It's like a square peg in a round hole. It's a simple analogy that shows how we often have the right people in the wrong jobs. I've been looking into how people, processes, and profits align in strata management. It's vital to the work I do with strata management business owners to fix a broken business model.
The work of Nanda and Narayandas (2021) of the Harvard Business School is helpful. They created The Professional Services Spectrum to help law, accounting, and consulting firms. It matches the right people with the right process to boost profits. It's a tool I'm finding works well with strata management businesses.
The spectrum suggests all professional services fit into one of four categories:
- Commodity - standardised, routine work
- Procedure - work that requires some expertise
- Grey Hair – leverages expertise and experience
- Rocket Science – cutting edge and innovative work
Commodity Work
Commodity work includes tasks such as:
- Issuing levy notices
- Creating work orders
- Updating rolls and registers
It's the work that many are now having done offshore.
Procedure Work
Procedure work involves tasks like:
- Preparing a budget
- Coordinating repairs and maintenance
- Arranging and recording meetings
These are tasks at the core of a strata manager's day.
Grey Hair Work
Grey hair work is when you pull out the big guns. These are problems that require years of hard-earned lessons to tackle. It might be a cladding problem where some can pay and others can't, but no one wants to. It might be tough dealing with a building manager who has a long-term contract and no clear performance standards. It might be a defects case against a hard-nosed well-heeled developer.
Rocket Science Work
When I think of rocket science work in strata, I think of the work of former Building Commissioner, David Chandler on Mascot Towers. This was a complex negotiation. It involved the government, seven main lenders holding mortgages on the lots, a strata lender, investor owners, resident owners, and commercial lot owners. It required years of experience and a strong grasp of law, finance, and construction. It also needed some force to reach a result where everyone lost, but not as much as they would have if they hadn't made a deal.
Applying the Spectrum
In applying the spectrum, I see some recurring themes:
- We charge commodity prices for procedural and grey hair work
- We categorise tasks as procedural when they are really commodity work
- Too much commodity work is being done by procedure and grey-haired people
- There is no well-defined career path for those who seek grey hair and rocket scientist work
The consequences of these misalignments run deep. They upset people that are being overextended as much as those being under-extended.
The wrong retention incentives are applied leading to staff churn.
'One size fits all' operational platforms don't work across the spectrum.
The answer to our broken business model lies in unravelling this tangled web. The prize comes when the right people do the right work with the right tools.
There's a path for everyone who wants it in strata management. It's a pathway to profitability with more grey-haired rocket scientists leading the way.
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
