As the economy recovers, apartment companies are making plansnow to avoid high rates of turnover of their best employees. That includes ensuring that workers feel engaged with their jobs.
“If you start to worry about engagement after you’re suffering from a retention problem, it’s too late,” says Rick Haughey, vice president of property operations for the Washington, D.C.–based National Multi Housing Council (NMHC).
To keep top talent in your leasing office, experts say, start by hiring people whose career goals and temperament are aligned with your corporate culture and mission in the first place. Then, communicate with them throughout their tenure, to make sure the job is still a good fit. Give them opportunities to increase their skills and advance their career. And, of course, give them competitive compensation.
an investment in the future
More than 50 percent of apartment companies say “retaining high performers/top talent” is their “most important” concern, according to the NMHC’s recently released 2012 Apartment Compensation Survey.
Losing a talented employee costs more than just the time it takes to fill the position again. “From a purely financial perspective, you make an investment in people,” says David Alagno, director of employment for Arlington, Va.–based AvalonBay Communities.
When the employee leaves, the time and money spent training that employee also walk out the door. The employee also leaves with some of the institutional memory of the company—experienced staff are often more productive than new hires. “As people stay longer, they become more efficient,” says Alagno.
There’s also the issue of public perception: Residents can get an impression of instability if there’s a new face behind the desk every time they visit the leasing office.
So, how much turnover is too much? Executives at Atlanta-based Post Properties say a rate of 10 percent to 20 percent is sustainable—and more than 25 percent is bad news. Post had a turnover rate of roughly 20 percent a year before the real estate crash. During the crash, voluntary turnover sank to 8 percent a year.
As the economy and the national job market slowly recover from the recession, turnover is on track to hit 17 percent this year for Post. Other companies typically run a little higher: AvalonBay says turnover averaged about 40 percent a year before the downturn and is now about 20 percent a year.
“But it will rise back up,” says Alagno.
A CONTINUOUS PROCESS
Retaining top talent starts with the hiring process and continues throughout their time with your company. Strong apartment companies hire candidates who fit well into the culture of the firm and whose career goals match the company mission. “We’ve identified certain backgrounds, like psychology, sociology, and political science, that work well in a team and work well in sales,” says Linda Ricklef, senior vice president of human resources for Post. Post also focuses on hiring college graduates.
Each employee should earn a wage that measures up to what other companies pay for the same or similar work, or he or she will probably eventually leave. So, it’s imperative to keep track of the salaries offered by competing companies in your area. “Compensation is really market-specific,” says Betsy Feigin Befus, vice president of employment policy for the NMHC.
But some employees leave even if their pay is competitive. “Pay is a component and not a primary driver of turnover,” says Alagno. Some employees leave to learn new skills that will increase their earning potential. Others simply find they don’t fit in with the culture of their workplace.
Many AvalonBay employees add to their skill sets—and their résumés—by moving sideways through the company before they advance. A regional manager may move from maintenance to operations, for instance, to gain a more well-rounded perspective and skill set.
“That person will be a stronger overall regional manager,” says Alagno. “Up is not always the only way to grow.” AvalonBay also offers tuition reimbursement to its employees of up to $4,000 per year.
Good managers should know the individual career goals of their employees. It’s important to align what employees do today with what they hope to do in the future, to breed a sense of progressive continuity.
“What does it cost for a manager to talk with an employee about their career?” asks Alagno. “Foster an environment to continually grow their careers. That means always promoting from within whenever possible.”
Top companies often hire outside companies to survey their own employees—much like they survey residents and potential residents. These surveys gather important information for employees who might hesitate to offer constructive criticism to their direct supervisor. “It shows you care about what they think and how they are feeling,” says Feigin Befus.
Relationships Add Value
For many employees, the most important part of the corporate culture is their relationship with their immediate supervisor. Surveys of exiting employees show that a direct supervisor is more of a motivator for many people leaving a job than even compensation.
Relationships extend to the human resources level, as well. Post’s “employee relations” staff keeps in touch with the associates in the leasing office, to try to provide a resource to employees and mediation if necessary. And companies like AvalonBay give regional quarterly awards, including “Best Customer Service” and “Best Leasing Percentage.” These awards are designed to reinforce the company’s branding, mission, and culture.
The most important benefit, however, continues to be a workplace that keeps employees engaged with a positive culture and opportunities for advancement. “Engagement is the critical part of retention,” says Feigin Befus.
“If I can create a work environment that adds value to our associates’ lives, then the residents feel they are living in a community. That creates value,” says Greg Lozinak, executive vice president for Chicago-based Waterton Residential. “The brand in a strong company gives the associates something to rally around.”
The NMHC’s annual survey is based on data from more than 50,000 employees at 93 major apartment firms, providing detailed analyses of industry hiring practices, including salary, variable pay, and total compensation of nearly 100 positions.