Kristy Simonette of Camden Shares Her Centralization Results

As centralization was first gaining widespread interest, there was a lot of conjecture on how it might play out in the real world.  Are tasks being centralized or entire jobs?  Will on-site teams downsize or just have their roles reimagined?  Now that centralization is turning from concept to reality with more companies, we are starting to see more and more first-hand results!  Several stories came to light during NMHC’s OPTECH conference which showcased that real implementation may not be what we initially expected.

Centralization – Working as Hoped?

To begin down the centralization path, companies are defining what could potentially be centralized.  Suzanne Hopson, President of Operations at Tricap Residential, identified three broad categories of on-site functions that could be centralized:

• Marketing
• Conversion (Sales)
• Engagement (Including service team)

A common theme among many panelists discussing their centralization story was that administrative functions appeared to be the lowest hanging fruit, including accounts receivable and accounts payable, so they were using those tasks to begin their centralization journey, while still assessing additional opportunities down the line. 

As expected, as we move away from “jack of all trades” to more specialization, we are hearing stories of greater efficiency in our team members, so much that Kristy Simonette, Senior Vice President of Strategic Services at Camden Property Trust, reported being able to convert 170 assistant managers to 30 centralized team members.   

Not only was more accomplished, but we keep hearing that the work output is more consistent.  When thinking about assistant managers, as an example, each APM reports to a different property manager, which makes it extremely difficult to create consistent operations.  Conversely, a centralized team all report to the same manager, so that all team members are attending the same training, getting the same guidance, and ultimately have the same (or at least much more similar) work output. 

Efficiency With Non-Centralized Team Members

One possible avenue for centralization is through the sales team by producing a flexible, floating leasing process, or leveraging virtual leasing strategies in some form or fashion.  However, even before that might be implemented, centralization of other functions is having a tangential improvement on the sales process. 

Although not always true, a sales “superstar” will often feel held back by the ever-increasing administrative tasks that are hitting our onsite teams, and yet with our emphasis on “jack of all trades” job descriptions for leasing consultants, they are often hindered by job tasks that do not mesh well with their core competency.  By centralizing more administrative functions, we are hearing stories of how sales-based leasing consultants can now place a greater emphasis on their sales efforts.  So not only are they more effective in their sales processes, but they also have greater job satisfaction!  Moreover, Simonette reported expanding the scope of their on-site leasing consultants, so rather than being limited by the inventory of their own individual property, they were encouraged to actively lease units at other properties in their “nest” (region).  This, again, was good news for high-performing salespeople who would not be constrained by their property’s availability.

Removing Single Points of Failure

One interesting perspective we heard at OPTECH was how centralization helps mitigate risk with certain fail points.  The smaller the team, such as an individual property, the greater the pain of losing a team member.  For instance, a single lost team member may represent 20% of the office workforce or even 100% of accounts receivable, which creates a big burden for the remaining team, and possibly a complete mismatch in skill/training for other team members.  However, by centralizing operations, staffing changes can be absorbed by a bigger centralized team to reduce the pain of turnover.

Changing Job Roles

Centralization has the chance to absolutely obliterate the traditional multifamily career ladder.  No longer is the leasing consultant > assistant property manager > property manager path the only opportunity for those looking to grow in the industry.  So while some roles may be changing or even disappearing, new job roles are opening up, with remote work now being a viable option for many previous on-site team functions.  Josh Gampp, Senior Vice President, Chief Technology Officer of UDR, was asked how one manages these changes without killing morale, and he explained how they approached their team members:  “Stick with us – your job is getting better.”  In other words, the changing roles should be a good thing, where team members can now find a role that suits their particular interests and skills a lot better.

The Net Affect on Staffing in Multifamily

When centralization started getting wide-spread interest, it was clear that there was a hesitation to consider that overall staffing might go down.  Yes, certain job functions may be centralized, but operators consistently seemed to think that rather than staff levels reducing overall, they would instead change the focus of on-site team members to providing a better resident experience.  This is where we see a potential divergence in the centralization discussion.  While some operators plan a shift towards a high-touch experience with residents through greater service levels, others are decidedly experiencing a decline in overall staffing levels, with one operator reporting staff reductions between 20 and 25%.  Interestingly, those reductions were not a result of layoffs, but rather leveraged natural attrition at their properties.  In other words, operators were able to avoid some of the morale concern because they did not have to lay off team members, but rather simply didn’t re-fill vacated positions.

The Next Stage of Centralization

As we continue to hear more stories of centralization, it opens up massive questions regarding the long-term evolution of our properties and the ramifications of those changes.  For example:

• Will centralization lead to industry consolidation, as efficiencies in some categories might favor geographically dense portfolios?
• Will the breakdown in traditional staffing structures lead to fundamentally divergent multifamily operations?
• As self guided tours become more prevalent, will there be a tipping point where prospects no longer want guided tours at all, outside of very niche scenarios?
• What other process-oriented changes will become possible due to centralization?