Sule Aygoren Carranza is managing editor of Real Estate Forum and editor of Multi Housing forum, from which this article is excerpted.

Washington, DC—Professionals working in the multifamily industry can expect small merit-based pay increases this year. That's one of the findings of the National Multi Housing Council's recent National Apartment Survey of Compensation and Benefits Practices. Although strong market conditions are allowing companies to give employees raises and helping them reduce turnover, high healthcare costs continue to be a burden.

Turnover is dropping, but still a significant issue for apartment companies. "While it isn't necessarily surprising, it certainly is noteworthy and something executives and managers should take note of," comments Elizabeth Feigin Befus, vice president of employment policy and special counsel for the locally based NMHC.

Last year's survey found the overall average turnover rate at 59.2%, an increase of nearly 22% from the 37.2% in 2005. In 2007, average turnover dipped to 42.8%. The highest turnover, as usual, was among leasing consultants, at 54.5%--a rate virtually unchanged from the prior year but down significantly from a high of 70.8% in 2004.

There are several potential reasons for the turnover levels, especially for leasing consultants. "Maybe we're not hiring the right people. Leasing consultants do a variety of tasks. I think it's difficult to find in one person the skills needed to be a good leasing consultant. You've got to be able to close deals, provide good customer service, be willing to perform administrative tasks, etc. So maybe recruiting needs to be improved," Befus says. "Hand in hand with that goes training. We can probably do a better job of equipping our leasing consultants with the education they need to be successful. If we've got more successful and more prepared people in their jobs, I think they will be more engaged and more committed and less likely to leave."

Attracting young and skilled talent is just as pressing an issue as turnover is, she adds. However, the industry is doing a better job collectively at attracting new recruits, and the effort begins at the collegiate level. "There are more professional programs to educate college students about the industry and equip them with the background and experience they need so they can bring something to the job at graduation," Befus says.

In terms of the headway in reducing turnover overall, Befus notes that it's a positive sign. "I think downturns in turnover relate to making investments in best practices--better recruiting, being in tune with what is really needed to be successful in that job and making the investments in training," she says. "And, of course, compensation--that's probably the number-one factor."

As for compensation increases, executives at the vice president level and above can expect their merit increases to be similar to last year. NMHC found that salaries should rise by 3.8% this year, the same rate predicted for 2006, although the actual raises for this cohort averaged 4.3% last year.

Merit increases for managers below the vice president level should receive merit increases of 3.7%, compared to 3.6% expected last year and 3.9% actually received. Non-exempt employees--those in non-supervisory and hourly positions such as leasing consultants and maintenance technicians--are slated to see the smallest merit increases, at 3.6%. That's up from 3.4% forecast in 2006 but on par with the actual increase that was seen.

For multifamily firms across the country, the median total compensation for a CEO, including base salary and variable pay, is $500,000 this year, up from $414,900 last year. Top property management executives receive $226,800 (up from $179,600 in 2006); top acquisitions executives get $200,000 ($195,800 in 2006); top construction executives receive $198,000 ($219,000 in 2006); top risk management executives earn $124,800 ($103,000 in 2006); top human resources executives get $105,000 ($122,100 in 2006); property manager in communities with between 100 and 300 units get paid $46,700 ($46,100 in 2006); maintenance technicians receive $30,000 ($29,700 in 2006); and leasing consultants earn $28,000 ($26,400 in 2006).

A persistent and growing issue, the survey found, was rising healthcare costs. NMHC found that median medical benefit costs are forecast to rise 10% this year, following a 10% increase in 2006 and 2005 and an 11.9% rise in 2004. In an effort to deal with these costs, 36.5% of firms decided to increase employee contributions to healthcare plans last year and intend to do so again this year. Companies are also expanding the healthcare benefits they offer, adding prevention and wellness programs. Nearly 92% of the companies that participated in the survey have healthcare reimbursement accounts and 6.8% offer health savings accounts to staff. Another 29% offer stress management programs, 34.4% help employees quit smoking and 26.1% offer weight control programs.

When considering human resources and staffing issues for the multifamily sector, Befus says it's important to look at the market as a whole. "The trends in acquisitions and dispositions, condo conversions, the impact of the credit crisis--all of those things that impact the multifamily business as a whole also impact employment," she says. "Human resources is not a separate part of the business plan, at least not at strategic companies. All of those factors will influence employment."

The report, which was released in two volumes, collected data for 68 positions, ranging from on-site property management positions to CEOs and leasing consultants, in 208 markets across the country. Some 112 firms with nearly 49,000 employees responded to the 2007 survey, which was conducted jointly by NMHC and Watson Wyatt Data Services. In addition, firms including AIMCO, American Management Services, Archstone-Smith, AvalonBay Communities Inc., BlackRock Realty/Metric Property Management, BRE Properties Inc., Equity Residential, Fairfield Residential LLC, Gables Residential, Post Properties Inc., SARES*REGIS Group and UDR Inc. helped to design the poll.

Instant Insights /

Compensation, Turnover Improve

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