The Science Of Sacking Clients And Its Profound Effect On Strata Management Profitability

The thought of sacking a hard-won client is an anathema to most strata management business owners. However, in this article, I argue it is essential for a better future for strata management that 20 % of your owners corporation clients should be sacked each year. 

If you are receiving 100 to 200 emails overnight and working nights and weekends to keep up with your work, as many strata managers do, then you need to embrace two scientifically proved mathematical theories to find a new way of working. 

The first is one that you would’ve heard about many times, the Pareto Principle, more popularly known as the 80/20 rule. Pareto (1906) studied the relationship between population and wealth and found 80% of Italy’s land was owned by 20 % of the population. Juran (1941) applied this theory to quality control and improvement and found that 80 % of consequences come from 20 % of causes. 

This simple equation has profound impact for strata management businesses. For example, 80% of your emails will relate to 20 % of events that routinely happen in strata. The rational response to this is study what those events are and find better ways of solving those problems so people don’t send emails about them. Simple. 

‘But this takes time’, I hear you say. ‘How can I take the time to investigate and innovate when I’m never on the front foot’. Good point. Again, Pareto provides the answer – 80 % of the stress your team suffers at work come from 20 % of the schemes they manage.

You can probably name them off the top of your head. Here are the indicators of those that should be for the chop - 

• Warring factions within the committee
• Riddled with outstanding and unfunded repairs and maintenance 
• Overbearing chairperson 
• One resident ‘constant complainer’ who’s emails are riddled with capital letters, exclamation marks and key ‘C’ words – corruption, conspiracy, contempt.
• Constant demands that you do more for less.
• Unsigned management agreements 
• Unable to agree meeting dates. 

These are the strata schemes that suck the life out of you and your team. How pleasant would work life be without them? So why do we hold on to them so tight and renew our contracts with them year after year without increasing the base fee and charging additional fees for out-of-scope services? The answer lies in the second theory, Prospect Theory. 

Prospect Theory, as advanced by mathematicians, Kahneman and Tversky (1979) holds that ‘losses loom larger than gains’. This research showed that the pain of losing something is about as twice as powerful as the pleasure of gaining something. So, in strata this means that we hold one to an existing painful client rather than risking the loss of them for a better outcome, including more time to spend on better work and better clients. 

An elementary grasp of the science of these things helps us understand our own behaviour. We are humans. This is the way we are wired. But that’s not to say we can’t and shouldn’t reframe our thinking to get to a better place at work. To achieve new levels service and job satisfaction we must be brave and overcome our intrinsic fear of loss. 

If you would like a free copy of my template letters telling people they have been made available to the market for alternative strata management services, be in touch.