Knowing how your compensation and benefits packages compare to others in the business not only helps you compete for the most in-demand employees and reduce turnover in your corporate office and on-site, but it can also be of assistance in budgeting and goal-setting.
The best source for that information? The National Multi Housing Council, which recently released the 2005 Apartment Compensation Planning Report, prepared for NMHC by Watson Wyatt Data Services.
"The report is the best available tool for human resources and operations executives to assess their firm's competitiveness and success as an employer," explains Elizabeth Feigin Befus, NMHC's director of property operations.
Overall, it looks like the multifamily industry is keeping itself fairly competitive in the salary game. According to the NMHC survey, base salaries and total cash compensation rose in 2005 for most property management positions, improving multifamily employers' ability to recruit and retain top talent across the board. Conversely, the average short-term incentive and bonus payment as a percentage of salary dropped for 17 of the 26 categories.
"The multifamily industry is investing in its people," Befus says. "Over the past several years, industry leaders, together with human resources executives, have devoted increasing resources to human capital. Forward-thinking firms have recognized the strong connection between strategic human resources practices and business success."
Stability at the Top
The investment is generating a good return. In 2005, the improved salary figures and more robust benefits packages kept turnover to a relatively low 37.2 percent overall; 38 percent for nonexempt employees and 17.2 percent for exempt employees. That's significantly better than the 48.2 percent and 24.5 percent, respectively, reported in the previous year.
Low turnover among top employees is a good sign, says jobs expert John Challenger of Chicago's Challenger, Gray & Christmas. "Nationally, we're seeing a lot of turnover at the top as we enter the new post-Enron/Sarbanes-Oxley era, and different things are required of CEOs."
Across the nation, more than 100 CEO changes were recorded in August 2005, more than double the 48 changes announced in August 2004. CEO turnover is 95 percent ahead of the pace set last year, with 893 changes through August versus 458 changes a year ago. Comparatively, the multifamily industry appears to have a more stable layer of top management.
"Most associates do not do a great deal of research on a company before joining the team," says Bill Garrett, vice president of associate services for apartment and condominium developer Lane Co. in Atlanta. "As such, company culture, values, and the nature of the work do not play as important a role in the choice of job as do the basics of salary and benefits."
While every category measured from vice president of property operations to painter experienced some increase in base salary and total cash compensation, two groups experienced the largest increases. Both property management and maintenance personnel got more money each payday than they had the year prior.
"On-site property management staff are often recruited from a labor pool similar to hospitality and retail employees," NMHC's Befus says. "Multifamily firms must have competitive compensation packages in order to recruit top candidates."
As such, property management positions experienced the highest increases in total cash compensation and in average short-term incentive and bonus pay.
The combination of higher salaries and improved bonus compensation gives employees added incentive to make goals, a crucial element in the increasingly competitive multifamily business.
For instance, Benchmark Assisted Living offers members of the field operation bonuses if operational goals are met. "The bonus is distributed with 40 percent (approximately $5,000 per quarter) going to the executive director (property manager) and the remaining 60 percent distributed to all employees," explains Jill Haselman, senior vice president of organizational development for the Wellesley, Mass.-based company. "Total quarterly amounts–based upon size of property–range from $10,000 per quarter to $20,000 per quarter."
Cash is Still King
For some workers, however, cash is king. That's because money often means more than benefits for these employees. Maintenance personnel, in particular, saw higher base salaries but lower incentive or bonus payments.
Challenger says even small increases in base salary can keep lower-skilled workers on board.
"The highest turnover is in unskilled or low-skilled positions," he explains. "Just a little bit more money will draw people to another job. They might be willing to switch for as little as 50 cents per hour."
That's why Trammell Crow Residential, the Dallas-based developer of more than 200,000 multifamily units in most major markets of the United States, recently changed its compensation program for maintenance staff.
Trammell Crow "actually eliminated most on-site incentives for maintenance associates in 2004," explains
Tim Swango, executive vice president for human resources and information systems. "We felt that our maintenance people were more motivated by a greater base [salary] than they were with an incentive that did not drive any additional desired behavior and result."
Leasing managers fared poorly both in terms of salary and incentives. This was the only position that saw a decrease in total cash compensation (down 1.3 percent) and short-term incentives and bonuses (down 5.2 percent). In fact, the percent of leasing managers receiving these awards dropped 5.5 percentage points from 2004 to 45.1 percent.
The shift is partly attributable to the increase in online leasing. "More people are making decisions about where to live independent of any sales person," Challenger says. "That makes leasing professionals somewhat less integral to bringing business in the door."
In addition to compensation, there are benefits. Almost every employer offers some configuration of medical and dental insurance, paid leave, and retirement benefit plans. Industry spending on these programs topped more than $7,000 per full-time employee, according to the survey.
"We have found through our associate satisfaction and exit surveys that access to a quality, affordable benefit program is often more important than the actual compensation," says Linda Ricklef, vice president of human resources for Post Properties, a public apartment REIT based in Atlanta.
Post, which owns 23,740 apartment homes in 60 communities around the nation, offers the usual health benefits such as medical, dental, and vision and includes life insurance, long- and short-term disability coverage, plus many voluntary benefits.
"If you were to ask our associates," Ricklef says, "they would say that the number one element is the health insurance. Close behind that would be the 401(k) plan and the disability plan, which, for instance, has provided extended maternity leave to many of our associates."
Many employers are beginning to give employees more choice in the benefits they receive. Jose Prieto, human resources director of Miami-based Hudson Capital, tailors his company's program to all classes of employees. Hudson is a condominium developer with 4,000 units in its portfolio. "We let the employee choose what they want. [They] are more satisfied when they choose their own package."
Whatever the mix, though, providing benefits isn't cheap. In 2004, multifamily firms paid an average of $2 million annually for their employees' medical benefits and nearly $3 million annually for their workers' paid leave.
One important factor the survey does not measure is the value of corporate culture.
"In our industry, if the compensation is within the 60th percentile and other benefits are competitive, compensation doesn't give us an edge [in acquiring] talent," Haselman explains. Culture does, she says. And the company rewards employees who "live the Benchmark values" at its 24 properties.
Through a program called "Culture Comp," Benchmark employees can potentially increase their wages by 21 percent or more annually. Among the initiatives are community bonuses if occupancy and net operating income targets are met, $50 "gratitude grams," $100 community service champion awards, and referral bonuses.
"Compensation, in reality, encompasses three areas: cash compensation, benefits, and workplace environment or culture," explains Trammell Crow's Swango. "Competitiveness of the compensation and benefits package has great importance in the process of attracting new employees."
However, he continues, "the company's culture and workplace environment are more important thereafter. It's Trammell Crow's belief that our workplace culture is the single greatest retention tool that we have."
–Margot Carmichael Lester is a freelance writer in Carrboro, N.C.