Estate Agency - Is the Digital Devil Finally in the Details?

A few weeks ago whilst I was using this blog to muse on the reasons for the demise of Tesco and the lessons to be learnt, I argued, that, as business cycles quicken inexorably, many of the disruptors of the early days of the internet are already ripe themselves for disruption.

But, I opined, there still are many from the `old` economy who remain supposedly `regulated` - protected by law - and are still getting away with it without serious disruption - high street banks, investment firms, big six utilities, train operating companies, London’s black cabs, the BBC and the big political parties to name but a few. 

And some, I emphasised, like estate agents, appear to live a charmed life when, by all that is rational, their business model should have disappeared years ago.  But that's not to say that the great disruptor, the web, hasn't made any impact on the way homes are sold and let. It has, and not in particularly good way for consumers.  

Another cautionary tale

But the world of property retailing may indeed, like Tesco, be at the beginning of its own cautionary tale. Despite being founded by outsiders to the property industry, rather than disrupting a model the online portals have enabled high-street firms to gain an ever-tighter grip on property sales and lettings. To the extent that now they are employing a quarter of a million people and, it seems, occupying half the real estate on Britain’s dwindling High Streets.

The reality is Rightmove and Zoopla simply created a new interface to an archaic system but are now the first step on the house hunting process. The pair, both FTSE 250 companies, despite the endless local magazines funded by estate agency advertising that thud onto doormats countrywide, are now responsible for generating almost all estate agents' sales leads.  This can be funded only two ways – by the consumer in fees or from estate agents’ margins.  I couldn’t possibly comment on which is more likely.     

And, of course, when such a duopoly exists enabling such a core business activity as client acquisition the suppliers can turn the financial screw on their hapless customers pretty much when and how they like. Having clearly got the message that something had changed their cosy world, some of the bigger, more upmarket estate agency firms, straightened their double cuffs and launched their own property portal.  OnTheMarket (OTM) created by Agents' Mutual, a consortium including the upmarket multiple big boys Knight Frank, Savills and Chestertons, saw the light of day earlier this year.

A new challenger brand

Owned by its members, who, despite Knight Frank et al, are actually predominantly smaller independent agents, the challenger brand is not short of ambition - aiming to replace Zoopla as the second-biggest portal in less than a year.

The cost to agents for OTM, Zoopla and Rightmove are reported to be broadly similar. It's more about control of the duopoly than sheer cost.  But OTM says already it has a third of Zoopla and a quarter of Rightmove’s branch numbers.  Like Tesco, it seems, there is a poorly-treated market ready to move the moment the starting gun is fired.

But unless anyone thinks OTM is some white knight running to the rescue of the consumer, it’s not. It’s clearly a self-serving industry play, exemplified by an interesting strategy behind the growth and one that’s causing the fur to fly behind details-laden windows from Alcester to Zennor - the `two portal rule'.  

OTM member agents are prevented from listing on more than one other portal - in effect forcing them to choose between Rightmove and Zoopla*. As the smaller of the two, Zoopla has always been the most at risk, and the vast majority of branches that have switched allegiance have chosen to drop it.

Of course, what will really determine OTM's fate is if it can gather the momentum to attract enough consumers to the site to convince more agents to move to it, otherwise in a pyrrhic victory it may only serve to make Rightmove stronger and be just a another sickly monkey to its robust, but perhaps short-lived  gorilla.

The distraction of internecine warfare

But to me this all feels like re-arranging deckchairs in the Titanic and such internecine warfare that ignores the interests of customers could turn out to be a distraction from the real threat that is set to challenge high street estate agents in the coming years – a long-overdue disruption by pure play online firms.

Nailing up a sign and placing ads has long been an option for those property owners not wanting to subsidise café-like interiors, wall-to-wall hair gel and cutesy cars.  But most don’t bother, even when enabled by early internet entrepreneurs. But a new breed of online valued-added estate agents is starting to appear, claiming to offer almost all the benefits - imagined and otherwise - of a traditional estate agent, but at a fraction of the cost.

Companies such as HouseSimple, emoov and Purplebricks have attracted serious investment from apparently savvy investors and are growing apace. And in the current frothy market rumours of IPO even surround them.

More than portal on-ramps

While earlier online agents were little more than on-ramps for private sellers to get their home onto Rightmove and Zoopla leaving the seller to do the rest, this new breed of agents offers valuation, professional photography, help in arranging viewings and with negotiations, all with easy financial terms.

