Macquarie Bank recently released its 2024 Strata Management Benchmarking Report. The industry-leading bank surveyed the views of 270 leaders across the strata industry, with each participating business, most of which have been operating for more than 10 years, providing data on business operations, people, and financial performance.
The report found that despite revenue increases and the unequivocal growth in the strata market, overall, the average profit margins for strata businesses are in decline, and noted that to restore margins, businesses must increase their fees and adopt tech-driven cost efficiencies.
Despite an overall downturn in profit margins, the report also identified a group of ‘higher performing’ strata management businesses that have thrived through the turbulence of the last three years.
In their key findings, they found that 22 per cent of businesses (one in five), met the definition of ‘higher performance’ – meaning they have a growing revenue stream, they achieve a 20% profit margin, and they manage at least 1000 lots.
So what makes a Strata Company perform better than others?
Using extensive analysis and industry acumen, Macquarie Bank identified four key traits ‘high performers’ possess:
They invest more in technology than other businesses, enabling their staff to work remotely and collaborate more easily online.
They offer more competitive remuneration packages to both junior and senior strata managers, and reward staff by aligning incentives with performance.
They invest more in acquisitions and have taken a larger share of organic growth.
They focus on smaller plans. This gives them greater control over costs and risks with less complexity and enables them to earn more revenue per lot.
Why investing in technology is pivotal for the Strata Industry
Strata management involves a high degree of administrative and repetitive tasks such as invoice & work order processing, insurance claims, generating levies, creating meeting agendas and the like so it goes without saying, the more automated tasks are, the less bogged down a strata manager will be. Furthermore, applying integrated technology with uninterrupted workflows to this process provides strata managers with more time to focus on tasks that require more customer engagement and emotional intelligence.
Despite the obvious benefits of task automation and integration, not all strata management agencies have invested in technology. Disappointingly, some strata managers have even reported that their company’s systems make their jobs even more difficult, leading to customer complaints which results in, yes, further work!
Investing in technology aimed at bettering an employees’ time at work, leads to a better employee experience, thereby improving employee retention and engagement levels.
By keeping technology up to date and aligned with employees’ goals, company leaders can zap areas of tech-related frustration, create operational efficiencies, and restore margins.
What’s more is that it’s easier for companies who have invested in technology, to attract and retain staff and still manage salary costs, which in a tough labour market, is pivotal to the overall survival of the company.
Commenting on the findings of the report, Macquarie Business Banking’s National Head of Strata, Tim MacKenzie said “Technology enables strata to improve efficiency, build connectivity and offer flexibility – something that’s incredibly important in attracting and retaining top talent.”
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