Purplebricks is backed by British fund manager Neil Woodford’s Woodford Investment management with a leading 29.2 per cent stake.
Some of the blame for its dismal performance as a listed company in 2018 has been attributed to Australian business, which recently underwent a major restructure and the appointment of a new Australian chief executive, Neil Tavender.
Operating losses at Purplebricks Australia ballooned 76 per cent to £10.2 million in the six months to the end of October, the company revealed in December.
Investigations by The Australian Financial Review last year revealed a mass exodus of “broke” agents, accusations of a toxic culture made by former agents, and a vendor-discounting competition run in NSW. The company was also fined by the Queensland Office of Fair Trading for misleading consumers and was investigated by other state consumer watchdogs.
As part of the restructure of its Australian business, Purplebricks increased its fixed fee to $8800, but split the payment between an upfront, non-refundable $4400 marketing payment and a $4400 success payment if a sale was achieved. This allowed agents to double their fees per listing to about $2000.
The restructure included the removal of company-employed sales assistants, some of whom have transitioned to become real estate agents, and the move to a more pure franchising model, with all territory managers (franchisees) and agents required to sign new work agreements in December.
About 14 sales associates were made redundant as part of the restructure, Mr Tavender said.
He said the restructured workforce gave more control to territory managers who were “afforded the opportunity to run a business within a business, while receiving extensive support from Purplebricks head office”.
“This was always the intention for the Australian market,” Mr Tavender said.
“Under the restructure, we have increased the number of local real estate agents [LRAs] across our business, who are now servicing smaller regions to ensure the highest level of customer service.
“These LRAs are benefiting from the increased remuneration scheme we introduced in October, which provides them the opportunity to double their income per listing,” he said.
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