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Managing Disgruntled Staff: Risk Management for Real Estate Brokers

Managing disgruntled staff can be difficult in any profession. In a real estate brokerage,  disgruntled staff members have the potential to make life very difficult for a broker, sometimes to  break policy or even go rogue. Their reckless actions may put your brokerage at significant risk. Brokers need to manage a disgruntled staff member swiftly and professionally to minimize the risk. 

 Here’s what can go wrong with disgruntled staff and what brokers can do to manage them (and avoid lawsuits in the process). 

Disgruntled staff can affect the whole team

A disgruntled team member’s behavior can have a big impact on the rest of your team. There is often a ripple effect that can result in a hostile and negative working environment for the whole team. It can cause your hardworking employees to become stressed and unmotivated. Unhappy employees are not productive employees. Clients may be subjected to negative conversations and an uncomfortable atmosphere when they visit the office. Just one disgruntled employee can make a significant impact on your business. They can also have an extremely negative effect on your bottom line profits.

Potential legal issues that could arise

Disgruntled employees are a major risk to a real estate broker. Their actions and behavior could lead to a lawsuit. One of the major concerns is intellectual property (IP) theft. A disgruntled employee may steal a broker’s trade secrets, ideas, and information critical to the running of the brokerage. 

Disgruntled staff also put confidential client information at risk. It’s not uncommon for disgruntled people to try and take their clients with them when they leave — and potentially the clients of other licensees too. They might steal information to use it themselves. Or, they might use it as an act of sabotage against the brokerage. If confidential information is stolen and shared, this puts a broker in a particularly vulnerable position legally. Clients may sue the broker if they find out confidentiality was breached and that breach has caused them loss or damage.

 There is also the chance a disgruntled person may sabotage information systems. For example, infecting the system with viruses, deliberately deleting files, or otherwise causing chaos. 

A disgruntled employee may speak badly about the brokerage and other real estate licensees. This can cause damage to a broker’s reputation and drive away clients. Even if allegations are being made that are untrue, brokers could find themselves facing a lawsuit to defend their name. 

There isn’t anything worse than a disgruntled employee that sticks around a brokerage, even though they hate it. These people provide the worst kind of service to your clients, which increases a broker’s risk of lawsuits. If a disgruntled team member is not committed to your brokerage and their work, they are a liability to your business. 

Tips for Brokers 

Deal with the issue ASAP

Team management is a big part of a real estate broker’s role. Managing a disgruntled team member can be a difficult proposition, but  it’s something that needs to be done swiftly. Disgruntled people in your business increase your risk… a lot. Don’t wait to take action. 

Find out the heart of the problem

When you first find out about a disgruntled employee, it may be secondhand or thirdhand information. When you’re speaking to disgruntled staff, be sure to listen to what they say. Try to find out exactly what the problem is. Not all disgruntled employees go on to sabotage the business and leave in a dramatic fashion. There may be an easy solution to the problem that can improve the team member’s contentment with their work situation. For example, they may be wanting more challenging work and feel overlooked. There may have been a misunderstanding that can be quickly cleared up so everyone can move on. Try and find out the heart of the problem, and make sure you have the full picture before jumping to a decision about what happens next.

Consider access to systems and information

Brokers should consider limiting access to systems and information for disgruntled employees. This can reduce the opportunity for a disgruntled team member to access sensitive data and use it inappropriately. Ideally, brokers should have these limits in place before they discover a disgruntled employee. Your team needs access to information to do their jobs properly, but they don’t need access to every piece of information that exists within your brokerage. Having everything available to everyone is bad information management.

Make sure your offboarding policies and procedures are in place

It’s important as a broker that you have policies and procedures in place to cover things like:

  • Your Brokerage Code of Conduct – setting out what expectations you have for your team and what behaviors are and are not acceptable.
  • Performance appraisals 
  • Termination 
  • Exit strategies and processes – This should include a checklist that walks through the process of offboarding. Cover things such as key returns, alarm code changes that need to be made, equipment returns, handover expectations, and post-termination non-disclosure agreements.

If you do end up terminating a disgruntled employee or independent contractor, it needs to be done lawfully and carefully to protect your business. 

Protect Your Real Estate Brokerage 

Insurance offers essential protection for real estate brokers. It can help to defend a lawsuit if the actions of a disgruntled team member result in you facing a claim.

 CRES offers a comprehensive Business Owner’s Policy, as well as Real Estate Errors and Omissions Insurance and Cyber Liability coverage. Backed by one of the largest insurance brokers in the world, CRES has access to more insurance options for real estate offices than just about anyone. Contact the team at 800-880-2747 for a confidential discussion today.

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