Recruiting negotiations often breakdown when compensation is discussed.
 
It only makes sense that what you’re offering the recruiting prospect should be “priced” to reflect a fair market value.
 
How do you know if your compensation package is reasonably priced?
 
According to marketing expert Harry Beckwith, you should measure how many people show price resistance.
 
If no one complains about your price, it’s too low.
 
If almost everyone complains, it’s too high.
 
How much resistance tells you your price is right? About 20%
 
About 10% of people will complain about any price.
 
Another 10% either have a preconceived price in mind or mistrust you because they think all prices are overstated.
 
When pricing complaints start to exceed 25%, it’s time to scale back pricing.
 
Here is a simple rule of thumb for recruiting:
 
If more than 25% of your recruiting negotiations fall apart when you’re negotiating compensation, adjustments need to be made.
 
Either your value proposition needs to be modified (offer more of what the recruiting prospect finds valuable) or your compensation package needs to be sweetened.
 
Trying to find recruiting prospects who will overpay for your services is not a winning formula.

In today’s podcast, we’ll be joined by Rob Keefe. Rob is the founder and President of Relitix
 
Relitix helps real estate brokerages use data, artificial intelligence, and machine learning to make better management decisions, recruit and coach more effectively, and find new ways to stick it to their competitors.   

Full disclosure: Rob and I have something in common besides real estate. We were classmates together at the Naval Academy some 30-odd years ago, and we both spent time as naval officers before jumping into the real estate industry.

Before starting Relitix, Rob led organizations in every corner of residential real estate, including real estate brokerage, real estate development, mortgage banking, title, and relocation management.

He also served as Chairman of the Wisconsin Realtors Association representing the state’s 14,000 Realtors and has served as a board member of the National Association of Realtors.

So let’s jump in. I think you’re going to learn a lot today!

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A few years ago, our company helped one of the large real estate portals hire agents for teams on the West Coast.
 
It was a big project that involved conducting more than 70 interviews/month and connecting pre-qualified prospects with team leaders who were hiring buyers’ agents.
 
Early in the project, I had the responsibility of interviewing team leaders and other high-performing agents who were being considered for the program.
 
After about a dozen interviews, I started noticing a pattern.
 
Most of these team leaders (who were now very high performers) started their real estate careers between 2008 and 2011.
 
After noticing the pattern, I started asking the follow-on team leaders: Why did you get into real estate during a downturn?
 
The answers were surprisingly consistent: I wanted to start a business, and I knew that if I could learn this business during a difficult time, I would be well positioned to grow and thrive when things bounced back.
 
A different type of person is attracted to real estate when the market is declining.
 
It’s the individual who sees opportunity in adversity and knows they can win big in the long run.

The doomsdayers were out in full force last week and most real estate news outlets provided detailed converage of the Compass and Redfin layoffs.
 
This makes for great headlines, but the apocalypse mindset is not reflective of what happens at the local office and team level.
 
Of course, higher interest rates have started a chain reaction that will lead to a reduced number of transactions.
 
Competition for these transactions will increase, and those offices and teams with the best agents and systems will capture this business.
 
This isn’t new—this is what always happens. 
 
Those with the most talented and effective agents win.
 
The increased pressure of the tightening business cycle is just accelerating the natural cycle of attrition.
 
It reminds us that those agents who are not a good fit for real estate are eventually going to leave anyway. It will just happen at a higher rate for a while.
 
It also reminds us that recruiting never stops. 
 
Some of the best agents (both new and experienced) are captured during difficult times. 
 
It’s when the most talented individuals rise to the challenge and reveal who they really are.

In a post from the archive, I covered one of the basic psychological concepts every recruiting and hiring manager needs to understand.

Cognitive dissonance is the feeling of discomfort individuals experience when their beliefs run counter to their behaviors.

It often happens after new information is presented to a person.

In the mid-1950s, psychologist Leon Festinger first proposed a theory of cognitive dissonance suggesting that people have an inner need to ensure that their beliefs and behaviors are consistent.

Inconsistent or conflicting beliefs lead to mental disharmony, which people strive to avoid.

As a recruiter or hiring manager, you’ll constantly be running up against cognitive dissonance when connecting with your prospects.

Why? You’re frequently introducing the new information that causes the mental disharmony.

Prospect Behavior: I am working for Company A.

