Hrm And The Strategic Planning Process Case Study

Hrm And The Strategic Planning Process Case Studyfrank Is The Lead Bro

HRM and the Strategic Planning Process Case Study Frank is the lead broker at a real estate firm that is located in one large city. The company has a nationally known real estate training program that costs $2,000 to attend. The program motivates real estate agents to sell more, gives tips on how to get leads, and recruits more agents to Frank's brokerage firm. Each real estate agent in his firm grosses a 3% commission with each transaction involved with buying or selling a house. After the broker's cut, most agents net a commission of 2.1% with each transaction.

Frank's motivation is to build his training program and the size of his brokerage firm by adding real estate agents. To do so, he decided to provide his real estate agents some incentives. At noon on the first Monday of each month, agents sign up for four hours of floor time for the month via computer. Floor time at the downtown office allows each agent to be the sole person to accept phone calls, answer e-mails, or visit with walk-ins to get possible listings and generate more business. Floor time occurs from 6 a.m. to 10 p.m. each day.

Agents love floor time so much that by noon each Monday sign-up day, all floor times for the month are taken. There are other ways to get real estate leads such as contacting people who have de-listed their houses or are showing "For Sale by Owner" signs in front of their houses. But floor time in this firm accounts for a third of all leads. Here is the new incentive policy: Realtors can receive up to four hours of floor time per month if they have had a transaction in the last three months. Realtors receive one additional hour of floor time per month for exceeding three transactions in a three-month period.

If there are four transactions in a three-month period, Realtors receive one additional hour. If there are five transactions, Realtors receive two hours. Six transactions lead to three hours and so on. Realtors receive one additional hour of floor time per month for referring one person to Frank's training program. They receive two hours for two people, three hours for three people, and so on.

The system worked well for two months after initiation of the program. On the third month, floor time ran out. Agents who had rights to floor time but could not get it were promised extra floor time the next month. The real estate firm added 16 real estate agents (while losing only two) and brought in 18 agents to the training program due to referrals from other agents. The superstar real estate agent Trina was involved with nine real estate transactions during the three-month period.

Frank decided to change the standard one week before Realtors could sign up for the next floor time. Realtors can now receive up to four hours of floor time per month if they have had a transaction in the last two months (effective next sign-up). All other aspects of the incentive program will continue. Stacey has been a Realtor with Frank's brokerage firm for the last 15 years. She had been on vacation in February and was gone in late March, so she did not get the e-mail on the new incentive policy.

She thought she could sign up for floor time because she had a transaction in the last three months. She went on the computer to sign up for floor time as usual on Monday, April 3, at noon. She was locked out. The computer said she had insufficient transactions over the last two months. Stacey immediately called Frank at 12:05 complaining that she couldn't sign up for floor time.

Frank said that she should have been keeping up with all e-mail correspondence from the firm. She said it wouldn't have made a difference. "I went on vacation knowing I was safe for floor time. Now you surprised me. The firm is going to get bigger and bigger, and it is only going to get tougher to get floor time." She was disgusted by the fact that her friend Trina received 20 hours of floor time in April.

The incentive plan was also unfair to newcomers who get no floor time. Stacey said, "Trina is a machine. She has a staff that helps her get sales. She even hired a person to find Realtors to go to your training seminars. How can I compete against Trina who will capture all the floor time in the firm?" Stacey also wondered about the training seminars.

She got into the business of real estate to sell houses, not seminars. Frank stated that he wants to give the spoils to those in the firm who produce the most. Trina happens to be one of the most productive Realtors in the city and state. Trina also nets 2.5% with each transaction because she passes the magical $3 million threshold each year. Besides, said Frank, floor time is only a small piece of the pie.

Paper For Above instruction

Frank's strategic purpose for the incentive plan was to motivate high productivity among real estate agents, reward top performers, and expand his brokerage by attracting productive agents through incentives. The plan aimed to incentivize agents to increase sales activity, refer new clients and recruits, and prioritize high performance by offering more floor time to those who met certain sales thresholds. The underlying assumption was that offering tangible rewards tied directly to productivity would stimulate a competitive environment that would benefit the firm’s growth and profitability.

Assessing whether the incentive plan achieved these purposes reveals mixed results. While initially successful in motivating agents—evidenced by increased agent activity and referrals—the plan's short-term success was undermined by issues such as capacity constraints and perceptions of unfairness. The rapid exhaustion of floor time and the perception that top agents like Trina received disproportionately more rewards indicate the incentive system's difficulty in balancing motivation, fairness, and operational limits. The modification to reduce the transaction window from three months to two further complicated perceptions of fairness, especially among senior agents like Stacey, who felt blindsided and disadvantaged.

Frank’s chosen incentive option appears to be a performance-based reward system emphasizing high-volume productivity. The focus on rewarding those with the most transactions and referrals exemplifies a ranking or merit-based incentive scheme designed to drive top performers' behavior. While effective in motivating prolific agents like Trina in the short term, such a system risks alienating lower performers or newer agents who may struggle to compete or perceive the system as unfair. Additionally, this approach might foster unhealthy competition, potentially undermining cooperation among agents who could otherwise benefit from sharing leads and strategies.

Regarding whether high-level performers should receive the bulk of organizational rewards, opinion varies. In highly competitive sales environments like real estate, rewarding top performers can be justified due to the direct impact on revenue. However, excessive focus on individual achievement can erode team cohesion and morale, especially if rewards appear disproportionate or unequitable. A balanced approach that recognizes both individual excellence and collective contributions—such as tiered incentives or team-based rewards—may foster a more collaborative and sustainable environment (Kaupins, 2020).

In the case of Stacey, a long-tenured agent concerned about fairness and transparency, Frank could have enhanced cooperative development of incentives through prior consultation. Engaging Stacey and other agents in discussions about incentive criteria would have built trust and clarified expectations. Soliciting feedback on the proposed incentive structure, and perhaps involving agents in designing criteria or reward levels, could foster buy-in and reduce dissatisfaction. Regular communication, transparency about reward calculations, and accommodating different levels of experience would also strengthen cooperation (Roberts & O’Reilly, 2018).

Given Frank’s strategic objectives, alternative incentive plans could better balance motivation and fairness. For example, implementing a balanced scorecard approach that combines individual sales metrics with team-based goals would promote cooperation. A tiered incentive system rewarding both high performers and consistent contributors could motivate ongoing effort across all levels. Additionally, integrating qualitative factors such as client satisfaction or training participation could diversify incentives beyond sheer transaction volume (Lazear, 2021). Recognition programs emphasizing teamwork and mentorship could also align with strategic growth goals, fostering a collaborative culture essential for sustainable expansion.

References

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