You can’t run a mobile home park without a manager – and sometimes you can’t run it with one. So how can you make a manager perform on all 8-cylinders? In this seventh installment of our nine-part series on “Mobile Home Park Perfectionism” we’re going to review the best techniques and concepts to get your employees to give their job 100% effort.
Giant textbooks have been written about employee productivity, but there aren't any for mobile home parks. This is Frank Rolfe for the Mobile Home Park Mastery podcast series. We're in our seventh part of a nine part series on mobile home park perfectionism and today we're gonna talk about how to maximize employee productivity; how to be a productivity perfectionist in a mobile home park.
There are basically three goals with your employees in the mobile home park. First, to make every single employee, both the community manager, maintenance man, rehab crew, whoever it may be, as effective as possible. That makes complete sense. Why? Because you're spending money on them and you want to get the value for your dollar.
Number two. You want to make sure that every employee follows your company policy. Like most good employers today, you should have some form a company policy of how things are done, how rents are collected, how they're deposited, all these many items. But you can't have great systems if you don't have people who follow the great system, so you gotta make sure that all of your people follow the plans that you put in place.
Finally, you want to minimize the amount of staff when possible. Obviously, every person on your pay roll costs you money. You don't want to have two managers when you can get away with one. You don't want four maintenance men when you can get away with two. You want to constantly be looking at is there a way that I can do this more efficiently that does not require that extra person? Because an extra person would put a huge drag on your finances.
Never forget that when you go to sell the mobile home park, what will happen is typically there will be a cap rate applied to your net income. Typically today, far lower than 10 percent but let's assume it was 10 percent. If you had that one extra manager for 30 thousand bucks, that's going to damage your net income and, in turn, your value by 300 thousand dollars. So, obviously, over-staffing is a very, very big problem.
All right. So, how do you get maximum productivity perfectionism in a mobile home park? The first thing you do is you only hire people who have the basic material to succeed. You don't hire anyone just as a warm body. A lot of people's problems begin with their hiring process. They get lazy. They get tired. They get tired of talking to people so they say to themselves well, I'll just hire this person 'cause even though they're not really any good and have zero potential, they're right here. So, why should I hold out on a bird in hand waiting for that bird in the bush it's gonna take me a lot more time to find? Don't ever do that. You're far better off waiting for the right candidate. So do not hire people that you know are not going to work out. People do this kind of thing all the time. It's just a really, really bad idea. Slow down, hold out, wait for the right employee. It's so much easier than firing the one that you just hired.
Next, give all your employees very, very simple goals. Say okay, here's what we're going to accomplish. This is what happens. Many people who work in mobile home parks are not rocket scientists. Not that most Americans are rocket scientists, but certainly in the mobile home park it's very, very important you give people very, very simple, very, very basic goals. Don't give people these insanely elaborate things that you cannot possibly follow yourself. Just be very, very reasonable in what you ask people to do. Don't ask them to do a hundred and one different things a day. Nobody can do that. You can't do that so do not make that a part of their work load.
Next, train them so they can achieve these goals. It's not enough to tell someone here's what I want you to do. You have to tell them exactly how to do it. So, how you collect money. Don't just say here, now you're the manager. Go collect the money. No. You have to tell them how do you collect the money? What is the process? Here's the day we send the demand letter. Here's the day we file the eviction. You've got to break it down for people. Too many owners just simply throw someone in the pool and yell swim. That does not work. You've gotta show people exactly what you want done.
Next, you gotta explain the process of how you will judging their performance. What is a failing grade and what is not? Think how hard it would be to be back in school if there was no grading system. Imagine that. You take the exam, you say what did I get? And they say I don't know. How do you know whether you're doing well or not? It's very reassuring in school, even if you're not doing well, to at least know what the cutting off points are. What's an A? What's a B? What's a C? What's a D? What's an F? More importantly, what does it mean if I got those? If I got the F, am I expelled? If I got the D, does it count towards my record? You've got to explain not only what they do and how to do it, but how you will judge that performance.
And don't forget, there's some things that managers do or other people or maintenance men do that are more important than others. Obviously, collecting money is paramount. If the manager does other things well ... If they pick up the litter fantastically ... If they go out there and get those flowers at the entry looking perfect, you're still not gonna consider that a success if they fail in collecting the money. You've got to tell them exactly how you will judge their performance.
Next, you've got to push them to perform. Everything they do, you need to convert almost into a video game. You need to say okay, here's what we're gonna do now and then you need to tell them exactly how the collections rate, what would be a success and what would be a failure. If you say I want to get 90 percent of the rent collected by the fifth, now we have a goal. Now we have a way to assess. If they don't hit 90 percent you can say hey, you didn't hit 90. You hit 70. That's not good. You've got to improve on it. But you've always got to tell them where they stand to push them to perform.
If you say well, let's see. I want to fill five vacant lots in the park this year because I want to fill 20 over the next four years. You need to do five this year and they say how am I doing on filling lots? And they filled one, then you can say not good. I wanted you to fill five. If they filled seven you'd say that's fantastic. You've actually outstripped your goal. You're doing a great job. But you want to always try to push them to perform using statistics. Who invented that? I think the school system did. That's kind of how grading works, is it not? So, just put some grading on the manager, assess them on where they stand and push them to succeed.
Next, if they fail to get the job done and it's not because of your training or lack of leadership, then you need to replace them immediately. There's an old saying in the industry which is it's easier to change people than to change people. There's also an old quote from Stanley Marcus, the founder of Neiman Marcus, that said take your markdowns and people in merchandise as quickly as possible. In most mobile home parks there's just one single employee and that's the manager. If that manager goes bad, it will greatly damage your business and you do not have enough people in there to dilute it. If there's one bad employee in a 10 person office at an IBM headquarters, then one person goes bad and the other nine can take up the slack and IBM doesn't crash and burn.
