For NAI Elliott, April Fools’ Day means more than harmless pranks and internet gags. We have our own annual tradition on that date—and in the spirit of the more well-known occasion, our employees never know exactly what to expect.
Since 1987, when we were Elliott Associates, Inc., we’ve gathered the entire staff on April 1 to share the financial results of the just-concluded fiscal year, and we announce the status of the employee profit-share plan. The April Fools’ aspect is that the news could be good, or it could be bad; it’s always somewhat of a surprise.
That first year there were five people present, and two of those were Lou and Moe Elliott, the founders of the company. This year we had 72 employees and brokers present; a quarter of them have been with our company more than 10 years, and well more than half have been with us for at least three.
Why has this tradition endured for 35 years? Our business model is built on three foundational elements: client success, employee satisfaction and sustainable performance. At our core, the company exists to understand and meet our clients’ goals, but equally importantly, to successfully employ our staff and support our brokers. Beyond that baseline, our owners and leaders are responsible for making every effort to ensure the continued existence of the company as a viable and sustainable business. That in turn supports the employees, the brokers and their families. It’s a cycle we work hard to perpetuate.
As a privately held company, we’re not compelled to disclose our performance to our staff, or virtually anyone else. It’s tempting to hold the company’s performance closely, and to hold the resulting profit even more closely. So why do we spend the time, energy and expense to bring our team into the conversation? Because transparency builds investment.
Think of it in terms of the goals of long-term employment and sustainability: The intrinsic motivation necessary for people to continuously strive to meet client needs is driven by understanding the fundamentals of what they’re doing, why it matters, and what their impact is. Commercial real estate operates on an annual cycle, and financial success is measured on the same timeline. An annual review of our company’s performance offers essential insights: areas of success, challenges we face and, ultimately, baseline feedback on the results of our efforts. Each and every employee and broker is brought into a circle of trust, transparency and sharing. As a result, they get an informed, personal view of how their impact is keeping the company on sound footing and creating mutual success.
The April Fools’ Day report for the 2021-22 fiscal year was a very good one: We had our best year ever.
How did we accomplish that? Every single business line maintained or grew total production, and we effectively contained expenses. The result was the company’s largest profit—double our historical average profit as a percentage of total income. As we’ve described in a previous newsletter, our growth in brokerage drove the company’s success in 2021-22. With six new brokers, strong retail and industrial markets, and a notable uptick in investment purchases and sales, every member of the brokerage department had strong production.
Speaking of history: We’ve enjoyed and shared a profit in 31 out of the 34 years since 1987, distributing more than $2 million in profits to employees. Those profits have been driven by a range of factors. In many years, the reimbursements for materials, supplies and foundational services have essentially comprised our profit. This year, brokerage drove the record profit.
Who participates in profit-sharing, and how? For their day-to-day work, each employee is compensated based on their role and responsibilities, and each broker benefits from transactions completed. But our profit is the overall result of cumulative and cooperative efforts; as a result, it’s distributed in equal shares to all our employees. To use a common internal metaphor, we believe the most entry-level teammate can pull the oars as hard as the highest-producing broker. To frame this year’s profit share, the amount each team member received was up to 14% of that person’s annual salary, and we’re especially proud of the impact for those at that end of the scale.
The transparency and accountability we engender by lifting the curtain of our financial performance each year is elemental to maintaining our long-term success and sustainability. It also keeps us strategically focused on the right areas, because every decision we make in a given year has an impact on our performance—and, in turn, our profit. Therefore, we consider each decision in the context of how we’ll report it back to our entire team.
In our eyes, the net result of this approach is an experienced and committed team, one that offers a full set of commercial real estate services and focuses on fulfilling our clients’ goals. And they tend to look forward to April Fools’ Day every year—and not just to switch out the sugar and salt in the break room.