Mediocrity and the real estate agent

In May I was the organiser and marketer of a public event that managed to attract a crowd of 400 people in four days. Overall, most things around the event organisation and execution went perfectly, and most people had the experience we set out for them to have.

But if you are a *tiny* bit of control freak like me, most things and most people aren’t really good enough.

On reflection, the parts I was not 100% happy with were those that were contracted out to people who were paid to deliver something crucial to the event, that, due to time or expertise, the organising team were unable to do. While those contracted did deliver the jobs they were tasked with, in most cases that was all they delivered. They did not think outside of their roles or consider how their part was going to affect everything else that was going on, and as a result there were some things that weren’t perfect.

Which led me to consider that if they had have been rewarded on the success of their contribution to the entire event, then they would either have significantly less reward than they were quoted for, or perhaps they would have ensured improved customer satisfaction by thinking outside of the scope of their roles, or being honest about their abilities and knowledge on a subject.

I know I’m not without blame here. I should have wrangled the standards I wanted out of them, but I simply had too many other things going on and had to trust that they were as good as they said they were. My biggest mistake was in assuming that the contracted service providers were as motivated by the desire for perfection as I was. Or maybe I’m just too scary to say no to (I’m about as scary as a 5-year old dressed up as a goblin: harmless, but in the wrong light things could look sinister).

Anyway, the point is it got me thinking about rewards and how we don’t tend to reward people based on outcomes, more on faith… faith in their abilities and faith in their honestly and integrity to be able to do a better job with less headache than we could. Essentially it boils down to time and money; you contract someone to do something because they can do it quicker and cheaper than you could if you tried to do it yourself. Though this doesn’t ensure the same level of quality that you would strive for.

This type of mismatch between service and reward and motivation is pretty rampant in everyday life. One major example of screwing up rewards and incentives that I can think of is evident in the process we go through to sell our houses: we reward real estate agents a commission based on their ability to sell our house at the best price possible, with the belief that they can do a better, quicker and cheaper job than we can. But the best price possible for the agent is not the same as the best price possible for us, and the subtle difference boils down to time, and translates into thousands of dollars for a home seller but a couple of hundred of dollars for an agent.

For example:

Say your house was worth $400,00. In an ordinary market, at an ordinary time, with ordinary influences, your agent can put in the ordinary effort to sell your house at its worth. At 5% commission they will take away $20,000 for selling your house, and you end up with $380,000

Compare this to the same conditions, but with the real estate agent going out of their way to ensure the absolute best price possible for you at that time. They manage to find a buyer who is willing to pay $420,000 for your house and for their extra effort and time, they will receive $21,000 in fees for selling your house; a meager increase of $1,000 for going the extra mile. The real difference is to you, as you will receive $399,000 for your house, an increase of $19,000.

So where is the incentive for the service provider to go the extra mile? My point is that our inherent systems of reward for services are geared towards mediocrity. I don’t know what the answer is, but suspect it has something to do with us as a society accepting that it is good enough for people to simply do a job. The idea of bonuses feeds into this mentality, as it enhances the idea that you get paid a set amount simply to do a job, with extra cash rewards if you go above and beyond. How do you strike that delicate balance between expecting to get what you pay for and being unreasonably demanding?

2 thoughts on “Mediocrity and the real estate agent

  1. Heh – your going to love having employees then buddy. I remember first time I was left in charge of a team. It was a full blown mutiny of laziness.
    It is easier to stir emotion in cement than in a team who feel they “are just getting paid to do their job”.
    Often its not a case of squeezing the crap out of subcontractors (fyi read this http://www.blindmanagement.blogspot.co.nz/2011/09/why-we-shouldnt-squeeze-crap-out-of-sub.html) but finding out what it would cost to make something great. While money doesn’t motivate – seems that cutting budgets DOES DEMOTIVATE.

    Any chance you have told some of the contractors your feelings?
    Oh and your look sinister frequently, and put the “pedantic” into control freak hahaha

  2. There’s no mention of bean counting or squeezing the crap out of anyone here! It is simply a ponderation on paying for services rendered. At what point does excellence kick in and why should we have to specify excellence when dealing with people who are selling their services, shouldn’t it be implied?

    And PS ponderation is a word because I said it is.

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