Why are more than 20,000 real estate employees changing jobs?

In 2020-21, EAC reached out to our members to learn more about your biggest challenges.

While legislative and compliance challenges topped the list, perhaps most surprising was how many members noted attraction, recruitment and retention of quality employees as an ongoing hurdle.

Those of you who have been in the real estate industry for some time, have seen many a junior come and go. You know that, despite the possibility of big rewards, real estate just isn’t for everyone.

In Australia, the ABS reports average staff turnover across all industries in 2019 was around 8.5%. In real estate this number increased to the second highest of any industry, at 11.7.%.

The AI Group indicates the industry had approximately 187,000 employees that year, meaning almost 22,000 people in real estate changed employer or left the industry behind completely.

So, why did 22,000 real estate employees jump ship?

Staff turnover in real estate

To-date, real estate has been an industry with few obstacles to entry. Qualification courses welcome anyone and everyone, and let’s be honest, completing your license isn’t really rocket science.

The trouble is, while acing the multiple-choice questions and completing the trust accounting assignment correctly isn’t particularly difficult for most, actually operating in our industry is no walk in the park.

“Some people enter the industry with big dollar signs in their eyes, thinking they can just do a course and start making a lot of money,” one member told us. “But real estate isn’t that easy – it’s like any industry, you pay your dues. Most people start in junior roles, meaning commissions aren’t as high or as frequent, and depending on the market, listings and sales can be difficult to achieve.”

The reality of real estate can certainly be a deterrent for some people new to the industry.

Difficult market conditions can mean those who don’t yet know how to read the lie of the land can struggle to earn above their base wage (if on commission).

Competition is generally quite high, with many agents competing in the same postcodes.

Cold calling and door knocking can be confronting, to say the least, when starting out.

And working hard in PM for less money than sales agents, can be discouraging.

All these factors and more lead to agents and other real estate employees jumping from one office to another, or leaving the field completely in search of consistent income with more work/life balance.

Research by global recruitment firms tells us that one of the main reasons people leave an employer is because of their manager.

And while the search for bigger and better opportunities is possibly the main reason for high turnover in real estate, we can’t expect that management is an issue in every industry, except ours.

“Often real estate managers are also salespeople or property managers. They are working to bring in and/or manage their own listings, at the same time as overseeing those below them,” says Sylvia Cortez, CEO of the EAC.

“But good, inspiring, motivating – retain your staff – management is so much more than just overseeing staff. It is about solid and smart mentoring, empathetic conflict resolution, careful planning and strategising. It’s not surprising employees move on if they feel they aren’t getting the management they need to succeed.”

Another big reason for high turnover is a simple one – not hiring the right person from the start.

Skills can be learned, but attitude, empathy, natural diligence is often intrinsic.

In real estate, we often cast our recruitment net through word of mouth and conduct interviews ‘old school’, without venturing into areas like behavioral-based questioning or consideration of culture fit.

Taking a more strategic approach to recruitment can result in employees who are a better fit and who stick around longer.

What does turnover mean for your business?

It is estimated replacing an employee costs up to 1.5 times that person’s salary, depending on their experience and seniority.

Unfortunately, many small businesses don’t add those dollars up, so they never clearly understand the cost of poor retention.

When you lose a junior employee, among other things, you are losing the time it took to prepare the ad the first time, shortlist candidates, interview candidates, shortlist interviewees, interview again, and appoint and onboard that employee. You also lose the time it takes to run that entire process all over again.

When you lose a senior employee, you not only lose time and money recruiting, you lose knowledge, experience and often income for several months as a new employee finds their footing.

Retaining good employees is a much more cost-effective way to run a business, than continuously recruiting for replacements.

How can you attract and keep the right employees?

HR and recruitment experts identify a strong employer brand as one of the key tools for attracting and retaining the right people.

Employer brand is your business’s reputation as a workplace (externally) and how you live up to it every day (internally).

Developing your employer brand centres on defining your offering or your promise to employees and then marketing that promise so people who really align with it, want to work with you.

A company with a great employer brand spends less money attracting the best candidates and converting them to loyal employees.

When aiming attract and retain high performers who will stick with you, consider the following:

  1. Build a genuine culture: your workplace culture is simply the environment you create for your employees. This is influenced by several factors, from leadership (and leadership attitude), through to organisational values and beliefs. It comes from the people – from top to bottom and right back up – who underpin your organisation, and it cannot be faked.As an example, if you promote your organisational culture as warm and friendly, based on family values of trust, support and honesty, you will attract people who fit those values.

    But if your culture is actually built on a platform of existing employees who are ‘every man for themselves’, ruthlessly ambitious and who lack compassion, your new employees won’t stick around long.

    Define the culture you want for your organisation, and build your team based on how well they fit into that culture.

  2. Look at the big picture, then talk about it: money is important to a most people; some would argue, even more so to real estate agents. But it is not the only thing that attracts people to a company and keeps them there.When advertising positions, think about what non-monetary benefits your company offers (for example half-day on Thursday, strictly no non-emergency after-hours PM calls, company car, monthly team dinner) and package it all up as part of your offering.

    A lot of companies will offer similar salaries/commission structures, so you can stand out by sharing a more well-rounded remuneration package… as long as you deliver on what you promote.

  3. Invest in strong management: someone who is a good and successful salesperson may not transition into a good and successful manager. Management is a set of skills beyond standard industry skills, and without those skills, people suffer.When promoting people into positions of management, first, ask them if they truly want to be a manager – knowing it means less time on the tools and more time mentoring others.

    Next, assess their management qualities – are they patient and open, do they communicate well? Are they supporting and willing to share and mentor?

    Once you are sure you have the right people in place – don’t forget that they too need mentoring and support, especially if it’s their first management gig.

    Training courses are offered by a number of reputable training providers, and in our opinion – when it comes to management training – they are best completed in person, rather than online.

  4. Cast wider than your word-of-mouth network: Looking for the right person among only the people you know or the people they know, can seriously restrict you when it comes to finding the best possible candidates.Look to popular job boards, social media and other opportunities to advertise widely, so more people know about the opportunity and you get a greater variety of people, with different experiences apply for your next role.

When it comes down to it, staff turnover is inevitable – but, in real estate, we can do better than 11.7%.

Retaining staff longer means they have more of an opportunity to learn and grow and become high-performing agents for your company and for themselves.

Image by Arlington Research

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