Keller Williams Realty

Organizational Issues and Solutions: Keller Williams in Ft. Mitchell
Description of the Organization and the Issue to Resolve
The company selected for this study is a Keller Williams Realty in Ft. Mitchell, KY. The international real estate brokerage firm was founded in 1983 by Gary Keller and Joe Williams is headquartered in Austin, TX, and has served the communities all over the U.S. for more than 40 years. KW is known among real estate agents as offering the best rates when it comes to commissions and the best training through their IGNITE and BOLD programs (Larcker & Tayan, 2015). KW Ft. Mitchell is known for its customer service which has allowed the firm to remain competitive with larger brokerages like HUFF in the area, as home buyers know they are getting agents who will work hard for them and help them to make a sale.
The organizational issue the company is having is that there is a high rate of turnover among agents, and that is a problem for the franchisee who is refusing to build a new building for the firm until it can consistently maintain 100 agents at the office for at least a year. While the firm does provide IGNITE training to every new sales rep that comes to work at KW, the training does not actually give the reps realistic experience in the field. Many real estate agents who come to KW come because the firm pays a higher commission than HUFF or other competitors. They also like the motto at KW of “God, family, business,” which they feel reflects wholesome values. However, new sales agents are never actually taken into the field by other sales agents, who could act as mentors—mainly because in spite of all the talk about teamwork, the real estate industrious is competitive and every agent is out there trying to get clients for themselves. This means that new sales agents are basically left on their own to figure what works and what does not work—in spite of the inspiring message given through IGNITE. The company could benefit from having a mentor program that could be useful in the firm’s quest to retain agents (Orpen, 1997). Specifically the problem can be understood in these terms: Inspiring training motivates initially but the lack of substantial know-how for agents first entering the field has caused multiple problems within the company, including: 1) sales agents are leaving after a few months, either giving up or going to HUFF which does not charge office fees (KW does); 2) over the past two years the firm has lost multiple top agents because they are being offered salaries on top of their commissions from sales to teach other young agents how to be top level closers like themselves.
As the hired consultant for KW at Ft. Mitchell, I will review and resolve this issue by conducting an analysis of the current corporate culture, identifying areas of weakness and propose solutions.
Analysis of Current Corporate Culture
The current corporate culture has facilitated the development of the current issue by its disjointed approach to organizational culture. On the one hand, the company has a strong mission and vision statement by which its managers can attract agents: it preaches family and commitment and offers the best commission ratios in town for sales agents—but its training is more inspirational and motivational than it is substantial and actually geared towards increasing new agent’s knowledge. New agents are unable to close deals effectively or convert leads into sales because they lack the training (know-how), skills, tools, and confidence to succeed. IGNITE is good at delivering that initial burst of inspiration, but most agents need more of a helping hand in terms of a mentor—but they are afraid to ask because the culture is still cut-throat and ultra-competitive. In other words, in spite of the talk about family and supportiveness and team work, the office agents all give off an air of being independent and in competition with one another. No one wants to mentor others—unless they are getting paid to do it.
Thus the company faces the problem of high turnover. In sales, this is not surprising: the sales industry inevitably draws individuals who are looking for a new way to make money that does not require a great deal of education or training. Sales is largely seen as a field that depends upon personal charisma and intelligence. Thus, sales agents do not go out of their way to seek tutorials, as they all tend to have egos that drive them to be individualistic and independent. The management at KW in Ft. Mitchell has never implemented a plan to provide mentorship to sales agents looking for ways to approach potential buyers, what methods to employ in given situations, and how they should go about closing deals. The culture at the company suffers from a lack of real supportiveness and leadership. As Chang and Lee (2007) point out, leadership and vision are essential in improving organizational culture. HUFF has realized this, which is why many agents at KW are leaving in spite of the firm’s better commission rate and joining up with HUFF: HUFF offers mentorship and does not charge an office fee, which insecure agents do not want to pay.
Areas of Weakness
Management lacks an effective mentor program for sales agents. Instead, it has focused on motivational speeches and stories via IGNITE. This is understandable: Gerhart and Fang (2015) explain that there are many different types of motivation—both intrinsic and extrinsic. Intrinsic motivation refers to self-motivating factors, such as a desire to learn and to grow as a professional. Extrinsic motivation refers to external factors, such as bonuses, increased opportunities for advancement, rewards for goals achieved and so on. KW tries to give both (better commission rate the extrinsic motivator and IGNITE meant to provide intrinsic motivation). However, the firm does not adequately promote the concept of teamwork but instead allows every sales agent to see himself as in competition with the rest of the agents in the office. No one is paid to be a mentor. This creates a spirit of competition that undermines the development of sales agents, as agents can bristle at another’s good success and new agents feel they are fighting an uphill battle just to gain experience and understanding. No one is willing to take them under their wing and help them to make a career of selling homes. The company needs to provide mentorship to reduce turnover.
Proposed Solutions
To implement a solution to the turnover problem, the organizational culture at KW has to provide the foundation for success: it has to follow through on the vision it proposes, which will serve as the foundation for growth and development that the workers need (Meyer & Stensaker, 2006). It has to provide a mentorship program and pay its top sellers to head up that program. Otherwise, it will continue to bleed agents to HUFF. Thus, leaders should be appointed (and paid) to mentor new agents and show them the methods that lead to success in closing sales. They should be responsible for promoting a learned approach to messaging with customers, drumming up clients, and making sure that every sales agent is confident in the field and knows what to do in a variety of settings when with clients. Confidence will lead to sales, which will reduce the turnover problem, as many new agents feel discouraged by having to pay office fees when no money is coming in from sales. Overall, this strategy will also help to promote a positive culture within the organization as everyone will be more supportive of and encouraging towards one another, celebrating every sale and assisting when needed.
References
Chang, S. C., & Lee, M. S. (2007). A study on relationship among leadership, organizational culture, the operation of learning organization and employees' job satisfaction. The learning organization, 14(2), 155-185.
Gerhart, B., & Fang, M. (2015). Pay, intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2, 489-521
Larcker, D. & Tayan, B. (2015). How important is culture? An inside look at Keller Williams Realty. Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-48. Social Science Research Network.
Meyer, C. B., & Stensaker, I. G. (2006). Developing capacity for change. Journal of Change Management, 6(2), 217–231.
Orpen, C. (1997). The effects of formal mentoring on employee work motivation, organizational commitment and job performance. The Learning Organization, 4(2), 53-60.