This 'full service' approach can start at less than £500, compared with a typical estate agent fee of around 1.5% of the selling price plus VAT. That would save you about somewhere short of £6,000 on a house at the national average and many more times that if you live almost anywhere in London. And that’s a lot of money by anyone’s standards

Of course we may be facing just another inertia-laden false dawn and the time taken to get to the tipping point is anyone’s guess but the current estate agency model is simply too expensive and offers too little value to be sustainable.

But one wonders what will happen to the High Street when they are gone?  Will we all be jumping into our one-owner bargain basement used Minis and Fiat 500s to get an artisanal coffee and some charity bargains from a former Tesco Local?

* Since this blog was first published Zoopla has revealed a strategy to counter its decline in the property sales portal market - diversification - with plans to acquire utilities price comparison site uSwitch for up to £190m

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Hiring Today? Don’t CYA.

I’ve recently observed a series of hiring processes in firms from mature to entrepreneurial.  What these disparate firms had in common is that, despite claiming they had significant gaps in their capabilities and needed to hire fast, whatever the level of person sought the speed of the hiring process was glacial.
 
This sloth was routinely accompanied seemingly by the appearance of anyone who could be remotely involved in the potential hire’s work environment appearing at some random point in the process. People turning up disinterested, clearly not briefed, asking the same unfocussed questions, often giving the impression they are just `meat in the room`.

And, along with this significant opportunity cost, then there was commonly stop-start hiring.  This is where a company is all over the candidates like a cheap suit for weeks, demanding endless meetings then disappears at the point a job offer should be being made only to reappear asking for yet another meeting, followed by yet more silence as the delay causes a turf war to erupt between HR and finance.  The job then vaporises, only to remain posted on the corporate website ready to dash the hopes of more applicants.

Lack of clarity

The associated lack of clarity shown to the candidate as to how many interviews and exercises will be needed to have been gone through before a decision can be made benefits no one. The `could you just come in one more time there is someone else we’d like you to meet` request is highly frustrating for the interviewee who rapidly runs out of fictitious dental appointments, imaginary plumbing malfunctions or the sudden need to `work from home` to cover their increased absences from their current place of employment.

Often this inability to set expectations is accompanied, from the candidate’s viewpoint, by an apparent lack of accountability on who owns the process - recruiter, HR or future line manager. Delay at all stages in process in receiving feedback routinely involves the passing of the buck to someone else that the candidate may have never met.

Law of diminishing returns

The fact is that, in these situations, the law of diminishing returns very rapidly sets in and real reputational damage may result from such behaviour.  Ineptitude aside, this lamentable approach is primary driven by CYA.  CYA, if you hadn’t guessed, stands for Cover Your A*** (or A** if you are reading this in North America).

In short, even if it’s disguised as facilitating `teamwork` or `involvement`, the real purpose of this sort of behaviour  is to ensure, that, if the hire doesn’t work out, everyone can point at each other safe in the knowledge that they all - explicitly  or implicitly - agreed to the on-boarding decision. Everyone's a*** (or a**) is covered.  

Putting off the best candidates

To be fair, though, fear of the increasingly constrictive labour laws in Europe and often farcical restrictions on what can be asked at interviews and of references in the US often adds to the self-induced paralysis. 

This approach, though, adds little if no value to the process.  In fact, it might have a negative effect, giving the potential hire the distinct impression of a culture not in control of itself or that of uncaring or incompetent potential colleagues. 

The endless meetings too can also particularly put off the best candidates who are likely to be busy in their current job because they are the top performers. Meanwhile, bereft of information, candidates who stick with the process are left unfairly to wrestle with the challenge of chasing the opportunity concerned whilst not wanting to look desperate or annoying.

Weaselly feelings

It also pretty much the case, that, along with CYA-style recruitment, ultimately comes lack of clear feedback  to the unsuccessful candidate as to why they were not selected for the role.  This is because the more people - many of whom will be untrained as to how to interview - see the candidate the more objective feedback is diluted and the more `feelings` come into play.  `It was a really hard decision, but we just felt one of the candidates was a better fit`, is a typical weaselly comment in this situation once the candidate or their external recruiter has chased repeatedly for a response.

