Ask Business Management Expert

Frank is the lead broker at a real estate firm that is located in one large city. The company has a nationally known real estate training program that costs $2,000 to attend. The program motivates real estate agents to sell more, gives tips on how to get leads, and recruits more agents to Frank's brokerage firm.

Each real estate agent in his firm grosses a 3% commission with each transaction involved with buying or selling a house. After the broker's cut, most agents net a commission of 2.1% with each transaction.

Frank's motivation is to build his training program and the size of his brokerage firm by adding real estate agents. To do so, he decided to provide his real estate agents some incentives.

At noon on the first Monday of each month, agents sign up for four hours of floor time for the month via computer. Floor time at the downtown office allows each agent to be the sole person to accept phone calls, answer e-mails, or visit with walk-ins to get possible listings and generate more business. Floor time occurs from 6 a.m. to 10 p.m. each day. Agents love floor time so much that by noon each Monday sign-up day, all floor times for the month are taken.

There are other ways to get real estate leads such as contacting people who have de-listed their houses or are showing "For Sale by Owner" signs in front of their houses. But floor time in this firm accounts for a third of all leads.

Here is the new incentive policy:

Realtors can receive up to four hours of floor time per month if they have had a transaction in the last three months.

Realtors receive one additional hour of floor time per month for exceeding three transactions in a three-month period. If there are four transactions in a three-month period, Realtors receive one additional hour. If there are five transactions, Realtors receive two additional hours. Six transactions lead to three hours and so on.

Realtors receive one additional hour of floor time per month for referring one person to Frank's training program. They receive two hours for two people, three hours for three people, and so on.

The system worked well for two months after initiation of the program. On the third month, floor time ran out. Agents who had rights to floor time but could not get it were promised extra floor time the next month. The real estate firm added 16 real estate agents (while losing only two) and brought in 18 agents to the training program due to referrals from other agents. The superstar real estate agent Trina was involved with nine real estate transactions during the three-month period.

Frank decided to change the standard one week before Realtors could sign up for the next floor time. Realtors can now receive up to four hours of floor time per month if they have had a transaction in the last two months (effective next sign-up). All other aspects of the incentive program will continue.

Stacey has been a Realtor with Frank's brokerage firm for the last 15 years. She had been on vacation in February and was gone in late March, so she did not get the e-mail on the new incentive policy. She thought she could sign up for floor time because she had a transaction in the last three months. She went on the computer to sign up for floor time as usual on Monday, April 3, at noon. She was locked out. The computer said she had insufficient transactions over the last two months.

Stacey immediately called Frank at 12:05 complaining that she couldn't sign up for floor time. Frank said that she should have been keeping up with all e-mail correspondence from the firm. She said it wouldn't have made a difference. "I went on vacation knowing I was safe for floor time. Now you surprised me. The firm is going to get bigger and bigger, and it is only going to get tougher to get floor time."

She was disgusted by the fact that her friend Trina received 20 hours of floor time in April. The incentive plan was also unfair to newcomers who get no floor time. Stacey said, "Trina is a machine. She has a staff that helps her get sales. She even hired a person to find Realtors to go to your training seminars. How can I compete against Trina who will capture all the floor time in the firm?"

Stacey also wondered about the training seminars. She got into the business of real estate to sell houses, not seminars.

Frank stated that he wants to give the spoils to those in the firm who produce the most. Trina happens to be one of the most productive Realtors in the city and state. Trina also nets 2.5% with each transaction because she passes the magical $3 million threshold each year. Besides, said Frank, floor time is only a small piece of the pie.

Questions:

1. What were Frank's strategic purposes for the incentive plan? Did the incentive plan accomplish his purposes? Why or why not?

2. Which incentive option is Frank choosing?

3. Do you think that high-level performers should get the bulk of the rewards in an organization, or should the rewards be meted out in a more egalitarian fashion?

4. Let's say Stacey represents most of the Realtors of the firm. How could Frank have improved the cooperative development of incentives with Stacey prior to incentive initiation?

5. Given Frank's strategic purposes, what alternative incentive plans would be appropriate for this real estate firm? Consider incentive plans mentioned in the chapter.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M9223078

Have any Question?


Related Questions in Business Management

Name a company that addressed a recent ethical problem in a

Name a company that addressed a recent ethical problem in a positive way. Also, explain how or if this positively affects us as a community?

When it is appropriate to use the trade-off process what

When it is appropriate to use the trade-off process. What conditions apply, and the technical evaluation criteria that might be used?

Need help with a essay with the following phrase for

Need help with a essay with the following phrase for analyzing : " Capitalism is at the heart of how people and organisations are managed in contemporary society" May i ask for a better explanation of the question? Also ...

How could these three tenets of the auburn creed be used to

How could these three tenets of the Auburn Creed be used to motivate others: "I believe that this is a practical word and that I can count only on what I earn. Therefore, I believe in work, hard work." "I believe in educ ...

How can these two tenets of the auburn creed by used in

How can these two tenets of the Auburn Creed by used in addressing teamwork issues: "I believe in honesty and truthfulness, without which I cannot win the respect and confidence of my fellow men." "I believe in the human ...

Discuss the advantages of having and interacting in a

Discuss the advantages of having and interacting in a diverse workplace. Consider the wide range of ideas and perspectives that a range of team members bring to a team, that are of differing ages, ethnic backgrounds and ...

Parmigiano-reggiano global recognition of geographical

Parmigiano-Reggiano: Global Recognition of Geographical Indications What historical factors have helped support the consortium's claims for the geographic specificity of Parmigiano-Reggiano and Parmesan? What are the eco ...

Communication planthis communication plan will be a roadmap

Communication Plan This communication plan will be a roadmap on how the new division will best be able to communicate with Biotech's corporate headquarters, suppliers, other divisions, and internally. This should lay out ...

Discuss strategies to obtain feedback from a customer and

Discuss strategies to obtain feedback from a customer and clients when working in sales.

Describe different networking methods and the advantages

Describe different networking methods and the advantages and disadvantages of them?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As