Tuesday 6 December 2022
As a business leader, when it comes to measuring your team’s output and contribution to the workplace, do you really want to leave it up to self-appraisal?
It is your business after all – your livelihood, and your future.
And, while self-appraisal has merit, it does leave room for inaccuracies and subjectivity.
This is where KPIs – key performance indicators – come into play.
KPIs are crucial in growing and improving an organisation.
For the property management (PM) industry, KPIs are fundamental in helping employees to better understand the business processes (what works and doesn’t work) and boost occupancy rates and revenue, while reducing tenant turnover and vacancy rates.
Clear KPIs will also assist you to gauge the areas where staff training and education are needed to ensure business growth and longevity.
As a business leader, you need to have the knowledge to develop KPIs that reflect your strategic priorities. As outlined in this Harvard Business Review piece, organisations operate in environments defined by their key stakeholders. Knowing how to determine these stakeholder groups will help in developing relevant KPIs that can assist your company to:
Work towards business objectives
Improve team morale
Monitor organisational progress
Manage company performance
Gain organisational insights
Without implementing structured and well-informed KPIs, your business growth will be compromised.
The key to success is in educating yourself on how to define and implement KPIs that can help your team measure internal processes, activities and productivity to reach your set goals. Each section below will highlight specific KPIs that property management companies should consider incorporating in their strategic planning and organisational development.
Occupancy and vacancy rates
As a property management business, improving occupancy and vacancy rates is one of
the fundamental keys to success. Poor rates are not an option, and this is why structuring
a KPI around this subject is a must. In determining the relevant KPI, you must first ensure your staff understand the importance of the measurement, its definition, and how to calculate the rates.
Wall Street Mojo provides a great guide to help you educate your staff. It describes the occupancy rate as the ratio of rented units to the total number of available units. A critical concept for investors, high-occupancy rates indicate that a property is fully utilised, while prolonged low-occupancy rates indicate that the units or apartments are not well-maintained.
In addition, the occupancy rate is inversely related to the vacancy rate, which refers to the number of vacant units compared to the total number of units available in the building. Calculating this figure will give property managers an understanding of how well or how poorly a property is performing in the market.
It is important to understand the series of key factors that can affect the vacancy rate. You will need to take into account:
Location of the property
Age of the property
Accessibility to consumer and durable markets
Accessibility to the transport system
Income level of the potential renter
The information available in the market about the property.
Once you have carefully considered this information and determined the vacancy rate, you can then identify the expected profitability of a property. A low-vacancy rate means that a property is performing well in the market. Now, that’s something your client will want to hear!
Measuring tenant turnover is a must for any property management business, which means it needs to be a non-negotiable inclusion for your staff’ KPIs. Identifying tenant turnover links back to understanding relevant stakeholders, and understanding their value, and importance to a business. Monitoring these turnover figures provides a clear indication of how well a property management company is servicing and supporting its landlords and their tenants.
But, how much do you and your team know about calculating and understanding tenant turnover?
Tenant turnover is calculated based on the time between the end of a tenant’s lease term and the start of a new tenant’s term. The fact of the matter is that landlords will cycle through tenants. Unless a property is rent-controlled, it is normal for tenants to turnover every one to two years. If your rates are higher, then you need to address why.
Are properties being mismanaged? Is your team not responding to tenant inquiries fast enough?
Minimising turnover time is also important. Extended periods between leases can be caused by poor property presentation (has the property been thoroughly cleaned), a lack of solid marketing and advertising, lack of repairs and maintenance.
Ensuring your staff clearly understands what a tenant requires and what causes high turnover is a must, hence the need to develop a KPI around the topic.
Money and business. It goes hand in hand. Whether it is a positive or negative result
depends on many factors.
Revenue growth is the biggest priority for any business. It equates to success and longevity. Building revenue takes time – in some cases years – and learning how to calculate scalable revenue helps you identify areas of the business that need more work and focus.