Or the candidate gets no feedback at all or receives  comments sounding like they are from no one who was in any of the interview rooms because the company doesn’t care to get organised to do the decent thing or because it’s so difficult to assemble a coherent response from a disaggregated team they have to make it up. It's also indicative of the interview process being a time-wasting smokescreen to cover a corporate requirement for external candidate interviews when an internal candidate was lined up for the post all along but had to be proved to be the `best candidate`.  Again, that benefits no one.

The three meetings rule

To get over this my recruitment rules are these: There should actually be a job available with a clear job description and list of the SMART competencies and potential experience required to be successful in the role so what is being interviewed for is unequivocal.  There should never, ever, be more than three meetings in no more than three weeks and this should be stated to the candidates from the start.

For more junior candidates, the first encounter should be with HR or a recruiter for initial screening.  The second should be with the person’s potential manager. The third should be not be a formal interview but should be a `fit` session with the team with whom they will be working and where anyone junior or senior can issue a veto on the hire.

For the most senior appointments the order should be partially reversed after initial screening , starting with the Chair or CEO - if it a board level appointment to establish suitability - before meeting other board members and non-execs to establish team  fit and with HR picking up the `hygiene factor`s at the end. That’s it.  Rejection can happen at any of the three stages.  If not, the process ends with a job offer.

In both of the above situations companies should also be prepared do what most employers fail to do, particularly those with a disorganised recruitment process - due diligence. It doesn’t have to be a Kroll-style investigation. Simply tactfully asking around and a few web and social media  searches can tell you a lot about what lies between the lines of the cv or behind the polished interview skills and allow interviewers to home in some realities that might be deal-breakers.

Full feedback

It all cases, should the candidate not be successful, full, frank and constructive feedback against the job specification and competency requirements must be given as each candidate should still wish they had been offered the job and will tell others so. They may also be prepared to apply for another position at a later date if the fit wasn’t right first time.

And if you get it wrong, it’s not the end of the world.  Probationary periods should be just that.  To ensure an individual doesn’t `accidently` exit probation, the person hired should be subject to more regular reviews during that period than post probation.  If someone isn’t working out, invoke the terms of the agreement, part company before acrimony sets in and start the three-stage hiring process again.

Lamentably, the companies that don’t have the courage of their convictions in the first place are often the same ones that don’t have the spine to rectify their mistakes later, so letting the bad apple rot the corporate barrel.  And that’s a sure-fire recipe for driving the best people out of the company and the inevitable corporate decline that follows.

 

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Tough Love, Freely Given - A Mentoring Manifesto

As the actor Kevin Spacey is oft quoted in a LinkedIn meme, `If you are lucky enough to do well, it’s your responsibility to send the elevator back down. `

I like to think I keep pressing the button. I like mentoring people.  I make no bones about it.  I get a kick out of helping raw talent quickly ascend to the highest positions. It’s become part of my DNA.

But, I’ve learned recently that there are diverging views on what constitutes mentoring and what is good practice.  Let me be clear. I consider mentoring is about one thing and one thing only - helping individuals achieve their true potential.

It’s about the mentoree, not the mentor.  It’s about them constantly improving.  It’s about them fulfilling their ambition. It’s not about theory; it’s about practice.

And for the mentor it’s about caring, but not about being compromised in that care.  It’s not about there, there; it’s about here and now and the realisation that the mentor is only as good as the mentoree’s success.

It’s about being constantly on call to help guide mentorees through decisions, providing perspective.  It's about distilling experience, letting people explain, reflect and safely experiment to build up their confidence.  

It’s absolutely not about allowing mentorees to sit forever in their comfort zones, obfuscating or making excuses for inaction. Neither is it about patronising, delivering mealy mouthed platitudes or creating warm fuzzy feelings.

It’s about fearless engagement with reality; about clear development goals and SMART objectives. It’s about holding people to account.

It is about exposing individual and cultural attitudes and their appropriateness to achieving goals. It’s about telling people what they might not want to hear.

It might be about empathy, but rarely about sympathy and it's definitely about emotional intelligence and understanding the whole person.

It’s about considering all the internal and external factors that might be compromising progress. It’s about working out and agreeing with the mentoree how to confront them, deal with them or bypass them. But it’s always about moving forward their personal development.

And it’s always about truth, clarity and mutual responsibility.

To paraphrase the slogan of one of my favourite causes, Big Issue Foundation, `it’s about a hand up, not a hand out`.

Most of all, though, it’s about tough love, freely given.

  

 

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