhaps most important, he didn't want to run the Village Green that he knew – a company where executives merely carried out Holtzman's orders. Quay wanted to be a partner. "I did not want to walk into an environment where I did not have the opportunity to have some leadership direction opportunities," he explains. A few conversations later, Holtzman agreed on the partnership, allowing Quay to drive change through the organization, with a focus on customer service.
Quay says they are still hammering out the details on making him a partner in the company, but he already has ownership in the properties the company has bought or developed since his return.
A New Direction Still, the question remains: Why would Holtzman pursue Quay, 33 at the time, to run the business his grandfather started in 1919? One answer was simply Quay's youth. Holtzman wanted someone who could relate to renters in their 20s and 30s.
Upon taking control of Village Green, Quay looked at underperforming departments and at the people who did not have customer service skills. "I understood that we were going to have to change some associates and bring others in from the outside who understood what service is," he says.
In this process, Quay realigned some of the departments where he saw overlap. He streamlined the collections department, reverting many of its functions to individual properties. He consolidated executives in management, development, construction, and communications. They now report directly to him.
Quay reallocated about 20 percent of the 120-person corporate staff. Some managers wound up in understaffed departments. When employees were dismissed, Quay shifted some of their responsibilities to other areas and promoted associates to fill those positions. "One of the things that made Village Green very successful was the breath and scope of our management support department," he says. "I consolidated and realigned the direction so there was less overlap and more specific accountability."
Focusing on the Customer The centerpiece of Quay's plan is customer service. And most of his moves were made with this goal in mind. His biggest asset coming into the job was his almost religious drive to satisfy each and every customer. Holtzman believes that for Village Green to achieve the greatest possible economic success, renters must be happy. Quay's customer service record with Village Suites, one of Holtzman's pet projects, proved to the chairman that Quay was up to the challenge.
Anyone following Quay's career up to that point wouldn't have been surprised that customer service was one of his first priorities. In the hotel industry, service is king. "In multifamily, you have a property that has five to 10 employees," Quay says.
"You have corporate and regional oversight, but its off site," he continues. "At hotels, you have hundreds of employees that have been in the business for a long time. It's usually a very tenured business with your executives on site. They can manage the service process much better because they're all there, and they all walk the same walk."
Quay adds this personalized touch at Village Green by visiting each property manager with a copy of his or her customer service report. If a property has a problem with trash pick up, for instance, Quay will walk out to the dumpsters with the property manager to make sure that trash is not overflowing from the bins.
To further drive home the importance of customer service, Quay made it count for 20 percent of each employee's performance review. He also established service benchmarks for each part of the organization. Leasing agents must sign 35 percent of tours to a lease and turn 70 percent of calls into appointments. Maintenance is expected to follow through on each request within 24 hours. Property managers are expected to keep bad debt at less than 0.25 percent of gross potential rent and maintain occupancy at above market levels in their class.
To fulfill these ratios, Quay brought in higher caliber employees who were more customer-service driven and gave them proper training and mentorship. Enticing these people, almost exclusively college graduates, was not easy. Quay raised pay levels about 10 percent and started a manager-in-training (MIT) program. He sent recruiters to college employment fairs, mainly to schools with hotel and finance programs.
When new hires start at Village Green, they all wear the same name tag that says, "I'm a little green." But MITs won't be green for long. They immediately begin a program where they learn about the basics of operating a property, including budgets, preventative maintenance, procurement, and service requests.
Quay also brings them as a group in each month to meet with him for four hours. The discussions focus on broader company issues, such as operating statements, initiatives, and site level needs. After six to nine months of this training, trainees get to manage a property. If they are not ready, they are let go.
A New Criteria Recruiting and training new people is only part of the battle for Quay and his team. They also have to evaluate their current employees.
Quay worked hard to take all subjectivity out of the performance measures, grading them on the service benchmarks he set. The three criteria used are leadership, financial performance, and customer service. Employees are grouped against their peers on a career board, which provides a structured way to award employee achievement and track performance, says Kim Brown, vice president of human resources at Village Green.
Before he arrived many managers would give large raises to employees inconsistent with their performance, Quay says. Now, the career board and the market dictate who gets a raise and how much it is. Those in the top 20 percent on the career board get a set raise, while those in the next 60 percent get a lower raise.
Those employees in the bottom 20 percent do not receive a raise, but are given action plans to improve their performance. If they don't improve, they, too, are let go.
According to Quay, employees who participate in the University of Village Green program, which began under Schwartz and Holtzman, usually score better on the career board. The university offers classes across a number of multifamily core disciplines, from collecting rent to proper landscaping to sales techniques.
