Best Practices Paper: Compass Real Estate

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Executive Summary:

Compass Real Estate was founded in 2012 by a group of former executives with experience at Facebook, Google, Twitter, Microsoft, and Spotify. Their mission statement is simple, it is “to help everyone find their place in the world.” This focus on providing this important service to clients is at the core of everything they do. Compass has an interesting dynamic, in that it is part real estate brokerage with offices all over the country and part technology company. According to their website, “Compass is building the first modern real estate platform, pairing the industry’s top talent with technology to make the search and sell experience intelligent and seamless.”

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In just 6 years, Compass has expanded to 23 markets across the US and is looking to now expand globally. The company is rapidly growing in size and has a unique set of human capital issues ahead of them. With their expanding markets, the employees must learn to adapt to different communication and culture standards. And with their constant development of new technologies; training, recruiting, and motivation practices will need to be analyzed and adjusted to accommodate their fast-growing company. The employees are largely of the millennial generation, which also presents a new mindset for how to compensate and motivate their employees.

1. How should the company prepare for the increasingly global world in which it operates? And/or how should the company prepare for an increasingly diverse work force and /or client group? What would best practices be?

Real estate practices depend greatly on the local city and state laws in which they operate. Illinois real estate laws can vary greatly from the practices in any other state including how a license is acquired and what is legal and not legal in a real estate transaction. Compass’s corporate headquarters and regional offices have 100’s of employees supporting the over 7000 agents within their brokerage that cover 23 major metropolitan markets in the US. With that many people within one organization, a solid stream of communication is imperative to keep everyone up to date with company changes and policies.

In late September, Compass announced an additional $400M in funding acquired, valuing the company at over $4 billion. Compass announced that with this additional funding they would plan to expand their agent base internationally. Dr. Margot Weinstein of the MW Leadership Consultants LLC and Metropolitan Real Estate Group Inc. gives several tips in how to best achieve a global real estate business. She emphasizes that despite your business operating in a local market, global economic changes can greatly impact your profitability and market trends. As Compass expands its reach it would be best practice to be sure they have a firm grasp of the culture in which they are expanding to, including communication and language standards and licensing and local real estate laws. As the corporate headquarters for Compass is in New York City, having solid communication policies with their global offices is imperative so nothing will get lost in translation.

As the business expands, diversity training among Compass’s employees would be an excellent way to help spread cultural awareness and appreciation for the local culture in which they are expanding. As Compass is a tech-centric company and customer service focused, it would be fitting to conduct diversity training electronically using simulated scenarios with role playing activities. With over 7000 agents to support, the staff will need to be able to effectively communicate, train, and administratively support their ever expanding and diverse agent base.

2. What legal and ethical issues will the company face, given the nature of its operations?

The nature of real estate is entirely through the legal practices allowed by the state in which you are operating. Almost every aspect of a real estate practice is covered by a state or local law, which can lead to a variety of legal issues if not followed properly. Licensing laws are likely the most obvious areas in which a brokerage or agent could encounter a legal or ethical issue. For example, every branch of a brokerage is required by the Illinois Real Estate License Act of 2000 to have their own license for that office and that “the branch office license shall be displayed conspicuously in each branch office. The name of each branch office shall be the same as that of the sponsoring broker’s principal office or shall clearly delineate the branch office’s relationship with the principal office.”

As determined by this Act, there is a laundry list of activities and tasks that an un-licensed assistant or employee at Compass cannot legally participate in. This could present some potentially ethical situations, specifically amongst the transaction departments. Real estate requires a lot of paperwork, and for an agent to legally list a new property a variety of contracts and disclosures are needed. For a contract to be legal, the client must personally sign and acknowledge all sections required. It is illegal for an agent to sign any paperwork on behalf of their client unless they have a legal right of attorney to do so. With the nature of these sometimes complicated transactions, some employees may find it “easier” or “faster” to complete paperwork themselves in order to not slow down the transaction process.

There are also strict regulations for every brokerage on how to handle escrow monies. This includes recording every dollar amount that comes in and out of the escrow account and having records dating back for at least 7 operating years. There are several legal policies safeguarding the use of this money in order to prevent commingling, which is defined as “Illegally mixing personal funds with money held in trust on behalf of a client.”

3. What are the most likely uses of job analyses in the company and how should it conduct the process? What would best practices be?

Since Compass is a rapidly growing company, job analysis is imperative in order to grow and expand their staff both at the headquarters, and at the regional offices. The job analyses should line up with their overall business strategies of expanding their reach to more and more real estate markets in the US and globally. Many of the positions at Compass are new or created specifically out of a need given by the agents, so a job analysis will also help analyze its current staff and can help adjust the job descriptions to more accurately define the work and improve the hiring process to fit the company’s current needs.

Because the majority of the company’s positions are directly related to supporting the agents, including the marketing, transactions, and agent operations staff, it would be best to conduct interviews or send out questionnaires to the real estate agents themselves. It would be insightful to get their opinions on what they feel are the important qualities and skills for this job to in order to best support them. Also, since their main concern is agent operations and customer service, it may be helpful to do some observation of the employees in order to see for yourself what type of problems they might encounter throughout a typical day, how often they communicate directly with the agents, and how important it might be to multi-task.

