The “New” Management Challenges

Welcome to “déjà vu all over again.” Assuming you have management responsibilities within your organization, how are you accepting and handling the current market contraction? Stressed? Worried? Cutting staff? Scrutinizing overhead costs? “Woe is me” or “This too shall pass?” If you have ridden the learning curve of past market contractions, you have learned a few lessons. Hopefully you remember most of them. If you are relatively new to your management responsibilities and have not yet earned “war horse” status, your learning curve is rather steep. In an effort to rekindle war horse memories and decrease the pitch of the learning curve for newer managers, I offer the following management observations and suggestions:

Market Contraction Creates Greater Scrutiny
You suddenly are on an island. The “cover” provided by unheard of volume suddenly disappears when things slow down. Increased visibility means the “you will be held accountable” mantra is no longer empty rhetoric. Not that you haven’t been accountable in the past, mind you, but a new level of accountability will now be applied. Get ready for it. In fact, if you are smart you’ll get ahead of it. Become more proactive in a time of change, not reactive. For major brokers, “cost containment” is a by-product of greater scrutiny. Although you cannot “cost contain” to profitability, you can be sure that someone is closely watching the bottom line. Greater visibility today means you must manage and lead differently tomorrow.

The next time you have the chance to address your team, you may consider asking the following question: “What do you think you may have to change given the current market contraction we are now experiencing?” If the response is “I don’t think I need to change anything,” you may contemplate the value this employee brings to the team, because they are clueless. If, on the other hand, a few members of your team respond with: “I think I need to get back to basics more than I have” or “I need to change my marketing strategy” or any number of responses, you will know you have a team member worth keeping. The key, as an effective manager, is to create the environment in which this discussion can take place. Your management skills will be enhanced by allowing your brokers and operations team to self-determine the actions they believe will be necessary. Greater scrutiny therefore need not be limited to hierchy or third-party pressure—it is actually more effective if it is the result of “self-discovery.”

Get Out Your Chair and Whip
Greater scrutiny brings many difficult characters out of hiding. When suddenly confronted for applying yesterday’s business approach to a new reality, many people become a caged lion. This behavior will severely tax your management skills. If a group of caged lions is not a management challenge, what would happen if you added a bunch of “territorial protectionists” to the mix? The reactive behavior caused by myopic tunnel vision creates a leadership challenge in which a chair and whip may prove to be useful.

When markets negatively impact performance levels, aggressive personalities usually respond with aggression. They no longer become “team players.” Their only concern becomes their own hide, even if it is at the expense of the entire organization. This seems to be a “CLM” (Career Limiting Move) but it is amazing how evident this behavior can be. Part of the “caged lion reaction” can be attributed to how credit is allocated. Who gets credit for what can be a driving factor in dealing with difficult behavior. The ideal is that it should not matter; if the entire organization benefits why should it matter? People who “cut off their nose to spite their face” do not have a long-term view of weathering the storm together.

You may consider pointing out to your charges that they are either a help or a hindrance. There is no middle ground here. You are either helping to grow the company or you are doing whatever you can, either deliberately or unintentionally, to undermine the success of the company. When things get tough it is imperative that as a manager, you get tough as well. The chair and whip therefore becomes an appropriate visual.

The $64,000 Question
If you are old enough to remember this TV show, you’ll remember that contestants were asked difficult questions about any number of topics. When markets turn, greater scrutiny requires asking difficult management questions, both of yourself and the team you manage. Here are my favorite “Top Five.”

  1. “How am I doing and how can I get better?” This question should be asked by all brokers of their clients and existing referral base. As a manager, you need to ask it of your team. Only by asking will you determine the validity of the statement: “Fact doesn’t matter, perception does”
  2. “How can I change our collective mind set for more proactive marketing activity?”
  3. “How will I change my team meetings to reflect how we go after business in a changing market?”
  4. “As a broker, are you maximizing the investment you have made in your past borrowers? If not, what will you need to change to do so?”
  5. “What can you do internally to increase the spectrum of business volume?”

Measure the Proper Metrics
Will a change in the market change what you measure? How about how you track what you do measure? I strongly suggest you re-evaluate your performance metrics. Are you measuring and tracking what you should be today? Greater visibility requires assessing and monitoring the performance of your team. The question you must ask is: “Am I measuring and monitoring the metrics necessary to drive the behavior my team will need to weather the storm of a slowing market?” When high volume clouds the picture, the metrics being applied are seldom questioned. In addition, we also have a tendency to fall into a rut of monthly reports, endlessly reviewed in the same manner. As such, some of this “rut review” ceases to have meaning because our senses are numbed by sameness.

