Above: Karina Ray

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7Issue 76 | Summer 2017

BENCHMARKING

The inaugural ARMA Benchmarking Survey was

conducted throughout last year with findings released to ARMA Council and Executive in February. This is the first benchmarking survey in a series that will run annually, to provide analysis for ARMA and participating businesses into the productivity and performance of individual businesses and the property management sector.

The analysis collates the quantitative data and provides commentary on the findings, so that each participant can apply the results in their business for the best outcome. As the survey is repeated, valuable trend data will emerge that will assist in policy development for ARMA and guide business managers in decision making and strategic planning. This is a tangible benefit for ARMA members who can now benefit from big business thinking that benchmarking offers through analysis and commentary.

2016 SURVEYThe 2016 survey saw 15% of ARMA members participating, and based on ARMA estimates, these businesses represent approximately 23% of the total number of flats and houses managed by its membership.

REPORTS FOR PARTICIPANTS Each participant can now access their individual business reports. A free summary report is available with the option to purchase the full analysis and commentary contained in the detail report. The detailed report gives an extensive breakdown on the data, with analysis given against the survey average, but also by size of turnover and location of operations. For example, a small regional business will be able to compare results with other businesses operating regionally at a comparable sales turnover level.

Download reports here: www.benchmarkmybusiness /myreport

FINDINGSThe findings from the inaugural survey are thought-provoking, and as participant levels increase and year on year data is accumulated, trend analysis can occur that will provide an additional level to analysis and interpretation. This information is already having an impact on business owners like Martin Perry, ARMA Chair Emeritus and owner of West of England Estate Management, who is beginning to factor the survey results into his business plans.

PROFITABILITYThere is a large disparity in levels of profitability between firms operating regionally and those operating nationally and in London only. This is also the case with respect to lower and higher turnover businesses. A trend in the data will emerge over time, however it is important to note that, despite healthy net business growth, if increases in the cost of ...(Continues on page 8)

THE ARMA BENCHMARKING SURVEY 2016BY KARINA RAY, EXECUTIVE DIRECTOR, BENCHMARK MY BUSINESS LIMITED

• My business is average in terms of overall revenue• I spend above average for our size on staff and training• We charge slightly higher than average fees per

development and unit• But, our overall income per unit is lower than average• We make below average profits due to the staff costs

My conclusion is that we probably do more 'above and beyond' work than we should, so we need to learn to set clearer boundaries for clients and staff, and develop an effective system for charging for extra work. Perhaps a time-charge model is the future!?

It was interesting to see that the bigger the firm, the fewer the developments and units per property manager. That would suggest that bigger firms do it better, a matter of some debate as we all know!

Martin Perry, ARMA Chair Emeritus and owner of West of England Estate Management, explains what he discovered from the full detail report:

Above: Martin Perry

8 AQD

BENCHMARKING CONT...

THE ARMA BENCHMARKING SURVEY 2016CONTINUED...

(Continued from page 7)

... employment and contracted fee growth do not move in line with each other, then the sector (particularly in the case of larger, national or London only businesses) is susceptible to downward margin pressure. Focus on sources of income, along with such strategies that tackle ways to reduce wage costs (decentralised office/support staff), increased use of technology and potential diversification are likely to assist in improving profitability levels within individual businesses.

SALARY VERSUS LOCATIONAverage salaries differ significantly between Regional and National / London only businesses. Based on responses, the average annual salary cost for a property manager varies 24% between Regional and National/London only businesses, with the regional being less. The variance in cost of a general manager is even greater, at 39%. Employee costs in others business areas vary little with business location. Total salary costs equate to 58% of total income, however, the result for regional businesses is 48% and for national or London only businesses the figure is 60%.

PORTFOLIOBased on survey responses, annual management fee income is growing at a rate of 6% per annum resulting from net new business growth, or 7% in terms of growth in total flats/units under management. As Dr Nigel Glen, ARMA CEO, has previously cited in presentations, significant sums are held by ARMA members in client funds. Of the members surveyed, £6.2m is held in client funds of which £5.2m is held in sinking and reserve funds. Extrapolated out, this

would equate to approximately £1.6bn of client funds held by ARMA members.

