139. Jamie Russo shares Compensation Strategies for Community Managers

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139. Jamie Russo shares Compensation Strategies for Community Managers

00:00:01 Welcome to the everything Coworking podcast, where you learn what you need to know about how the world wants to work. And now your host, co working space owner and trend expert Jamie Russo. Welcome to the everything Coworking podcast. Today we are going to talk about why bonus structures may not make sense for community managers and generally, how to compensate community managers before we dive in. The Coworking startup school is about to open. Actually, if you're listening today, it opened today, so you have about a week to jump in.

00:00:51 If you are interested in the program, go to cover King startup school dot com, and you will get the details in your email. The co working startup school program is for you. If you are ready to invest in your co working space and want to avoid costly mistakes and get to profitability faster, we will help you to avoid stress by getting expert and peer support in a highly facilitated environment. We want to make sure that you create the right space for you and your target market right from the beginning,

00:01:26 and we want to make sure that you get the business model rights they're set up for financial sustainability that matches your goals, will review your pro forma help you with your product mix design, sourcing, furniture, working with vendors, getting your marketing systems down, hiring the right team or learning how to run the space yourself. Getting set up with the right tech and more. You can piece some of the support together from the pod guest and from the everything coworking Facebook. But this program is for people that want to invest in access to a package that fast tracks them to success and provides the information resource is and support that you need when you need it,

00:02:05 and in the order that you need it accompanied by individual access to me, other industry experts and a curated peer group. So again, if this sounds like a fit for you, go to Coworking startup school dot com to get the details. Okay, so today we're going to talk about compensating community managers. This topic comes up a lot in for Michael working startup school members and in my flight group. Certainly for new operators, this is a hot topic, because oftentimes they are, you ve slash you are operating a co working space and then transition out and hire their first manager.

00:02:46 And all of a sudden they get really anxious about replacing themselves with someone who cares about the business as much as they dio. I was totally in that camp, so I opened my co working space in Chicago. I don't tell this story very often. My husband, uh, waas in finance, and I had said to him, Okay, some opening this local business. We need to not move for a long time. Cool, he said. Cool. Okay, we're good. Months after I opened,

00:03:21 he came to me and said he had a non opportunity in the same Francisco Bay area that we needed to consider, so that was fairly traumatizing. About a year after I opened that space, we moved to Palo Alto, where I quickly was fortunate enough to meet some partners and open a second space. But it was a big transition for me as an owner. I had been running the space and suddenly had to hire somebody, which was the plan. But I had to do it faster than I had thought I would and had that exact feeling that I just described where okay,

00:04:01 I'm used to selling. I do all the things I sell. I do all the community building, all the relationship management. And now I have to hire somebody who's going to replace me. And I want them to feel as committed to the business as I feel. Especially now that I will be a five hour plane ride away.

00:04:22 So, um so I immediately instituted a bonus structure that was very generous and very focused on Bring on new members.

00:04:31 And I remember I was only a year in business that we were not even at full capacity yet. So I was still building my business.

00:04:39 And this is common, you know it can take. It depends on a lot of things. My product mix was also not right.

00:04:45 I had to fix that after I moved. Had to manage a construction project remotely. So this is you know,

00:04:52 all these things that I learned lessons that I learned are, you know, part of the reason that I run the Coworking Startup school do this podcast.

00:05:00 I've learned a lot of hard lessons that I want others to not make, and I have had visibility into dozens and dozens of Coworking businesses with my other hat,

00:05:10 and I see the framework that works to set up a successful space and have done that myself with him.

00:05:16 With the bell of all the space but back to my Chicago space and hiring my first community manager, I put a bonus unstructured structure in place that literally we rewarded every single membership that was closed pretty significantly,

00:05:31 because I was so nervous that the person that replaced me would not be focused on bringing on new members,

00:05:37 which we still needed to. D'oh. And I realized fairly quickly that that was expensive and that the person I was had hired would was going to do the things she was gonna do regardless.

00:05:52 And so I knew that I didn't have the structure quite right. And this has taken some time and really learning from other,

00:05:59 much more experienced operators. How best to approach this? So let's talk about this. Let's back up and talk about aligning interest,

00:06:10 creating bonus structures, and to do that, I think it's important to look at the role of the community manager and the hats that they might wear.

00:06:19 So I have a list in front of me that I'm gonna post to the blogged. I'm not gonna read them all out loud because it's a long list.

00:06:27 As we know, the typical Coworking community manager wears a lot of hats, so I like to bucket them.

00:06:34 I also run a program called Community Manager University, and I bucket the training and content into these five areas community building operations,

00:06:45 sales and marketing, finance and leadership. So I'll just, you know, read a few if you already have a space,

00:06:51 you know these very well. Community building includes building relationships with members hosting member of ends, making connections among members operations on boarding off boarding members,

00:07:02 keeping common areas. Need an organized ordering supplies, making a lot of coffee, opening and closing the space.

