15 Sep Keller Williams : Stanford University White Papers
Stanford University has studied Keller Williams Realty on three different occasions. Access the papers here to see what they learned! (Hint: They were impressed.)
A quote from Mo Anderson, former CEO and current Vice Chairwoman:
The culture in this company is like the life blood flowing through a body. It supplies the oxygen for the body to live, and without it, this system falls flat on its face.
The Keller Williams Model: The Keller Williams approach combined an economic model that delivered profits through economies of scale and a cultural model based on interdependent relationships and succeeding through the efforts of others. Keller Williams believed that its model was uniquely differentiated from that of its two primary competitors: traditional real estate brokerages and 100-percent commission organizations.
The Economic Model: The Keller Williams economic model was based on keeping fixed expenses low and generating high commission volume to achieve economies of scale and excess profitability at the market center level. This economic leverage was driven primarily by having a significantly larger number of agents per market center than competitive real estate companies. Where the average brokerage in the U.S. had 49 agents per office in 2006, the average Keller Williams market center had 174 agents.
Compensation Model: The commission split that Keller Williams offered agents was a hybrid of that offered by traditional franchises and 100-percent commission organizations. The Keller Williams agent received a 70/30 commission split from the first dollar of gross commission income (GCI) generated.
Profit Share: Keller Williams was unique among real estate companies in that it offered a second source of income – profit share – to its agents.
Cultural Model: The economic model of achieving outsized profits at the market-center level through economies of scale and the compensation model of offering a generous commission split and a share of the profits were two essential factors that led to Keller Williams’ rapid growth. And yet according to the leaders of Keller Williams, it was the cultural model of interdependence and succeeding through the efforts of others that was the critical element that led to Keller Williams’ overall success.
Agent Leadership Council: The management of the market center was not the sole responsibility of the team leader, nor was it the joint responsibility of the OP and the team leader. The leaders of Keller Williams believed that agents had an equal stake in the success of the market center and therefore should share in the decision-making process. As a result, management of the market center was a shared responsibility of the OP, the team leader, and the top agents within the market center who all jointly served on what was called the Agent Leadership Council (ALC). Subcommittees of the ALC made recommendations on specialized issues such as financial planning, recruiting and retention, marketing and advertising, training, technology, social events, and philanthropic giving. The ALC structure ensured that each market center was run as a true partnership.
Open Books: In order for the profit-share and ALC decision-making systems to maintain their integrity, Keller Williams operated an open book policy in each market center. All agents had access to view the expenses and revenues of the market center. Because the profit share formula did not change, agent could run the calculations themselves to make sure they were receiving their proper share.
Training: The leaders of Keller Williams believed that if individuals were expected to play a significant role in the decision-making and management of the company and their careers, then the company had an obligation to provide the training needed them to achieve their full potential.
The leaders of Keller Williams believed that education was an ongoing process within the company. In addition to real estate and management techniques, the company also taught life improving perspectives that the company thought led to improved performance.
Be The Best That You Can Be: The leaders of Keller Williams believed that business should be infused with a higher purpose, and the company’s culture encouraged team members to commit to a lifestyle of self-mastery that would improve both business and life skills. People within Keller Williams spoke of the company’s “productivity warrior attitude” about increasing efficiency and profitability. They spoke of a desire to “absolutely develop wealth and then share it” through charitable activities. According to Mo Anderson, “the energy this culture creates feeds the bottom line.”