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Employee satisfaction requires new strategies - Brief Article

National Real Estate Investor - May 1, 2000

As the apartment industry matures, managing employees has become even more critical. But just as human resource (HR) operations have grown more important, they have also become more challenging thanks to today's tight labor market.

Apartment firms not only compete with each other for talent, but also against a broader category of people-intensive, service-oriented industries. In this environment, apartment companies are trying to improve their HR performance by examining their wage strategies, decentralizing their HR operations, outsourcing certain functions and implementing new technologies.

It's not just the check anymore

Employees are looking for more than just a paycheck, and many companies have learned that paying more than the competition is not necessarily the best or even an effective way to recruit qualified personnel. Indeed, many firms are making strategic choices to invest in training and recognition programs to gain a competitive edge, increase retention and build morale.

Others are adjusting pay levels, but not necessarily across the board. Instead, they are implementing job classification programs and performance-based pay systems to remain competitive while still keeping salary costs in line.

That being said, money does still matter. To design the best possible compensation package, firms need to know if their wages are in line with market standards. However, compensation data on site-level property managers is difficult to find.

To fill this need, the National Multi Housing Council (NMHC) will release later this year its first Apartment Compensation/Benefit Survey measuring wage and benefit practices for site-level positions in major markets.

Hiring out in the field

Decentralizing HR operations is a growing trend in the more sophisticated apartment firms. Faced with high employee turnover and a growing number of qualified applicants who "got away" while headquarters processed a hiring request, more and more corporate HR departments are now letting site-level management make hiring decisions.

It is not enough to just delegate authority downward, however. Corporate offices must also provide site-level management supervisors with the training and resources needed to make smarter hiring decisions.

The value of outsourcing

Depending on a firm's size, outsourcing can be an effective way to reduce HR costs and provide benefits a company cannot offer on its own. For example, firms are outsourcing payroll processing and the administration of workers' compensation claims. They are also using third-party vendors to offer Web-enabled training programs.

Before going down this path, however, firms must conduct cost-benefit analyses of existing tasks and services. Some real estate firms that want to out-source discover that their employee pool or transaction volume is not large enough to make third-party HR services work. Other times, a firm will decide to keep an HR function in-house because doing so yields substantial benefits to employees.

If, for example, a firm's face-to-face training program is the primary method through which senior management interacts with on-site and regional employees, then that training may contribute significantly to building company morale. In that instance, outsourcing would not be desirable.

The turn to new technologies

Training is one area where many HR professionals are looking for high-tech solutions. New distance-learning options, such as Web-based and CD-ROM training materials, may work best as risk-reduction tools for new employees, who can be required to study the materials and pass an online test before beginning work.

Before introducing a new technology, however, a company should develop a plan that specifically identifies the expected costs of implementing the tool, the costs of training personnel to use it and the guidelines that will be used to determine whether the technology actually raises productivity.

Some firms have also found that distance-learning can actually hurt employee productivity and increase turnover when employees feel removed from peer contact and company recognition. Consequently, firms may need to find new ways to recognize outstanding personnel and encourage employee interaction.

Share your HR experiences by sending e-mails to jharris@nmhc.org or by calling 202-974-2344.

Jay Harris is vice president of property management at the Washington, D.C.-based National Multi Housing Council (NMHC). NMHC represents apartment owners, developers, managers, lenders and suppliers.

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