00:07:09 Lots of operational items, sales and marketing scheduling two hours for perspective leads responding to Leeds via email and phone.

00:07:18 Giving those tours following up on leads posting to social media is often one of those hats posting to the Google.

00:07:25 My business page soliciting reviews for Google and Yelp Finance might include involvement in managing monthly member building. Billings are things that are both automated and manual.

00:07:37 Um, and then the leadership Bucket can vary depending on whether the community manager is managing other team members,

00:07:45 but often it will least involve things like tracking key performance indicators, running weekly team meet meetings. So,

00:07:53 needless to say, without going through the rest of the list, most community managers are really busy. And they wear a lot of different hats and have a lot of different areas of focus in the business,

00:08:04 not just sales. And when we're talking about a bonus structure, typically a bonus structures pointed at, you know,

00:08:13 a revenue target, right? So let's talk about what percentage of time that a community manager might allocate to these buckets each day.

00:08:24 So I'm gonna suggest, and this may be different your business, but just roughly that they're spending like 30% community building,

00:08:32 30% operations, 30% sales and marketing, with the other 10% roughly going to finance and leadership super rough swag.

00:08:41 But let's just say, you know, roughly they're spreading their time over community building operations and sales and marketing,

00:08:48 so they're not even pointed at sales and marketing all the time. Um, and two of these buckets,

00:08:53 operations and community building are really more about member retention than membership growth. So when I left Chicago, I was very focused on filling the space.

00:09:06 And so my bonus structure was just based on bringing new people in the door had nothing to do with member retention and membership growth.

00:09:13 So if I'd had the wrong person in that role who was just super pointed at that incentive, then they would have spent all their time selling and basically ignoring members members and only doing,

00:09:24 you know, the basics to get new members on board, which we don't want. So most community managers are more responsible for nurturing leads and then retaining members than on filling the top of the funnel,

00:09:39 making cold calls, attending events, doing outbound outreach to get leads into the funnel. If you have that person,

00:09:47 it's probably a sales role. The community manager is so busy with all of their hats, they probably don't have time to do that.

00:09:58 In my experience of good, Higher will manage leads and follow up on leads and bill were build relationships with members like it's their job without a bonus structure in place.

00:10:09 Ah, bad higher will not manage your leads like you would even with a bonus structure in place. So just to kind of get to the fundamentals,

00:10:20 you need to have the right person in the seat to begin with. And then the bonus structure is really about how you want to appreciate their focus on your business.

00:10:31 It's not for the community manager role, so much aligning incentives, but we'll talk about that in a minute.

00:10:38 So if you're looking for Ah Hunter, that person to fill the top of your funnel to G. O,

00:10:44 you know, build relationships with the attorneys and the accountants and Goto event and go to the B and I lunches et cetera,

00:10:52 then hire for that profile. If your team member, which is typically you know first your team member is going to be a community manager,

00:11:00 doesn't have a sales background, and they're not a natural hunter with training on how to hunt, they're likely not going to hunt because A they don't have time and B,

00:11:09 it's just out of their comfort zone or they don't enjoy it. You know, if you do, you know a behavioral assessment like it just is not.

00:11:17 The sales hat is not going to line up with the nurturing hat. The hunters don't spend time nurturing right,

00:11:24 The hunters go, go, go, go! After the sale, one of our G W A board members was giving us her perspective on the sales role.

00:11:32 We're hiring a business development team member for the G W A and kind of talking about, you know,

00:11:38 that hat and how does it fit And can they do you know other things, or do we have to hire somebody who's really only focused on sales?

00:11:45 And she said, they have sales people that air so wired to sell that they want to spend zero minutes doing paperwork like they don't want anything that gets in the way of them going after leads,

00:11:57 which is amazing, right? But can you imagine a community had a sheriff that doesn't want to do paperwork or admin work?

00:12:04 It just doesn't fit right. It's hard to put both of those hats on one person. So here are some things to think about in terms of the compensation package.

00:12:16 We again we probably are looking at a community manager. If that's who we're compensating. We're not talking about a sales manager,

00:12:23 right. If you have a sales manager than that is an incentive based, bonus based structure that you want to put in place.

00:12:30 But people tend to want to put that on a community manager to get them lined up with, you know,

00:12:35 filling the space and growing the business. So we want to remember that, really, they're responsible for nurturing leads,

00:12:42 and that's part of their daily roll part of their job. So here's how we do it just as an example,

00:12:49 and this is only an example. It is not prescriptive. We've a quarterly bonus structure that pays out 12% of quarterly operating profit.

00:12:58 80% of the bonus pool goes to community managers, and 20% of that goes to the functional team, which includes marketing,

00:13:04 accounting, et cetera. This structure rewards closing deals, retaining members and managing expenses. That's a big deal,

00:13:13 right, because the other situation you could get into is a community manager who's like, I'll make everybody's day free lunch three times a week.