Recruiter’s Conflicting Belief: Company B is more capable of engaging your talents.

Cognitive dissonance is a powerful force in an individual’s mind, and candidates will sometimes do strange or irrational things to alleviate mental disharmony.  (Ex. A prospect might tell you:  I’d never change brokerages… even if they’re unhappy.)

High-performing recruiters become experts at detecting cognitive dissonance, and then they employ strategies to minimize its negative affect on the recruiting process.

The most effective real estate hiring managers operate like farmers.

They view the recruiting process as an exercise in planting, nurturing, and eventually harvesting.

While it may seem obvious that the interview is the planting stage, many real estate hiring managers think they’re harvesting when they meet face-to-face with a prospect.

These false expectations cause frustration on both sides.

Prospect: I wanted to explore some new options, but my interview felt like a time-share sales pitch!

Hiring Manger: These candidates just don’t get it—my office is the best possible option in the marketplace. Why can’t they see that!?

Some of this frustration can be avoided by conducting thoughtful interviews, but the real progress is realized by viewing the post-interview follow-up from this new perspective.

Post-interview follow-up means educating a candidate over time for the purpose of making what is obvious to you (you’re their best option) obvious to them.

The best recruiting outcomes happen when candidates recruit themselves by discovering (with a little help from you) a new reality that was not visible to them during the interview.

In today’s podcast, we’ll be joined by Stephanie Robertstad. Stephanie is a recruiting coordinator for Berkshire Hathaway HomeServices Fox and Roach Realtors. 
 
For those of you who don’t know, BHHS Fox and Roach is the flagship franchise in the Berkshire Hathaway HomeServices network. They were recently ranked #1 for the sixth year in a row, and show no signs of slowing down. 
 
They are headquartered just outside of Philadelphia, but they have more than 5,500 agents and more than 75 offices spread across Pennsylvania, New Jersey and Delaware. 
 
We all know that you don’t get this large and remain on top without recruiting. As you’d expect, they’ve been remarkably successful at attracting and growing some of the best agents in the country.
 
To pull something off this substantial, it only makes sense you’d need a team of talented individuals who are working on recruiting from various angles.

Today, we’ll just look at one part of their overall recruiting system, and that’s the digital sourcing and hiring of new agents.
 
Stephanie sits at the center of this part of their system, so let’s jump in and learn how the experts do this!

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Building awareness one person at a time is a lot of work.
 
Is there a shortcut? Yes. It’s called an employment brand.
 
When we buy something, a consumer brand quickly answers the basic questions of awareness.
 
I’ve heard of you. I like what you provide.
 
Employment brands are intended to produce the same response.
 
By nature, employment brands are shallow, (I like your company. I think I know what you do.), but they can quickly touch many people.
 
Building awareness through personal connections often leads to deeper connections, but you can only reach a few individuals.
 
Both methodologies work.
 
Smaller organizations (single offices, teams) are usually more successful with the narrow and deep strategy. Personal energy and grit pay off.
 
Large organizations (large brokerages) are sometimes successful with the wide and shallow strategy. Effective systems and reliable execution make the difference.

Teachers give tests to students to determine if they’re meeting standards.
 
It’s a simple, one-way relationship. The teacher is in charge, and the student has to measure-up to get a good grade.
 
Since our formative years were spent in the education system, we tend to look at all assessments from this perspective.
 
During the recruiting process, the recruiter gives the test and lets the prospect know if their skills/competencies/strengths are acceptable.
 
Take a minute to view this issue from the prospect’s perspective.
 
They’re often asking: Is this opportunity a good fit for me?
 
Assessments can help answer this question, but only if it’s presented to the recruiting prospect as a benefit–not just a pass/fail evaluation tool.
 
Try pitching it this way: We have a quick assessment tool that will help you learn about your strengths and figure out if working in this role is a good fit for you.
 
Of course, the assessment will also provide you the value of learning more about your prospects, and it will fuel productive follow-up discussions during the recruiting process.
 
Always lead with what’s best for the recruiting prospect—it’s the posture that resonates with the highest performers.

Storytelling is an important part of every recruiter’s toolkit.
 
Perhaps you have some standard stories you share during the recruiting process.
 
While this is a good baseline, Rich Millington argues that stories become superpowered when they are customized to match the worldview of your listener.
 