4. Select a position within the company and recommend what should be done to recruit and select employees for this position. What would best practices be?

One very important position within Compass is its Agent Operations Associates. These employees are tasked with training, advising, on-boarding, and supporting the real estate agents in their region. It is not required for this position to have a real estate license, as they do not deal directly with any client data or transaction related information. Since this role’s tasks are almost entire customer service based, the recruiting and selection processes should focus on the skills and traits best suited for working with a wide variety of people. For best practice, personality testing should be included as part of the selection process. Some research concludes that a person’s traits and personality, which are long term and not trainable, are at the core of customer service competencies, as supported by this graph by Spencer & Spencer (1993).

And because customer service-based positions rely heavily on traits, behaviors, and attitudes; situational and behavioral questions are best when conducting in-person interviews. These questions can help gauge someone’s behavioral tendencies when solving problems, dealing with difficult personalities, and communication skills.

5. What should the company’s overall approach be to training and development and what major programs should be delivered? What would best practices be?

Compass is not only a brokerage, but also a technology company. Part of Compass’s mission is to create a modern, high-tech way to navigate the real estate experience both on the client side and agent side. This technology includes all aspects of how to handle paperwork, create marketing materials, send out email, communicate with clients, and all other agent-related business tasks. Because of the nature of this type of company, constant training and development on this new technology for the employees is imperative to achieve this mission. Everyone from the transaction team, marketing department, and agent operations department needs to have a good grasp of the company technology in order to be successful in their positions.

Because training is so important to this company, it would be best practice to provide access to training materials and information at all times. A company portal containing step by step instructions, training videos, and other important information should be available. Having scheduled trainings that can be attended in person or via a video conference would be helpful on a continual basis, so that everyone has the opportunity to learn at any time. Having designated “Product Experts” would also encourage the learning and development of all the employees by providing a personal training resource that can answer questions live and in real-time.

6. What should the company do to manage performance? What would best practices be?

Many of Compass’s positions are high in customer service and require a lot of interpersonal skills. Regular performance appraisals would be ideal for all positions, especially for those with the highest level of risk like those in the legal and transactions departments. Much of the measurable performance is highly dependent on the ability to assist others and be compliant with real estate policies and laws. To measure this performance, a 360 degree feedback questionnaire may be helpful. With this method, you can obtain information on how well the employee communicated with the other departments and how well they assisted the agents they were tasked with supporting.

For those employees in the technology development department, an electronic method of measuring performance may work best as their work is based around their outputs. This could include analyzing their progress over time, as it pertains to a certain technology initiative they are trying to create or maintain. Their individual performance should be measured against the overall productivity timelines determined for each project they are working on.

7. What should the company do to determine compensation policy and practices? What would best practices be? 8. What kinds of benefits should be provided? What would best practices be?

Since the majority of Compass’s employees are measured on their performance and not their physical outputs, it may be best to determine appropriate compensation by benchmarking, and comparing Compass with other similar companies within the real estate industry. But compensation should not just include a steady paycheck. According to several research studies done by Time Magazine, Gallup, and LinkedIn, the millennial generation is not just looking for a steady paycheck, but also added benefits like a flexible work schedule, opportunities for professional development, and an emphasis on work-life balance. Such benefits might include free training and development opportunities through partnerships with leadership conferences and local consultancy companies. A flexible work schedule can be offered through a job-share program, or the option to work remotely a few days out of the week.

8. What kinds of practices/programs should be developed to foster positive employee and/or labor relations? What would best practices be?

The agents of Compass are the core of the company’s business. Fostering positive relationships with the agents is important to their business and should be a focus of their employee engagement efforts. Because of the technology focus of Compass and the constant release of new programs and features it may be a good idea to introduce a competition amongst the agents to encourage use of the technology products and foster some communication and friendly interaction between agents who may not otherwise interact. In an article written in Harvard Business Review, in order for a competition to foster innovation the competition needs to focus on the value of the results and not just the results themselves. If agents are competing on who can use the Compass products and tools the most, or who is the most improved, it means they will be actively using the Compass products and thus being able to provide valuable feedback to the software team on what they think may be changed or improved upon. An open platform for communication of this feedback and suggestions should be provided as well.

Company branding is also important for positive employee satisfaction and motivation. Creating a consistent company culture and brand that echoes in all that they accomplish fosters a strong sense of community and organizational identity. In this chart from HBR, you can see that organizational identity and community is among the top four sources of employee motivation.

Because Compass has offices all over the US, a consistent identity is important to keeping a sense of employee pride in being a part of a company. And each Compass region should celebrate their local community by promoting a company-wide volunteer project, hosting all-region happy hours and events, celebrating office birthdays, and agent accomplishments. 

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Best Practices Paper: Compass Real Estate. (2022, Sep 29). Retrieved December 10, 2022 , from

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