significantly increased productivity and profitability
However, some property owners will argue that the obstacles
presented by outsourcing (cost, quality, response time) can be • • economies of scale, or efficiencies of scale, are better with
overcome by partnering with the right property management outsourced managers because management is their core
company. It really boils down to how much time, money and business, so they can negotiate good rates with suppliers or
service providers
energy you want to spend on property management.
• • best practice and benchmarking, because management
Quality companies are more aware of best practices in the industry,
Improved service is the number one way to increase retention in and are better able to benchmark your performance against
your development. This makes service quality a primary factor others in the industry, allowing them to identify and address
to consider when deciding whether or not to outsource. potential problems and inefficiencies sooner, or avoid them
altogether
An outsourced contractor can provide flexibility in staffing levels • • risk reduction, because, by outsourcing to a management
that would be difficult to manage with an in-house staff. They company, you wash your hands of some responsibilities.
can also provide you with expert specialist knowledge that
might be difficult to cultivate in-house. Developing in-house On the other hand, managing your development in-house also
competencies is not efficient if these skills are not needed on a has its advantages. You can:
permanent basis. • • stay in control, because no outside interests will influence
your management, and you can maintain complete control
over every aspect of your development
However, keeping an in-house staff does come with its own
benefits. In-house employees are generally more loyal to a facility • • take advantage of familiarity, because in-house managers
and will accumulate much more knowledge of your business know your organisation, including your company culture,
policy and overall philosophy
model over several years of service. Outsourced property
management, on the other hand, often sees a higher employee • • maintain a harmonious working relationship, because in-
turnover rate, which means that any specific knowledge the house managers can more accurately judge the validity of
employee has about your property will be lost when they leave. employee requests, such as asking for additional resources
or delegation of authority
• • more easily enforce company policy, because an in-house
Cost
manager is part of the established chain of command, and
A major consideration when debating in-house vs outsourced
property management is the cost. Consider the Pareto Principle, has access to in-house communication systems and policies
which states that 80% of the work is done by 20% of the staff. • • protect your relationship with your shareholders, because
This is a significant amount of employee downtime to consider. your internal manager is in the best position to observe how
As stated above, outsourcing allows for greater flexibility in your management practices affect your relationship with
staffing levels, which could translate into lower labour costs and your customers, and to intervene if necessary. For example,
a lower investment risk. a cost-saving measure that looks good on paper may result
in inconveniences to your shareholders – and potentially
On the other hand, keeping your property management in- lose you business, loyalty or support. Your own employee
house gives you the ability to account for fixed assets, and on the front line looking out for your bottom line is better
maintain tighter control of your budget. Fixed assets mean you able than an outsider to understand and protect that critical
don’t have to use your judgement when it comes to volume or relationship.
inflation costs. They also come with limited variable costs, so it is
easier to stick to a budget.
In conclusion
If you can, run the numbers. Take all expenses into account:
vehicle acquisition, maintenance, payroll, training, cost of Sometimes, the best solution is to choose not one option, but
compliance, etc. If your costs seem inordinately high, you may both. Maintaining an internal manager as a liaison between
benefit from professional management or consultancy. your company and your shareholders can allow you to benefit
from outsourcing, while ensuring seamless communication with
employees and customers. It’s simply called consultancy.
Weighing the options
Whichever option you choose, don’t just ‘set and forget’. Your
Outsourced and in-house property management both have a performance directly impacts your business, so don’t neglect
multitude of variables that can impact their level of effectiveness to review it often, and re-evaluate your options as the need
in different situations, so you need to consider both options arises.
carefully to find the solution that works best for you. Remember
that the lowest price option may not actually be the lowest cost If you can’t imagine releasing some control over
solution long term. to an outside company or professional, think
twice about outsourcing. You should not hire
The advantages of outsourcing include: professionals and then tell them how to do
• • increased core business efficiency, which allows you to focus their jobs.
more completely on your core business, which can result in
Francois Schoeman, CEO Pecanwood Estate
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