Every employee has to take mandatory courses within their discipline to be promoted. Quay built upon what his predecessors started by adding more classes and implementing teleconferencing, which means that executives don't have to fly to regional offices to teach courses.
While costly and time consuming to implement, the recruitment and training programs are becoming revenue generators, he adds. The company recently went on an aggressive marketing campaign, telling Midwest owners it had revamped its customer service and employee training. Northwestern Mutual, in Chicago, received the marketing collaterals and recently chose Village Green to manage a 198-unit property in Cincinnati. "I was very impressed with their training procedures," says Barbara Young, asset manager for Northwestern Mutual.
"I like the fact that they developed a plan for bringing people in, developing them, and continuing their education and experience so that they can become managers," Young continues.
Central Buying While the training and development program earns more property management business, Quay has also looked for ways to cut costs outside of streamlining his corporate team.
In the purchasing area, he studied how the company purchased supplies. "We have a company and properties that are worth about $2.5 billion," he says. "In a given year, we will develop between $150 million to $250 million in new products and brands. We were not leveraging that buying power."
So, he created the position of director of procurement. The new director determined that Village Green was a very inefficient buyer.
Individual properties and departments were doing their own purchasing, which left the company with seven suppliers for maintenance supplies and 35 brands of cleaning supplies. "You cannot leverage costs when you have that type of inconsistency in your purchasing," says Quay.
The director of procurement centralized the buying functions, choosing a preferred vendor for things like building products and day-to-day maintenance supplies. Over the last two years, the company has saved 33 percent on essential items.
Cutting Through It
Three years into his training and customer service initiatives, the company is still not quite where Quay wants it to be. "Until I can no longer compare us to a real estate company but can compare us to a hotel company or a great manufacturer with ISO 2000 certification, we won't be where we need to," he says.
Those who know Quay don't doubt that his drive, passion, and meticulous nature will get Village Green where he wants it to be. "He finds a way to solve problems, and he just gets things done," says Bob Luby, asset manager for The Mayerson Co., a real estate management and investment firm in Cincinnati that uses Village Green to manage some of its properties. "He just cuts through it."
Cutting through it is what every executive must do. No matter what hand is dealt, he or she must move on. Or, as Quay likes to say, "Don't be a victim." If Quay had a mantra, this one, which he learned working for numerous executives throughout his career, may be it. He spreads this message throughout the organization, and he obviously practices it. This is a major reason why Village Green enjoyed an increase in net income and in revenue in a very shaky economy. And it's how Quay became the 2003 Multifamily Executive Executive of the Year.
Accommodating Every Need In his plan to turn the Farmington Hills, Mich.-based Village Green Cos. into a service company, George S. Quay, president and COO, not only wants to offer residents speedy maintenance and efficient move-ins, he wants to give them a wide variety of choices in lease terms and apartment styles. "When you walk in the door of Village Green, you should be able to say what you want, and we can give you a price," he says. That could mean asking for anything from a furnished unit on a two-month lease to an unfurnished unit on a two-year lease.
It is a concept Quay used during his tenure with Village Suites, the former corporate housing division of Village Green that he ran during the ,90s. The company is getting back into corporate apartments and currently has more than 100 units.
Getting furnished apartments running at these sites has not been as easy as Quay first expected. With furnished units, property management staff has to set up the utilities and furniture delivery. "We ended up tying up resources when the local team sits on the phone with the utility company waiting for confirmation," Quay says.
Though the same leasing agents can sell both furnished and unfurnished housing, he learned the administrative burden of doing both types is vastly different. "We found that the corporate housing business is very administration heavy," he adds "You are scheduling utilities, vendors, furniture, and housewares. The client requires a service level that's different than the unfurnished resident. They are there for a much shorter period of time, and they are much more demanding."
These higher expectations forced Village Green to bring on a second support staff for the unfurnished housing section. "We felt we could do it more cost effectively to set up a separate internal center to handle it," he says. "Behind the scenes we handle the furnished and unfurnished parts of the business differently. But the customer knows no difference."
This is the key to Quay's push to customer service – make life easier for the customer by offering more housing options without adding hassles. Once this happens, Village Green will be one step closer to becoming the service company Quay envisions.
Village Green Cos. at a Glance
- Year founded: 1919
- Location: Farmington Hills, Mich.
- 2003 revenue: $250 million
- Number of units: 27,000
- Number of units in the pipeline: 1,000 to 1,500 per year
- Expected growth in units within five years: 30,000 to 35,000 units
- Geographic coverage: Michigan, Ohio, Indiana, Illinois, Missouri, Minnesota, Texas, and Kentucky
- Revenue streams: Owner, manager, developer, purchaser, and third-party manager
- Number of employees: Approximately 1,000