Buy In From the Back Office & Agents.
Buy in is the most critical aspect of any principal broker’s desire to automate their back-office operation is to start with persuading their administrative personnel of the positive attributes for converting from a system they have known and become comfortable with.
That may sound simple because you’re the boss. But speaking from my experience, in running a fifteen-person brokerage operation for over a decade, it isn’t as simple as it sounds. The reality is most people don’t like change, and in most small and medium size brokerage operations administrative staff are wearing multiple hats.
Staff often feel they don’t have time to learn anything new even if it will ultimately save them time and increase their productivity. Most will find fault with any new system to avoid learning something new and putting more on their plate – it’s human nature.
As a managing broker, we were rarely concerned about dictating to our agents what was required for them to get paid, but we were very sensitive to imposing anything new on our financial manager or controller she didn’t feel comfortable with.
Best Practices suggest that creating a plan allowing automation to occur in phases will increase acceptance. Going live at the beginning of a new fiscal quarter will often minimize disruption and workflow as your business continues to operate and generate revenue.
Best practices also suggest running legacy systems and new systems for at least pay period, if not two, which allows inconsistency to be easily spotted and remedied. Don’t kid yourself regardless of your thoroughness there will some inconsistencies to work through.
Automating and mapping out your current operational workflow and then comparing it to industry best practices is a good first step. You may determine it’s an ideal time to change old operational bottlenecks for a more streamlined and efficient process.
Start with a process for tracking agents pipeline revenue for deals with at least a 50% likelihood of getting completed. This does not require agents to share their client’s detailed communications before a transaction is completed.
Again, our experience was that most agents pushed back on any new processes if they felt they were losing control or ownership of their private client communications and information. Keep the pipeline requests simple, but powerful enough to aid in forecasting and budgeting.
Creating a strong process around structuring and submitting deals is critical for automating back-office operations. An effective deal submitting structure should also include an approval process for agents, administrative personnel, and if required the managing broker.
Automation built into invoicing, along with notifications to all involved parties in a transaction, with easily accessible reports for agents, administrative personnel and principals should also be part of a complete end to end automated solution.
Best practices solution that focuses on simplicity in the application along with transparency for everyone to understand and track their commissions will significantly enhance the acceptance of the new processes and procedures.
Managing brokers should ask themselves several questions once they have created an acceptable process roadmap. The first, and the most important question was from a financial perspective – do you create a customized system or utilize one of the commission-centric products currently available in the market?
Regardless of your ultimate decision best practices encourages the utilization of an open architecture software versus a closed software architecture. Open architecture is more favorable because it will allow a more efficient and cost-effective migration of your data with Quickbooks and CRMS’s utilized by your agents.
Open architecture an API (application integration process) can be created that only identifies and migrates transaction specific information from your agents private CRM to the company’s commission tracking platform. Saving them time and avoiding “double data entry” will increase adoption and reduce mistakes.
Another important concept, as a managing broker we had to consider was, the tracking and transparency required for reporting back to agents were significantly different than the reporting required by our lender or partners for the entire brokerage and property management operation.
Brokerage revenue was just one piece of the puzzle, but the most complicated to track due to agent split plans and the mantra of the brokerage industry to “just get deals done.” Utilizing an open architecture software can significantly reduce the brain damage of migrating data between systems.
Other questions to consider as you implement and automate your back-office operation is whether to utilizing a desktop application or a cloud server application. Cost and security are typically the factors that dictate these decisions. There are advantages and disadvantages to both.
Cloud-based systems are primarily being offered on a monthly subscription basis versus purchasing the software. In today’s security-conscious society investigating the security protocol of a cloud-based system is also critically important. Cloud-based applications will typically have a higher degree of security than the typical brokerage operations firewall system implemented by their local IT providers.
Financial software’s, such as Quickbooks, Peachtree Accounting and Oracle-based solutions today are offering desktop and cloud-based platforms. However; as a Quickbooks customer, it does feel as though Quickbooks online will be, at some point, my only customer supported option.
Commission-centric software’s, such as Delius, CommissionTrac, RealtyBack Office, BrokerMint and Broker Sumo only cloud-based options are available. Costar’s Brokerages Applications and Crichlow Software Development’s Leascom are the only desktop application we are currently aware of in the market.
If you make the effort to implement and automate your back-office operation, the byproduct will be an incredibly accurate sale and lease comparable system for your brokerage operation.
Why – because comparable information is being generated from worksheets your agents complete, to get paid, immediately after a deal is done, while all the relevant details, such as free rent and TI cost, are still fresh in their mind.
It’s information that you own created at the same time you are increasing your back-office productivity and transparency with your agents. Feeding two birds with one seed: operational efficiency and growing an internal comps database.
Over time, as data builds up, you may even be able to get by without a full-blown CoStar subscription when working local markets.