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435-649-3998
435-604-7244 FAX
1776 Park Ave.
#242
Park City, Ut 84060
QUANTUM MANAGEMENT SYSTEMS
High Performance Organizations: From Myth to Magic
Page 1
Myth #1
Revolving Door Theory
A Case Study
Observation:
In this real situation the manager recruited better than
projected. Around February-March, he made a decision
that he was "full", stopped and lost his momentum.
We held a meeting with him in May pointing out con-
cern and predicted a minimum of 6 months in lost
revenue and an equal shift in the break-even phase.
He adamantly denied saying we would not see this.
He asserted that he was substantially ahead of sched-
ule; he needed to take care of the people he had so
they wouldn't leave. They left! He went back to re-
cruiting aggressively.
Number of Associates by Month
Situation:
Managers recruit until they "think" they are full, be-
lieving they don't want to artificially create turn over
or have a revolving door. Recruiting typically takes 4-
6 months lead-time; 4-6 months for agent productiv-
ity; 1 1/2-3 months for closing: 10-15 months for a
return on investment.
Profitability Cumulative to Date
Situation:
This represents money involved in a new, start-up of-
fice, from day 1 until all invested money is recovered.
Break-even occurs at the bottom of the curve. Break-
even for the office occurs when the invested money is
recovered. There were two projections by the man-
ager. The first was the manager on his own. The sec-
ond, more conservative, occurred after we had
"couched" the manager on what we felt to be more
accurate assumption.
Observation:
The manager was very competent and dedicated. We
consider him to be an excellent manager who simply
made a single error in his decision. His decision cre-
ated what is called a phase shift. The best he could do
given this phase shift was to recover 6-7 months later.
Notice the illusion of current positive performance in
February and March justified a bad decision.
Total Expenses Cumulative to Date
Situation:
The other variable this could cause profits to shift is ex-
penses (the market remained the same).
Observation:
Barring increases in expenses and a shift in the mar-
ket, we must look to number of agents & recruiting.
It is interesting to notice how well expenses are fore-
cast in 1-2 to actual.
MYTH1.PM3 TM 11/90
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