First, I’d like to take the opportunity to clear the air. There is talk that we do not pay over the minimum wage; in fact, we pay a large majority of our staff above the minimum wage. We hire many young people who have a passion for hospitality and the coffee industry, but may not have previous experience in the workforce. These people may start on the minimum wage, but we move quickly to invest in developing them through extensive training. We work to develop them as staff so they get skills they didn’t previously have, and as soon as they successfully complete their training they move up in our pay bracket scale. The time it takes to complete varies depending on the person doing the training.
We recently forecast costs over the next 12 months to be 3% higher than before. To accommodate that, we have increased our coffee prices by 2% – which works out to be on average 10c a cup. With the increase to the minimum wage, we took the opportunity to consider the wages of every one our front line people, so we could make sure everyone’s contribution to the company was recognised. It’s important to us that an increase for the lowest wage earner also has the appropriate impact on those people who are in higher pay brackets. Our café staff who are in higher pay brackets have more experience, skill, and responsibility. As the cost of running our business increases, we need to make adjustments so that we can continue investing in our people, continue paying for our product – and yes, continue to make some profit.
In retrospect, the signs at our café caused a misunderstanding. We’re truly sorry that we’ve upset a lot of people by not communicating the full details about how wages affect the price of coffee. It was never our intention to attribute the price increase solely to the increase for minimum wage earners. We hope that we’ve provided some clarity around what we pay our people, and on how an increase for entry-level staff also has an impact on those people who are in higher pay brackets. This, combined with other cost increases, is what ultimately saw us raise our price of coffee by 2%.
We’re one of New Zealand’s largest coffee companies, coming from small beginnings in Wellington in 2003 and we gratefully attribute this success to our people. They are the heart and soul of what we do. We now employ over 300 people around New Zealand and the world and we pride ourselves on being a good employer. We know that success cannot happen without treating people right. We grew only through upholding our values for our people, providing them with opportunity to learn, develop and grow their skills with the hospitality industry. No company can grow and be successful unless it employs good people, and looks after them.
While we don’t claim to get everything right by a long shot, we’re proud of what we do with the people who work with us. Many of our people have been with us for years, and have gone on to compete professionally as baristas, and proudly made it their career.
We welcome the conversation around people’s wages because we think it’s a really important one, and we’re pleased for this opportunity to let our customers know more about our business and our people. People should be as informed as they can when making decisions on where to shop – and where to work.
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A house in the palms of giant people from an unknown planet. Photo: Getty
Much of the criticism is unfair and almost cruel in its depiction of the many hard working people who work in the industry – believe me, I’ve seen it all, writes David Faulkner.
Life as a property manager has never been tougher. Despised and hated by many, loved by few we are constantly under attack. Whether it’s journalists, politicians, consumer group or tenant group, everywhere you look it feels as though somebody is having a go at us.
Who are these creatures guilty of deliberately driving up rents to extract more money for their already full coffers?
Who are these vultures, guilty of threatening to evict a tenant who is brave enough to complain about the leaking tap that never gets fixed?
Who are these parasites guilty of intentionally only signing tenants up for one year, so we can move them on and claim another fee when we re-rent the property?
Who are they, these money hungry, corrupt, cruel and abusive dirty rotten scoundrels?
Forgive me if I am being a little paranoid, but in all my time working in property management, never have I seen our industry come under such scrutiny and criticism. In fairness, some of what has been written has validity, particularly around regulation and transparency and, yes, I’ll say it, the letting fee should be the responsibility of the landlord. Yet some of the criticism is unfair and almost cruel in its depiction of the many hard working people who work in the industry.
I have worked in property management for more than 12 years, first as a property manager and now as a director of my own training and consultancy business. Like many people who work in the industry, I fell into it and I am glad I did. I have chaired the REINZ property management committee and I have seen it all, from suicides and assaults, to dodgy landlords and dealing with the tenants from hell. It is an industry where no two days are the same and it comes with many challenges. Yet it is an industry that I love.
It is also an industry that I have deep concerns for. We are dealing with a crisis around attracting and retaining talent and confidence within our sector is low.
There are many things that have been written and debated recently and our new government is wasting no time in overhauling legislation. The banning of the letting fee is the latest challenge our industry is having to deal with.
However, nobody is sticking up for us. I’ve read enough negative press, I’ve heard enough. It is time to draw a line in the sand.
Time to take a stand
The Spinoff business editor Rebecca Stevenson wrote a scathing opinion piece about property managers, which upset many who earn a living from this career. We were “terrible for everyone” and “made her blood run cold”. Ouch!!
Some of what was written was fair and just but some of it was woefully inaccurate and simply went too far.
The first of her complaints is that we are money hungry. We charge between 6-10% of the rent for managing a property. I’m sorry, Rebecca, I may have misunderstood something here but for a business to succeed doesn’t it have to charge a fee to make a profit?
We study the industry at great length and I’d argue that if we are to offer a truly professional service we should be charging more. A property management company will spend about 25 hours a year to manage one property. This includes inspections, rent payments, issuing statements, landlord payments, repairs and maintenance, letting once on average every two years, dealing with tenant requests and reporting to landlords. Property managers need to have an ever increasing knowledge base of legislation which goes above and beyond the Residential Tenancies Act.
They are dealing with The Building Act, Privacy Act, Human Rights Act, Health and Safety at Work Act, The Unit Titles Act, and Consumer Guarantees Act to name just a few.
Property managers also need to learn new legislation and standards that keeps being thrown at the industry such as.
Healthy Homes Guarantee Bill
Residential Tenancies Bill No 2
Residential Tenancies Bill No 1
Residential Tenancies (Prohibiting of Letting Fees) Amendment Bill
Rental Warrant of Fitness
Asbestos Regulations
Standards around Testing and Decontamination of Methamphetamine
If that is not enough you then have to deal with the increasingly complex world that is the Tenancy Tribunal which can often feel like you’re playing Russian roulette.
