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As originally presented in REP magazine.  Click here for the original publication

The success rate for real estate agents trying to build a team is dismal.  Kathleen Black, one of North America’s top experts on team-building, explores three mistakes agents commonly make and how to plot a better course.

After Coaching hundreds of real estate teams since 2009, I am a believer in the power of team environments.  What I mean by that is when a new member joins the team, their success has more to do with the team environment than the member themselves.

I’ve found three key difficulties facing both team leaders and the team overall: compensation, training and recruitment.  Each issue can cause significant difficulties for an inexperienced team leader, but there’s no reason any of them should derail a team completely.  Every problem has a solution.

1. Compensation Structure

After making the transition from being a sales person on a top-producing team to being an elite coach, I was quickly able to pinpoint the first and most prominent mistake made by team leaders: compensation structure.

I see a lot of team leaders not setting themselves up to be compensated for their new role.  A lack of compensation for that role creates a broken equation where the team leader returns their focus to sales instead of working on growing their team and nurturing the people they’ve hired.  I like to emphasize the need for a connection between building the business and being compensated for the role of team leader.  It’s essential for a team leader to see the value in being the leader and to recognize the need to compensate themselves accordingly.

In determining what works best for compensation structure, I stand by the idea of compensating for your value and what you bring to your team, as well as considering the future of the teams growth.  When coaching clients, we evaluate every influencing factor, but what makes the custom structure so effective is that it is always targeted toward the goal of where the team will be in the future, instead of where the team is currently.

Ten years down the road, the team will not be composed of the team leader and one team member, so capping at a 50/50 split is extremely restrictive.  I always recommend taking into account the long-term vision; if your team will have a lead-conversion partner, a licensed assistant and a manager, prepare for that from the beginning.  Also account for a team’s expenses, such as marketing, overhead and any additional costs the team may carry.  This will ensure that the team has the resources to continue its growth.

It’s shocking for some to discover that a big team is not necessarily a profitable team. Sometimes the lack of profit surprises even the team leader.  Our advice is always to reverse-engineer your economic model.

Quite often team leaders discuss profit margins without considering that they’re counting their full personal gross commission as profit.  What you are paid to lead, to manage, or to sell is not profit.  In fact, the more you personally do in your business, the less the business is worth to sell to anyone else in the future and the harder it will be for you to achieve residual income.  The reality is that a team without profit isn’t healthy for anyone involved.  A healthy business operates to the advantage of all its team members.

2. Training

The second difficulty that team leaders face when building a team is training.  A top producer doesn’t necessarily make a top trainer.  I identified with that personally when I first made the change to being a coach. I  have however, found a way around this particular challenge by implementing multiple training systems and certifications.

When training, shadowing is generally the path used to show someone the ropes, but the mistake here is that every person does it differently every single time.  This inconsistency doesn’t work to effectively prepare an agent for success when they’re on their own.  The team leaders I coach work on the idea of mastery.  Everyone follows the same steps, so everyone knows what it takes to be successful.  At that point, the agents approach the situations with their own personalities and interpretations, but they have been empowered with a set system that will allow them to be successful.

When it comes to enforcing the training, I say, “Know it so well you can’t forget it.” Learning it all with intensive training and weeks dedicated to the art ultimately pays off more than any other implementation of the systems.  Learn it properly and you’ll never have to think about it again.

3. Recruitment Systems

Recruitment, or lack of recruitment systems, is the third major difficulty faced by team leaders.  The lack of recruitment systems equates to team leaders not looking into the business they want 10 years down the road and instead recruiting people who don’t complement the direction they want to take their team.  One common example of this is taking someone on who is easy and comfortable.  There won’t be a push from them to help achieve the levels of success the team leader has envisioned.

When looking at recruiting, a team leader isn’t just faced with a few interested candidates; they are responsible for a decision to invest $20,000 to $25,000 worth of training into someone with no guarantee of a return on investment.  There is no perfect equation for selecting ideal future team members, but you can get pretty close if you use the right filters.

When our clients look to recruit, we start with a DISC personality profile review because team leaders need someone who both upholds the team’s standards and values, as well as contribute to the team’s continued drive to succeed.  That is by no means the last step, but with further tests and questionnaires as part of our process, it can be a revealing starting point.

Ultimately, I encourage team leaders in any stage of growth to keep in mind compensation structure, know their worth as a team leader, and concentrate on training and recruitment.  Know the direction you want to take upfront.  Otherwise, the best-laid plans will sabotage your growth in the future.

Kathleen Black CEO of Kathleen Black Coaching and Consulting is one of North America’s leading real estate coaches.  Her expertise in helping real estate teams optimize their profitability is unmatched in the industry. 

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