00:13:22 You don't want that either, right? So you want that person who's really looking at the piano as you would and managing kind of all aspects of revenue retention and expenses.

00:13:36 So for me. In my experience, I look at that quarterly incentive as a bit more of a thank you for being committed to the members and two supporting this business versus being a really big carrot because of all of the non sales roles that our community managers play.

00:13:54 As a matter of fact, my newest community manager, who is a maze seeing I had forgotten to review the bonus structure with her when I hired her.

00:14:03 So the end of a strong quarter came. She is just a perfect profile for this role. Members love her.

00:14:11 She draws people in really well, and as we know, that's a really chicken or egg cycle if she gets more members into the space and members or happy more members come in and just a really good reinforcing cycle,

00:14:23 which is going really well with her personality and approach. So we got to the end of a great quarter,

00:14:30 and I mentioned the bonus to her, and she just kind of looked at me and she said, Well,

00:14:34 thank you. She's like, I kind of don't you know it's not necessary. I appreciate it. I would you know,

00:14:40 I would have done the same job anyway, which she had done without knowing that there was a bonus structure in place.

00:14:46 So, you know, she was kind of making the point. And not everybody would have this personality,

00:14:51 of course, that, like, not necessary. But thank you. Um, and I love. There's a book called Drive.

00:14:58 The Surprising Truth about What Motivate Us motivates us by Daniel Pink. It is a great read and get it on Amazon or audible or however you get your books.

00:15:08 Then it talks a lot about how humans respond to incentives, and it's somewhat surprising. And I think it will make you think about the types of incentives you wanna have in place for your team and one of the things that I got out of this book and other operators that I work with do this for their team as well.

00:15:28 They'll save a budget for unexpected thank you's for when the team goes in above and beyond the call of duty.

00:15:36 That way, you have ways to serve unexpectedly. Thank your team. So have that predictable incentive in place that has a formula that everybody understands but also save some budget for the unexpected.

00:15:49 Thank you's which the book drive will tell you like is actually a really big deal and sometimes more appreciated than the expected bonus come with compensation so that all you know,

00:16:03 being said food for thought on how to structure your bonus. You know, make sure your manager is.

00:16:12 You know why? I'm saying the manager wears different hats. Clearly, the lead, nurturing and lead follow up hat is a critical one.

00:16:23 So even though you're not thinking of them as the sales machine absolutely trained them on your sales funnel, train them to give an amazing tour,

00:16:34 teach them thio close leads and make sure that you have the systems in place for the right accountability and the right lead.

00:16:43 Follow through and make sure it's super clear to your manager how to spend her day. So we talked about of what typical the 30 30 30 split.

00:16:54 New managers don't know that until you tell them right. So it's super easy for managers to get focused on relationships with members,

00:17:04 for example, and not spend the time doing, you know, posting to Google and doing things like making sure the Google my business listing is updated and social media posts are are active and at the right frequency,

00:17:19 so you want to make sure you are explicit about how the daily split should look. So what percentage of the day should be spent on interacting with members on lead?

00:17:29 Follow up on keeping the conference room's clean et cetera. You may have a community manager that gravitates towards one of those buckets,

00:17:37 so make sure you train them on the right balance and create accountability systems, like in your weekly meeting with them to ensure that that's how they're spending their day.

00:17:47 So just another example. One of my flight group members shared the following, he said, Our space of the community manager and a sales manager.

00:17:55 So our community managers are incentivized on overall performance of the business, and our salespeople are incentivized on hitting the revenue budget.

00:18:03 Sales managers air wired to go, go, go. And if you don't have one, that is,

00:18:07 Go, go go then you might want to reconsider whether that person is the right fit, he says.

00:18:14 Our incentive is fixed for each quarter and based on a minimum of 80% of revenue achieved, the community manager and the sales manager are eligible for a portion of that defined bonus.

00:18:26 They need to hit 100% of the target to get 100% of the bonus. And he added that we have noticed the community manager going after meeting at events revenue to help push that overall revenue each month.

00:18:38 So having a formal structure in place can help with that focus sort of on the fringe where you need that to happen.

00:18:48 Um, so ultimately, how you compensate your team is a personal decision that will be based on the market conditions in your local area and which hats you want your community manager to focus on,

00:19:00 and your personal experience and experimentation with compensation packages that work for you and your team. But I thought it was helpful to kind of just talk through all the hats and what makes sense in terms of aligning incentives and what toe create that structure around.

00:19:17 So there is a block post related to this topic on the block. Get everything coworking dot com and just a reminder.

00:19:24 If you are opening a co working space in 2020 and want to make sure you avoid costly mistakes and create a profitable,

00:19:33 sustainable business that you love to run. Goto Coworking startup school dot com to get the details

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Jamie Russo