It's not the same with your park. If that one manager ceases to collect rent, ceases to answer the phone, stops completely in trying to rent or sell homes, what's going to happen to you? You are going to be in big, big trouble. You may not be able to hit any of your budgets. You may not be able to pay your mortgage or any of your investors. It will be a very sad day, indeed. Do not let that happen to you. At the very first sign of things not working out, you need to replace that person immediately because the damage to your business is going to be gigantic.
Next, you are always better off with one great employee than two bad ones. So, you want to hire good people and don't make up for that by hiring a bigger quantity of people. If you can get one great maintenance person to do the job of two, then get the one great one. Remember that often with your budget you have X dollars to spend. When you split that, you half how much each person makes. I would farther have instead of an average manager and average assistant manager, a fantastic manager and I give them both salaries.
Let's look at that in perspective. If I have in my budget the manager earns 30 thousand and the assistant manager earns 15 thousand, I would much rather pay 45 thousand for a phenomenal manager and have no assistant. Same with the maintenance person and definitely with rehab crews. All the time you'll see with rehab crews there's one guy whose fantastic. He knows how to do everything. He can fix plumbing. He can fix electric. He can do it all. He can lay carpet. Oh my gosh, is he good. But the other guys aren't any good at all. So, who would you rather have? That one great guy or the really bad ones? I would rather fire the bad ones and give all the money to the great guy and see if he can go find one other great guy for that same amount of money.
Always seek out the persons who are really, really the top level players and pay up for that. You see it in the NFL. You see it in the NBA. There's no reason you can't see it in your mobile home park as well.
Some other considerations. A bad employee could literally cost you everything. Do not let them jack with your future. You invested your hard-earned money in that mobile home park for the down payment. You got a lot at risk. Do not let some random manager destroy your whole movie for you. That's absolutely crazy. They're going to destroy your life. So, at the first sign of their failure, jump all over that with enormous intensity because they are literally going to destroy you and do not let that ever happen to you.
Also, a bad employee is worse than none at all because they can create lots of liability. We talked in the last show about liability perfectionism and trying to stay away from those kinds of issues and one of the biggest ways to get yourself in trouble is with a bad employee; a bad manager, a bad maintenance man. What they are gonna do is they pose so many risks to you. Let's just look at those for a moment.
Number one, they can claim that they got injured when they really weren't. We've had that happen many, many times. They can claim you made them work overtime hours when you never did. We've had that happen. We had a guy once who claimed that we were working him overtime and he added it up to it was 24 hours a day for several weeks. Fortunately, the employment commission thought that was absurd, which it was, but it shows you how people are in the world today. So, a bad employee is a liability issue.
On top of that, they can create lots of liability for your company. Let's look at that for a moment. Let's say the manager lets someone move in the RV and tells them the lot rates a dollar a day. You're bound by that because they're your employee and they told them what to do. Let's say that they tell the plumber oh yeah, dig over there. And instead of hitting the sewer line he hits a power line and blows his head off. Once again, they can cause all kinds of problems for you.
That doesn't even include the other issues like embezzlement. One of the great embezzlement scams in the mobile home park is for the manager to call you as the owner and tell you we have a huge sewer leak. Oh my gosh, there's sewage going everywhere. And the city stopped by earlier and said if you don't fix it, we're gonna shut your water off by tomorrow morning. So, we only have one hope. Here's the deal. I found someone at ABC Plumbing and they said they can get it fixed but it will cost 10 thousand dollars and they have to start in five minutes so if you don't do that, we're screwed. As the owner, maybe you're on vacation. Who knows what? You don't know what else to do. You say okay, let's go ahead and do it and they send you a bill for 10 thousand. You pay them and then the guy splits five thousand with the manager 'cause after all, there really wasn't a sewer back up and he never dug a darn thing and it's basically the oldest scam in the book.
Now, today how would you battle that? Hopefully with your smart phone. You'd say let me see a picture of the leak. Show me a picture of the guy digging it and all that kind of stuff. But those things happen particularly in the olden days before we had the smart phone. And even today with owners who don't think about using the smart phone as a tool. But again, bad managers are terrible. Do not let them on your property. Do not leave them there. Get rid of them as soon as you can.
Finally, never settle. Always think about upgrading your staff. Sometimes you get the manager but you know they're not really that good but it's a warm body there to collect the rent and do things. But then months later you get a call from someone whose been managing the park down the street that's fantastic looking, totally full and they're just at odds with the owner and they don't get along anymore and they want a new place to go. What should you do? You should definitely upgrade your stuff.
Always be on the lookout for that really exceptional person, like we already talked about. The exceptional person is a one in a million. So valuable to your business. An average park with a fantastic manager will reach a net income that is not possible in any other way so you've always got to be watching for that next great hire. You never know when you're gonna need it but you need to know that it's there and you need to pounce on it when it comes up because your manager is the most important member of your team. They are your quarterback. Just as in the NFL, they pay big dollars for the best quarterbacks. You need to pay big dollars. You need to watch for the talent. You need to harness the power of that manager. And don't forget, the same is true in a larger park with a maintenance man and definitely the same is true with a rehab crew. Always be looking for the best of the best.
This is Frank Rolfe. We're talking about the perfectionism required with your on-site management. Hope you enjoyed this and our nine part series on mobile home park perfectionism and we're back again soon.