CASE STUDY THE COMFORT ZONE

• Nell Ludwig is the manager of a residential real estate office in New Orleans. She has been a successful sales associate and broker for 15 years, winning almost every conceivable award from her company and the local board of realtors several times. Every year she personally lists and sells over $2 million of residential real estates; one year she sold over $6 million dollars worth. She gets to work at 8 oclock every morning, works several nights each week, puts in 6 to 10 hours on weekends showing and listing property. She loves her work and earns $50,000 annually from personal commissions and overrides from her 25 sales associates. However, she wants to make $75,000 this coming year and knows the only way to do it is to get her associates more productive.

• One thing Ludwig cannot understand is why her associates will not wok harder. Sixty percent of them are women and earn an average of $10,000-$12,000 annually; the remaining men earn only slightly more than the women. The two top producers are women, who average about $30,000 annually each. Many of the associates dont get work until 10 or 10:30 in the morning, and they dont work evenings or weekends unless specifically requested to do so by Ludwig. Most agents want to have floor duty (sitting in the office waiting for the phone to ring) rather than going out and calling on For Sale by Owners (FSBOs) on the phone or physically going out and farming an area, which involves knocking on 25 doors a day and introducing themselves to the homeowners in a community.

• All the associates have been through extensive sales training classes, which showed them how to farm and how to call on FSBOs, expired listings, and friends. However, most associates just try to handle call-ins from floor duty and friends who call to list a house or look for a home to purchase.
• Ludwig was lamenting her problems with a friend who is sales manager for Lanier Business Products and asked him for advice. His response was the following:
• Why dont you make them set weekly goals for calls, presentations, and listings from the various sources and have them come in at least one evening a week for two hours of FSBO calls? Put all their names up on a big chart and review progress every week. Your problem, is that all your sales associates have reached a comfort zone and youve got to get them uncomfortable and off dead center.
• I cant do that, Jim, Ludwig responded. All my associates are independent contractors. They are not salaried, like your people, but are just on straight commission compensation. If I make them set goals and hold them accountable, theyll leave. And FSBO calling frightens the daylights out of them-I dont believe any of them would show up to do that on a regular basis.

Questions:

1. Who do you believe is rightJim or Nell? Justify you answer.
2. How would you motivate the sales associates to list and sell more real estate?
3. How would you motivate associates to make FSBO calls?

Case Study Leadership Lessons

• Bill Echols was recently promoted vice president of the eastern region of a major securities brokerage dealer. He is responsible for 12 offices, each of which is headed by a broker manager. Bill is a retired Air Force colonel, is 47 years old, and was decorated many times for his service in the Vietnam War. He has been a high achiever all his life in sports, academics, and the military, and he is now intent on being a business superstar. He has been in the securities brokerage business just three years and has already broken all sales records. He has now been given the prestigious promotion to regional vice president of the firm and appears destined for the top.
• The 12 broker managers range in age from 27 to 45, with 5 to 20 years of securities experience. Four do not have a college degree, and three have their MBAs from outstanding business schools. About half of them were star sellers, and the others were good to average performers who displayed management talent.
• Bills basic business philosophy is to run a tight ship and treat everyone the same---fairly and equitably. He is a stickler for details and perfection. He spent a lot of time the first three months meeting with the managers, showing and telling them exactly how he wanted operations to run, and introducing some of his own management information systems. However, in spite of his zeal for the job, production has significantly improved in only one or two offices, and several managers appear to be somewhat disgruntled with the new methods of operation even though they believe Bill to be extremely competent and can see the value of his ideas.

QUESTIONS:

1. What type of leader does Bill appear to be?
2. Why do some managers respond to him in a negative way?
3. What would you recommend Bill do to better the performance of the branch offices?