Some people need a story of ego. “This is what the best people in the world do…”
 
Some people need a story of change. “This is what the future of the field looks like…”
 
Some people need a story of vision. “Imagine how great it would be to be standing on stage presenting this to the world…”
 
Some people need a story of togetherness. “We can create this amazing thing together…”
 
Some people need an underdog story. “They don’t think we can do this…”
 
Some people need a story of pride: “We do this better than any of our rivals, let’s not ruin that…”
 
Some people need a story of love. “If we truly care about them, we should do this…”
 
Understanding the perspective of your prospect makes you empathetic.
 
Crafting stories from that perspective makes you persuasive.

In yesterday’s podcast, Dave Caveness referenced a recruiting and retention framework his company uses to stay focused on the long-term nature of talent management.
 
It’s helpful because it reminds us that hiring is cyclical in nature, and it takes proactive energy and focus to staff an office for both productivity and growth.

Here’s the Carpenter Staffing Cycle:

High Resolution Version

As you head into the summer months, it’s a great time to take inventory of your hiring and retention strategies.

Do you have good systems for attracting and hiring talented agents?

What needs to be tweaked or retooled to make you more effective?

Are there some agents on your team you need to let go?

What needs to change so you can develop and retain more effectively in the months ahead?

This framework will help you see the big picture and apportion your effort to all the parts of the process.

Today, we’ll be connecting with Dave Caveness. Dave is the President and CEO of Carpenter Realtors in Indianapolis.  
 
During his tenure with Carpenter, he grew his company from seven small neighborhood locations to more than 30 offices that are strategically located in central Indiana. They are now more than 650 agents strong, and recruiting continues to be their primary focus.
 
My discussion with Dave started off strategic as he shared the subtle yet powerful advantages of tasking selling managers with recruiting responsibilities.
 
While it’s not for everyone, with the right managers and framework, he shows why it is a potent way to drive recruiting results.
 
In the second half of the podcast, Dave describes how he uses gamification to keep his managers focused on recruiting.
 
Recruiting goes better when it’s competitive, full of energy, and fun. And, he shares a tactic you can quickly duplicate in your organization to increase results!

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I’m not sure if this is unique to the real estate industry, but most recruiting prospects can only digest one idea at a time.
 
For the last several years, our recruiters have anecdotally tracked the response rates to emails of various lengths and a noticed a clear pattern:
 
Emails that are short and contain one idea or question get the highest percentage of replies.
 
If an email contains two or more ideas or questions, the response rate drops.
 
For the smaller number of prospects who do respond to a longer message, a majority will focus on the first question/issue and ignore the rest of the email.
 
It’s better to send multiple short emails (spaced apart over several days) than to try cram too much information into a single message.
 
As usual, less is more.

Best-selling author Morten Hansen says there are two types of bosses in the workplace.

The “do-more boss” sets many goals, has a long priority list, and is a verbose communicator.

The “do-less boss” sets few goals, keeps a short priority list, and communicates concisely.

Which type of boss is more effective? 

By far, the “do-less bosses” are the high-performers in most organizations.

Why?

Because the few goals they do set are clear, concise and focus on the most important outcomes.

Because their priority lists contain only the tasks that are absolutely necessary and contribute to the most important outcomes.

Because they spend extra time describing what needs to be accomplished in a clear and concise manner.

If you’re running around with your hair on fire and never seem to get your work done, you’re probably a “do-more boss.”

Continuing in this state is not serving you, your organization, or those on your team.

It’s always good to find direct connections between proactive actions and desired benefits.
 
For example, we recently discussed how researchers discovered a connection between smiling and having greater influence.
 
Do more of these connections exist? Absolutely.
 
In a post from the archive, Dave Mashburn revealed a way to experience a creative breakthrough when you’re stuck.
 
A long suspected, but now proven, link between walking and increased creativity has been made.
 
Researchers at Stanford University conducted studies showing creativity increased about 60% (based on standard creativity tests) when research participants walked on treadmills.
 
Also, the creativity boost was not just limited to the period of active walking. It lingered for a short time after the walk as well.
 
How long do you need to walk to produce the creativity effect? About 8 minutes.
 
Increasing performance, overcoming obstacles, and reaching your goals often feels like a mystery.
 
Taking a walk may be the easiest and most productive way to find clarity in your struggle.