I have spoken with many principals to discuss the option of a BDM incentive structure. One Principal proudly said: ‘They have an incentive. If they work hard and bring in new management, they get to keep their job. That’s incentive enough isn’t it?’
While the comment was made with a bit of humour, behind the principal’s comments is a basic truth. Many BDMs are expected to perform for the basic wage with no incentives in place.
While that may work for some, most BDMs need and want some sort of external motivation. By offering an incentive to a BDM, the Principal encourages them to give their very best while recognising their achievements. Encouraging a BDM with an incentive-based package will get them thinking more like a salesperson, help grow a Property Management Department, and, in turn, help reach an agency’s overall goal.
The role of a Principal is to guide the BDM to ensure the growth of the Property Management Department. Having an incentive structure in place is one tool that Principals can use. Incentive plans fail when the structure has no clear guidelines or isn’t focused on the individual. A well-designed BDM incentive structure will make the individual focus on income-producing activities to bring out the savvy salesperson in a BDM.
Deciding on an incentive structure that will suit you, your department and the BDM is never easy. First you need to make the decision about whether or not the BDM will be rewarded based department growth or signed new managements.
If you look at the department growth option, the BDM is rewarded for signed new managements but punished for lost managements. Or, if you have your BDM purely focused on signing up new managements without obligations to the overall department, the Principal takes the loss and responsibility of any lost managements.
I believe both options can work. If you have your BDM working purely as a salesperson, I recommend you have an office manager or customer liaison office to handle the retention of your current clients.
As a principal you might want to see an increase in the number of contacts on your office database and in the number of new managements. You might want to increase the monthly income, streamline workflow, implement training or better communication between the team. When designing an incentive structure, you need to ask yourself, “What is the desired outcome?”
Also try following my KISS Principal: Keep it spirited and structured. The word ‘spirited’ means to be full of energy, enthusiasm and determination. The incentive structure you have in place for your BDM should bring out those personality traits and encourage high performance. The BDM will also need to have a clear understanding of the structure and need to know what they can do to earn high incentives along with what that incentive is.
Once you have decided on your structure, you can reward your BDM in many ways. I have included a list of suggestions, but always remember that every office is different. As the Principal you need to sit down and figure out what will work for you and what will inspire and fire up your BDM.
- Pay half a week’s or the entire first week’s rent
- Pay a percentage based on the overall department growth each month
- Pay a flat rate of $250 or $300 per secured listing
- Pay a percentage based on the first year’s income of the new management
- Pay an incentive for any landlords the BDM recommends to the sales department and when a sale is created.
BDM Incentive structures are very powerful concepts that have been proven to be highly effective for department growth. The structure educates BDMs and provides them with a clear understanding of the connection between their performance and their rewards.
A performance-based incentive structure can help transform a BDM from an average employee that just does their job and gets paid, into a BDM who strives to achieve excellence and outstanding results on a daily, weekly, monthly and yearly basis.
Reflection Time – Ask Yourself:
Is your BDM on an incentive program and how are they performing?
Would you like to see the number of new managements double each month?
Are you confident your BDM is performing to the best of his or her ability or are they floundering?
Can you now see what a full-time BDM can do for your Property Management Departments long-term growth?
Will you know look at a way to not only recognize and reward your BDM but also your Property Managers to ensure longer retention?