Today's management firms understand that to remain competitive, they must not only listen and respond to tenants' needs, concerns, expectations and opinions, but they must also use this information to quantify their performance results and compare them with best practice indices.
Why benchmark? Because the graveyard of business is littered with companies that failed to recognize inevitable changes. The fact is, business is a competition, and the more self-satisfied management firms are with their accomplishments and performance, the less they should be.
Benchmarking is a quality tool. It makes companies look outward, beyond their own walls. It exposes managers to the marketplace, to competitors and to the best practices of companies in other industries. This process helps create a culture in which change and continuous improvement are the norm.
Today's successful companies are using results from their benchmarking efforts to point out improvement opportunities and to set goals. For example, rather than using last year's performance as the benchmark of success, some property management companies are utilizing frequency of tenant contacts or response-time standards such as those used by IBM, Kodak or Federal Express.
Real estate management firms are finding that they must become customer- and performance-focused in order to set themselves apart from their competition. They need to develop practices that will attract and retain tenants while at the same time implementing benchmarking policies that will enable them to effectively compete in the marketplace.
One benchmarking tool that some firms today are utilizing to gauge their performance and improve their management practices is the tenant survey. In The Tenant Retention Solution, published by the Institute of Real Estate Management (IREM), authors Howard Lundeen, CPM(R), Laurence Harmon, CPM, and Kathleen McKenna-Harmon, CPM, discuss how management companies have developed an evaluation system called REACT. It is an independent and objective, self-administered performance measurement tool that quantifies and compares the perceptions and opinions of tenants, building owners and property managers to each other and to scores from the best in the industry.
Under this system, questionnaire responses are incorporated into a computer database which contains information gathered from across the real estate industry. This allows for the preparation of separate reports on the various participants' (tenants, property manager, owner) perceptions and a comparison to prior results, as well as to industry scores.
The authors state that performance measurement questionnaires directed to tenants of different types of commercial properties provide formats for soliciting the service and quality expectations of tenants. Tenant questionnaires should focus on key services valued by them as well as the job performance of those hired by the management company to provide these services.
A good tenant satisfaction survey should measure such areas as: * management performance, including responsiveness and follow-through, and appearance and condition of the property; * quality of the leasing services; * quality and frequency of tenant communications; * overall effectiveness of marketing programs; * maintenance performance; * accuracy and frequency of financial reporting; and * overall assessment.
In the January/February 1998 issue of the Journal of Property Management, Christopher Lee, president and CEO of Los Angeles-based CEL & Associates Inc., suggests that a good survey is one which is composed of 45 to 55 questions and takes 10 to 12 minutes to complete. Open-ended questions should be avoided in favor of questions with a scale that allow for results to be tabulated. A six-point scale ranging from "strongly agree" to "strongly disagree" is preferable, says Lee.
Ideally, the property manager should distribute the survey to one or more key decision makers in each tenant company. The survey should be personalized to ensure that it is not handled by the office manager. A self-addressed, stamped return envelope should accompany the survey to ensure confidentiality. The survey should also allow the tenant to respond anonymously, although a place for the name and phone number of the tenant should be included to allow for tenant response. A good survey should generate a 55% or greater response rate.
Armed with results of an accurate, customer-based evaluation of their management services, a real estate firm can begin the process of making improvements. This type of evaluation is also a valuable resource tool for owners, who can use it to compare the performance of one management firm to another.
To help ensure the success of these benchmarking improvements, some of today's firms are taking this evaluation process one step further by tying the results of the tenant survey to compensation via employee performance reviews or annual bonuses. They are implementing performance-based employee contracts based on the results of such benchmarking tools. For example, a firm's maintenance department's performance may be evaluated quarterly based on such factors as building inspections and tenant surveys. If the department fails to achieve an excellent rating based on firm requirements, the employees lose a bonus.
By developing such useful benchmarking tools as the tenant survey, real estate management firms can ensure that the highest quality standards are achieved, customer satisfaction is increased and training methods for property personnel are developed to improve overall performance.
At a time when the real estate business is becoming more complex -- often involving greater risk and shrinking operating profit margins -- management firms need to see to it that they are providing services to meet their owners' real needs. In today's marketplace, there is no greater owner need than attracting and retaining satisfied tenants for their real estate investments. That is why keeping the contract today means paying more attention to the tenant, and that starts with a solid analysis of the company's management performance. Without this clear vision and correctly defined business practices and processes, an organization is doomed to lackluster performance and loss of business.
* Keep questions short and to the point * Never ask, "What would you like to see?" * Never ask negative questions. * Never ask questions you can't resolve. * Keep all questions to one side of a single sheet.
Source: Journal of Property Management
Richard F. Muhlebach, CPM is currently serving as 1998 president of IREM, and he also serves as president of Bellevue, Wash-based TRF Management Corp. AMO(R)