PRODUCTIVITYThe average number of flats managed by an individual property manager is 37% less in national and London only businesses compared to regional businesses. This implies that amongst national and London only businesses there are potential gains to be made by realigning this number to that of regional businesses.

RECRUITMENT AND STAFF RETENTIONAverage annual expenditure on recruitment is 1.3% of sales for national and London only businesses, and 0.3% of sales for regional businesses. Staff retention is a key consideration in this sector and therefore in the 2017 survey we will measure new starters and leavers across all job functions so that staff churn can be measured. Employee development can have a significant impact on retention rates and staff training is an area that deserves mention. The average annual expenditure on education and training per annum is 0.005% of sales for national and

London only businesses, and 0.006% of sales for regional businesses. As investment in training and education for staff increases, we will be measuring the impact on staff churn in the future.

GENDER MIXAmongst respondents, the percentage of female employees is 61%. Given women represent just under half (46% in 2014) of the total labour force in the UK1, the question then to ask is, why are such a high number of women employed in the property management industry? To provide greater insights on this topic, the 2017 survey will ask for a breakdown of the number of females in the roles of property managers and directors/business principals/owners. This information will highlight the ease (or

not as the case may be) with which it is possible for females to progress in their careers through property management and into directorship, ownership and management.

INDUSTRY CHALLENGESRespondents were asked to give their views on the most significant challenges facing the property management sector currently. ARMA Council and Executive have all the responses and will consider these views when prioritising objectives, but as an overview, these are some of the issues noted.

When completing the survey, I was a little taken aback by the amount of time it took, however the time taken to input the information pales into insignificance when compared to the numerous benefits to our business in analysing and using the results. Being able to compare statistics associated with our business against “industry averages” has generated several marketing benefits alongside informing a number of business decisions including, ratios of support staff to front line property managers, sources of income proportions, business churn, etc.

Whilst the information produced on the back of the 2016 survey was useful, it will only become more useful if more ARMA members participate in

BENCHMARKING — A ‘Golden Nugget’

BEN JORDAN Managing Director of Premier Estates

the survey in future years. I regard the results of the benchmarking exercise as being a real golden nugget that we could not have obtained through any other source and therefore question why any business principal would not take the time to complete the exercise given the immeasurable benefits created by doing so.

Please help move our industry forward by assisting in generating the most useful data possible by participating in future surveys. The data generated will help you to run a better business.

··

ANNUAL MANAGEMENT

FEE INCOME IS

GROWING AT A RATE

OF 6% PER ANNUM··

Above: Ben Jordan

OVERVIEW OF CHALLENGES FACED

Apartment prices & lack of affordable stock

Awareness of our roles/duties from all parties

Legislative changes

Low market fees compared to the level of service

Maintaining competitive fees

Managing client expectations

Non-regulated and non-ARMA agents/Property Managers

Recruiting & retaining talent

Staying competitive

KEY DATESCurrently — Survey questionnaire open 31 August — Survey questionnaire closes18 October — Results released at ARMA Conference23 October — Participant reports available to download

1The World Bank, “Labor Force, Female (% of Total Labor Force),” The World Bank Databank (2016)

9Issue 76 | Summer 2017

BENCHMARKING

2017 BENCHMARKING SURVEYThe 2017 ARMA Benchmarking Survey is now open and can be accessed from the ARMA website where instructions and question guidance notes are provided so that you can collate all the detail needed to answer the questions in advance of entering the Survey. In 2016, the Survey

closing date was extended in recognition that it was a new initiative and members needed extra time to gather information and complete the questionnaire, however an extension is not anticipated this year. Results will be announced at the ARMA Conference on 18th October. Reports for participants will subsequently be made available.

We are grateful to the 2016 sponsors Claibon Recruitment, Residentsline and SLC Solicitors and to media partner FlatLiving for their support.

SPONSORS

MEDIA PARTNER

Above: Ben Jordan