“The tenants put a hole in the door and spilt wine on the carpet, here is the evidence.”
“Accidental damage, case dismissed!”
If you break down what property managers do by the hour and charged for it at current rates, most landlords would be paying around $50 an hour for the service they get. This is way too cheap for the increasing responsibility that property managers have thrust upon them. Comparing this to what builders, valuers, solicitors and any other property profession charges – you will probably find that we are the cheapest property profession you will come across.
This, I would argue, is the root cause of the problem. With too many companies competing in an unregulated industry, many companies compete on price making it their only point of difference. This can cause standards to drop as the cost of business increases, meaning the only way you can make a profit is by taking shortcuts. Businesses caught in this predicament also struggle to attract talent as you simply cannot afford to pay the good employees what they deserve.
This issue will come to a head with the removal of the letting fee. In a recent study, over 50% of companies surveyed manage less than 200 properties. In short, our industry is dominated by small companies which will have tight profit margins. When you remove the letting fee, you are potentially wiping out around 15% to 20% of revenue for these small companies. If the landlord doesn’t absorb the cost, many small companies will disappear which will be hard on the people working in these companies.
Photo: Getty Images
A role that comes with risks
One thing that has been left out of all the media attention is the conflict and stress that comes with the job. Property managers are often abused and sometimes bullied with approximately one in two females and one in four males fearing for their safety at some stage of their career.
In recent times we have heard first-hand of events that property managers are subjected to.
A property manager in her 60s was punched in the face by a tenant
A tenant having to be restrained at a shop by security guards as she tried to assault her property manager who was out doing the weekly grocery shop.
A property manager being abused on the phone by an angry landlord demanding she signed a backdated letter so they could evict a tenant. The property manager refused.
A property manager being told to sign a contract with a landlord who didn’t want ‘heavy people’ living in her rental property as she had concerns about the bathroom floor.
A property manager being hospitalised after being assaulted and held hostage in a property.
These are just a handful of the distressing situations frontline property managers find themselves having to deal with. As a property manager a few years ago I was often abused by both tenants and landlords and on one occasion attacked by a drug-fuelled tenant.
Many people have moved on from the terrible incident that took place in Northland last year where two property managers where murdered, gunned down in cold blood. But our industry remembers and it won’t forget. The job comes with its risks.
Don’t get me wrong, the vast majority of people, both landlords and tenants, are wonderful to deal with. However, property always comes with a lot of emotion and often brings the worst out of people when things go wrong. Too often the property manager becomes the scapegoat. But hey, we are money hungry right?
The money-hungry myth
In our last two surveys about the industry, we asked people who work in property management what they loved about it. With nearly 400 people completing the survey only one person made reference to the money that they made. Overwhelmingly the biggest motivator was helping people.
To put it plainly, property managers do not do this job to earn hundreds of thousands of dollars. They are kind, hard-working people who often go above and beyond. Many people who answered the question in our survey were quite negative about the industry due to the stress and abuse they are subjected to.
Don’t believe me? This response from an anonymous property manager sums up how many feel.
“What do I love about the job? To be honest, nothing now. It is so stressful, I loved my job for the first 8 years, now I hate it. Tenants are struggling to keep up with the cost of living, owners are stretching themselves beyond normal means which in turn affects maintenance, life is just more stressful these days and we are the meat in the sandwich that cops all the abuse”
The greatest concern I have for the industry is the physical and emotional wellbeing of property managers. The vast majority enter this industry wanting to do a great job and look after both landlord and tenants. However, they are let down by organisations and employers who have the right intentions but do not have the resources or the skill set to train and support them.
With landlord and tenant demands increasingly on the rise, we are reaching crisis point with the ability to attract and retain people within the industry. Time and time again I see or hear of property managers suffering and struggling to cope leading to issues around mental health and burn out. Some end up on medication and self-esteem goes as the constant barrage of demands proves too much for many.
This is where the industry needs to step up. Property managers wellbeing needs to become the focal point for businesses and the industry as a whole. There is no point attending the latest ‘Grow Your Business Quick’ seminar if your property managers simply cannot cope with the increased workload and pressures that come with this.
Getting the industry regulated is a start. With knowledge comes power and more importantly for property managers, confidence to give the correct advice to consumers whether it be tenants or landlords. It will sort out the “cowboys” and improve consumer confidence.
Tenants and maintenance
The recent Consumer NZ report claimed that tenants who lived in managed properties were less likely to have maintenance requests responded to rather than if they rented from a landlord.
We have a theory about this.
Too many property managers are available 24 hours a day, 7 days a week. Too many try to please everybody without little gratitude or thanks. Too many do not know how to handle the abuse and conflict that comes with the job. Too many lead an unhealthy lifestyle as they cram down a pie for their lunch rushing between appointments. Too many of them wake up in the middle of the night worrying about something they forgot to do the previous day as they were overwhelmed with work.
It is not that they don’t care about getting maintenance done, it is quite the opposite. A well maintained property is easier to manage. What likely happens is that a request will go through to the landlord for repairs and there is no follow up. The problem is they get too busy and this is why service levels vary so much.
A landlord who deals with a tenant directly is more likely to agree to the request as it is in their interest to have a positive working relationship.
Change is required
With 50% of the population renting, many of which could well become lifetime renters, change is required both through the Residential Tenancies Act and through regulation of the property management industry.
But please do not paint the picture that the property manager is the bad guy. If anything, they are as much a victim of circumstances working without regulation or guidance.
We are human beings, and contrary to public belief, we really do care.
David Faulkner is the director of Real iQ, a training and consultancy business which works with NZ property managers
The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
