Remember the property boom from 2000 to early 2008? The paint may have long dried, but in those golden days, almost any “location, location, location” was better than cash in the bank.
Let me refresh your memory: First time home owners, supported by the banks, signed up for the maximum bond. Why get a starter home, when you could join the wealthy and infamous today? Others used their existing property, to trade up for a bigger home or purchase a holiday getaway by coast. If you wanted to change the view, sell up in six months, to another foolish buyer, willing to do the same. Investors jumped on the buy-to-let bandwagon. At social functions, the “smart” person was the salaried employee turned part time landlord, not the tenant. Speculators purchased off plan and sold for a tidy profit, before the ink had dried.
While the property owners, investors and speculators got rich, perhaps the real winners were the estate agents. As long as demand outstripped supply and credit flowed fast, estate agents could easily move their property stock to irrational buyers. Some HR professionals also joined their ranks, hoping to make a six figure income in a relatively short period.
When the market tanked, owners were trapped in their house of debt and speculators lost their title deeds. The falling interest rates didn’t help buyers, cash strapped and strangled by the new credit regime. Estate agents battled to stay on the ground, there were three options (1) Slash head count (2) Close shop (X) Dip into trust funds.
When I first read about the riff between the Estate Agency Affairs Board (EAAB) and Wendy Machanik Properties (WMP) late last year, I didn’t expect to be writing about it. Historically, the relationship between the EAAB and estate agents has been a rocky marriage. WMP wasn’t a fly by night estate agency. The WMP empire has been around for decades, their distinctive red boards and sleek estate agents, as solid as the property on offer. Or so it seemed.
I noticed that media coverage of the EAAB versus WMP, concentrated on the financial issues, largely ignoring the role of talented individuals in this story. For the savvy HRF reader, here is the talent side:
1. The Whistle Blower
The EAAB acted on a a tip-off from a whistle blower regarding alleged irregularities and non-compliance at WMP. The EAAB undertook further investigations and applied to the South Gauteng High court to prevent WMP from dipping into the trust accounts and to appoint an interim curator. We work in a country where whistle blowing, especially in companies, is not promoted and celebrated. When last did your company have an awards function for whistle blowers? Or are they no longer employed?
2. The Ethical Employee
To avoid curatorship, WMP illegally tried to reinvent its name to “White Acorn trading as WMP”. In those dying hours, WMP depended on the actions of one employee, a conveyance secretary to process the changes. The employee refused and the rest is history. In a world where potential corruption is a transaction away, HR must champion ethical business and assist employees in high risk positions.
3. The Invaluable Workforce
As the WMP empire unravelled, their last hope was in the Rawson Property Group taking over their business. But they didn’t. They understood, what many executives don’t: when it comes down to the wire, the value in the business, is not in the brand, the buildings or the customers, but the talented individuals behind it – in WMP, the mass walk out of agents ended the prospects of saving the business. (Many agents quickly secured employment at other estate agencies) So much for the stereotype that estate agents are next to used car salesman, not professionals that bring value to the business.
WMP is likely to be the first case of many irregularities in the estate agents industry. I suspect that the auditors are going to have a field day with other agencies that have been using trust funds to float their business.
(HR Future, March 2011)