Downsize With Dignity

It's never easy to let an associate go, but showing courtesy and respect send a broader message about the kind of operation you run.

March 1, 2009

Showing respect speaks volumes to your team.

These days, even some of the hardest working salespeople are having a tough time generating business.

As a broker, it’s tempting to cut associates more slack than usual because of challenging market conditions and the terrible state of the overall economy. But there comes a point when nonproducers, particularly those who fall behind on desk and administrative fees, become a serious drag on the brokerage’s operations.

While many salespeople are wrestling with their own difficult decisions about whether to take on a second job—or even leave the real estate business entirely—it’s more important than ever for brokers and sales managers to determine when it’s time for poor performers to move on.

"It’s never a pleasant talk," acknowledges Jason Crouch, broker-owner of Austin Texas Homes LLC. He has reduced head count by roughly a half-dozen agents from a high of 25 two years ago. "But I try to keep the best interest of the other person in mind and help the person buy into the decision."

Crouch engages struggling associates in a straightforward conversation about their performance; he finds that agents often have done their own thinking about the situation and reached their own conclusion that it’s best to leave.

Melba Franklin, CRB, CRS®, a managing broker at RE/MAX of Greater Atlanta, takes a similar approach. In counseling sessions, she’s found that many salespeople have been working without a business plan. "A lot of good producers in the past could get by without one, but that’s not true anymore," says Franklin, who oversees about 110 salespeople in two offices.

Use Words Wisely

From a business perspective, letting go of independent contractors is usually simpler than laying off salaried staff. In most cases, there are no potentially thorny issues of severance pay or accrued vacation time to work through.

But that doesn’t make the decision to downsize any easier at an interpersonal level. Your choice of language is critical. "Instead of saying, ‘I’m going to have to fire you,’ start a conversation in which you ask, ‘What are your options?’" says Bernice Ross, co-owner of in Austin, Texas.

If their response focuses on what the broker should do for them, such as giving them more floor time or funneling more referrals their way, it shows that they’re not willing to take responsibility for actively building their business, Ross says.

In this case, letting them hang on longer isn’t useful for anyone. "If they’re not productive, there’s a cost to others in the brokerage," Ross says. She says it’s imperative to establish strict production standards and be consistent in enforcing them. "Agents don’t like favoritism," she says. "The word gets around when people aren’t meeting their goals."

Both Speed and Courtesy Count

Although associates who fall short of their goals should not automatically get the boot, it’s a manager’s responsibility to address the situation quickly. "One of the biggest mistakes you can make is being unwilling to make the hard decisions. Counsel out nonproducers gracefully," Ross says. "Otherwise you’re keeping people around as mascots."

Depending on how often they come in to the office, they also may be taking up valuable company resources. That’s why Franklin’s offices maintain a zero-tolerance policy for those who aren’t able to pay their desk fees, which range from $850 to $1,000 a month.

Crouch says it’s his policy to treat all associates with respect, even if they’re leaving the brokerage. He appreciates the same in return, although he recalls a few instances when associates have fled his brokerage without notifying him.

"I often wonder why some agents feel the need to sneak out rather than call me or speak to me face-to-face. I realize that we’re all self-employed independent contractors, but it seems as though simple respect and courtesy should come into play."

That’s a lesson worth remembering no matter which side of the desk you’re on.

Downsizing Dos and Don’ts

  • Don’t put too many training resources toward those who aren’t performing.
  • Do show compassion rather than a cold shoulder to struggling associates
  • Don’t beat around the bush. Associates who aren’t carrying their weight jeopardize your business.