President’s Message March 2017: The Oops Fund

President’s March 2017 Message

Are you still charging full speed ahead to achieve all the goals you set out to accomplish this year? I sure hope so! If you need some help achieving your goals, don’t forget to lean on your fellow NARPM^® Members. Remember, you are among the best Property Managers on the planet!

Throughout the year, I’m going to share a few ideas that I have learned along my journey that will hopefully be of value to you, too. This first idea is what I call, “The Oops Fund.” I’ve taught this idea for the past four years or so.

In fact, I’ve taught it to many NARPM^® Members in the Southwest Region as I was serving as the Southwest Regional Vice President for NARPM^®. Now is my chance to share it with the broader NARPM^® audience.

The Oops Fund was born out of my desire to align the employees’ interests with mine, as the business owner. Although I’ve always felt like I had a great team of people working with me, I became frustrated by the fact that when an employee made a mistake, I was the only one dipping into my wallet (yeah, that’s right, Hip National Bank, where I like to make deposits, but not withdrawals!) to fix it. You know what types of things I’m talking about. Things like, “Oops, I lost the keys to the property and now we have to have it re-keyed,” or, “Oops, I sent one of our vendors to complete the repair, but the owner has a home warranty.” Whether you have seen this from the employee perspective or business owner perspective, I know you’ve been there, too.

I began thinking of a lot of very formal ways to tie the employee interests to mine, like creating a profit sharing plan. But all the details and legal ramifications weren’t at all appealing to me. I wanted something much more simple and direct. Here’s what I wanted the program to do: when the employee made a mistake that cost the business money, I wanted them to share in that pain; I also wanted the team to look out for one another and tie their overall performance to each other and the business.

I wanted it to be as simple as possible and something that I could modify or discontinue at the time of my choosing. Although I tried several different approaches, I eventually came up with The Oops Fund and it accomplishes all these goals.

Here’s how it works. Each year, I fund The Oops Fund with $X per employee. I also call this “at risk” money. Every employee’s Oops Fund money is different, based on their ability to impact the bottom line of the firm, how long they have been with the firm, their level of responsibility, my expectations of their performance as it relates to guiding others in the firm, etc. Said differently, the general manager that has been in your firm for ten years should have more Oops Fund money than the new receptionist you just hired six months ago.

For a simple illustration, let’s assume you have four employees in your firm. You fund The Oops Fund with $2,000, $1,500, $1,000 and $500 for each person respectively, for a total of $5,000. You track every “oops” during the course of the year. To track the money that is lost, I simply created a general ledger (GL) account in my Quickbooks called “Oops Fund.” Every time I pay out for a mistake, it gets coded to that GL account. At the end of the year, I have one line item with the total amount of “oops.” I can also look at the detailed break down with a description for each mistake and the corresponding dollar amount.

Let’s say you tally up the total at the end of the year and determine that $3,000 was spent on mistakes. $5,000 minus $3,000 in mistakes equals $2,000 left in the Oops Fund for all to share. Or said differently, $2,000 divided by $5,000 equals 40%. So everyone in the fund gets 40% of their original Oops Fund amount. So, the person with $2,000 originally, gets 40% of that, or $800, and the others get $600, $400, and $200, respectively.

I do not tell everyone who made each mistake, nor do I tell them the total amount of The Oops Fund, nor the individual amount of The Oops Fund contributions. My goal is to unify the team, not divide them by blaming one another for a mistake. So, although I may discuss their mistakes with each individual during their performance review, I do not share the mistakes of others. I simply tell them that this year the team earned X% of The Oops Fund. Incidentally, one of the things that helps make this approach so effective is purely psychological. Many studies have shown that people are much more motivated to try to avoid losing something, as opposed to trying to gain something.

Since I’ve instituted The Oops Fund, I’ve strengthened the bond the employees have to each other and the firm. Now everyone wants to look out for each other and avoid mistakes. It’s not just me or the person who made the mistake. It also helps all of us focus on solutions, so that when something happens, we all have a vested interest in figuring out how to avoid the same problem in the future.

If this idea makes sense for you and you decide to implement it, but you have questions, feel free to contact me, I am happy to help. After all, NARPM^® is Engineered for Your Success!

Warm regards,

Steve Schultz, MPM^® RMP^®

2017 NARPM^® President

Current editions of the award-winning Residential Resources magazine is sent eleven times a year to members. Join NARPM to receive all of the benefits of membership and receive current editions.

Residential Resources: March 2017 Issue, Volume 28, Number 3