In its simplest form, revenue is the calculation of how much money a business earns, with the end goal being to increase over time. Calculating revenue growth is the easy part – the formula will depend on if you choose to calculate monthly or weekly.
The hardest part is in increasing the percentage. This is where KPIs come into play, and setting clear guidelines and formulas will help achieve the end goal.
A McKinsey and Company report, The ten rules of growth, outlines three core elements: “a bold aspiration and accompanying mindset, the right enablers embedded in the organisation, and clear pathways in the form of a coherent set of growth initiatives”.
As a business owner, you need to also consider these five key indicators and determine what work needs to be done to improve each category:
Develop a scalable growth formula
Prioritise fast-growing markets
Commit to the local market
Expand internationally if you have the transnational advantage
Focus on growing business in adjacent areas.
When you’ve developed your goals for each category, you can form relevant KPIs for your staff.
Staff productivity and work satisfaction
As discussed earlier, identifying clear stakeholder groups is one of the first issues
to address before setting KPIs. And, one of the most important categories is your
property management team. Without happy and productive employees, your business
will not thrive. Ensuring your team feels supported and confident in the workplace will increase productivity, performance and quality of service. We probably don’t need to tell you… but happy staff leads to satisfied customers!
There are two main ways to improve staff connectedness and output. The first is to measure staff productivity. Some ways to do this include:
Time-tracking apps - This can evaluate the input value of each task (i.e. how long it takes to complete a project or assignment), and it also makes your team more aware of their own productivity and efficiency.
Utilising email productivity tools - This can help property management companies determine what the workloads of their employees look like while pinpointing key areas where email isn’t used effectively.
Project management platforms - This can help leaders and managers monitor their staff’s individual tasks while in progress, and when they’re completed. Popular project management tools for property management companies include Monday.com, Airtable.com and Asana.
The second focus should be on staff well-being. Given the heavy workload associated with this
industry, property management companies need to ensure that employees are engaged in their work and that stress is minimised. Industry expectation requires employees to respond to tenant and client calls and messages 24/7. This can lead to staff burnout and unhappiness within the workplace.
Subsequently, staff turnover is one of the biggest issues in the property management industry, and it can impact all other KPIs. In fact, in 2019 the real estate industry recorded the second-highest turnout of staff of all Australian industries.
Working with your property management team to create a better work-life balance will ensure a healthy and safe space. Creating a supportive environment for your staff will ultimately boost business productivity.
Without customers, there is no business. Catering to customer needs – and ensuring they walk away happy – has to be a priority. However, you can’t develop KPIs based on customers unless you understand the relevant characteristics.
There are two types of property management customers: landlords and tenants. Identifying the requirements of each of these will help the business to improve its core offerings and services. In both categories, the need to respond in a timely manner to requests is imperative. There are different lead and lag measures you can put in place to monitor and track your progress when it comes to achieving customer-centred goals. For example, net promoter scores (NPS) is crucial in understanding the customer’s perspective on a property management company’s service. It is also important to consider the factors that drive your NPS:
The NPS of landlords can be impacted by the property management company’s information transparency and quality of communication (i.e. frequency, time of response and channel of preference)
The NPS of tenants can be impacted by the responsiveness of property managers, maintenance turnaround times and available channels of communication and self-service options.
As you can see, it all links back to response time.
Achieving improved communication is possible – it is just about having the right tools in place. One of these tools is digital self-service. A fully equipped self-service experience includes intelligent chatbots that provide detailed answers to commonly asked questions in a conversational way. This enables tenants to get answers quickly, without waiting for a property manager to be available to take their call, as well as giving them access to information outside office operating hours. For property management companies this is a win-win. Utilising proptech tools with self-service experience features can increase efficiency and productivity, enhancing the customer experience while minimising repetitive and laborious tasks for employees.
Investing time in each of these categories will ensure useful KPIs are successfully implemented into your business.
Have you set your KPIs for your property management company? If so, then book a demo with us and we’ll give you the proptech solution that can push your organisation forward to success.