As an effective manager, you must be sure that you are rewarding the appropriate behavior. Changed results require changed behavior. If you change what you are measuring (what gets measured gets done), you will change the overall performance. For example, if you want to drive volume, don’t measure just volume. Measure the criteria that will get you there. Examples include:

  1. Average time application to submission
  2. Average time application to closing
  3. Number of past clients contacted per week
  4. Number of times you have asked for referrals
  5. Number of outside presentations you have made
  6. Number of new business sources per quarter
  7. Number of pre-quals per week

Managers today must reconsider the value of what they are measuring. Volume is an after-the-fact measurement. Get ahead of the curve by measuring the behavior that will ultimately drive volume. Don’t wait for volume to drop and then yell and scream that the sky is falling.

A wise sage once said “We don’t go through life, we grow through life.” He meant that we should learn from our past experiences. For those managers who have been in this business for over 10 years, you realize we live in a cyclical world. Markets ebb and flow as certain as the tides. It is incumbent upon today’s managers to recognize the hazards a changing market creates. Greater scrutiny requires greater manager vigilance and an ability to effectively deal with those suffering from “we’ve never done it that way before” syndrome. By asking the right questions and measuring the appropriate metrics, you will make your management job a lot easier.

by Bill Evans

Processors Discuss Best Work Strategies

This month M.O.M. asked five originators to share their strategies for creating an effective originator/processor relationship.

I believe creating an effective originator/processor relationship requires three things: excellent communication, a pre-established process that keeps both parties accountable for their tasks and giving each other the benefit of the doubt. Excellent communication comes in many forms, from a set-up page outlining the file in summary to catch any nuances that may not be obvious; to calling the borrower to introduce yourself, review expectations and program; and a call or short meeting with the LO to ensure accuracy and confirm assumptions.

With a pre-established process, the file is put together the same way every time, the LO is expected to provide this file as complete as possible. Processing steps have a timeline associated with it, and in the event the LO must step in, a timeline is established to ensure the loan closes on time and accurately. Giving each other the benefit of the doubt is also important. Processors don’t dawdle to make the LO look bad, they are hustling at every moment of the day to keep things on schedule and on time. Loan officers don’t give a “pile of poop” to processors if they are lazy or they don’t know what they are doing. If both sides give each other the benefit of the doubt, it goes a long way to a good working relationship.

Crystal Holler
The Allen Mortgage & Real Estate Group
Minnetonka, Minn.
___________________________________________________

The system that I have implemented and designed with my originator is I believe the only way to run our business of $100 million annual production. The originator is the life blood of the system and it is my job to ensure that we always exceed the expectations of our clients. I need to shelter him from all the trivialities that can bog him down and prevent him from taking on additional business and offering enhanced customer service. When he has taken the application and suggested where we place the loan, his part is done. I facilitate all the communication with the borrower for imformation, appraisal, title, payoff work, locking the loan, shopping for the best product and such. I have to work the hours necessary to ensure we get our loan docs to title five to eight days early. That’s how we impress our Realtor partners. We communicate constantly using proprietary software to ensure no one is out of the loop including the listing agent and that we rarely have any last minute surprises. We were blessed to do the volume of purchases we did last year with my LO, his assistant and myself.

Mutual respect, hard work and dedication lead to all great things. A processor must be willing to accept any challenge. You have work until it is all done; there are no set hours, no five o’clock punch out.

Ryan McDonough
Security Mortgage Corporation
Scottsdale, Ariz.
_________________________________________________________

It seems like a simple concept, but in a busy office communication is the most effective strategy. When I began processing for my current loan officer, I approached her and made an appointment to discuss our working relationship. I process for four other LOs as well and each has different expectations. So openly discussing her expectations and how we could build a system that would work for each of us was key. Luckily, trial and error are great things! Over time we have discovered what works and what doesn’t.

The one factor that remained true in each and every loan that was originated and processed was communication. We speak daily and are constantly e-mailing or voice mailing one another. Even though we are both busy, we take the time to return calls and e-mails promptly. Over time we have developed our relationship to be a “team.” Agents have seemed to notice this teamwork and like what they see. Not only do they send us their clients, but have become ours as well. We have many agents that utilize us for their own personal loans, which is a true compliment to how she and I have built a working relationship!

Leslie Champion
B.F. Saul Mortgage Company
Newport News, Va.
__________________________________________________________

I think the most important factor in the relationship between an originator and their processor is teamwork. Both have to want to achieve the same goal and do what it takes to get there. If you have one without the other, it does not work as well as it would if both were on the same page. By working as a team, the process will be more streamlined and there will be less room for oversights. A level of comfort between the two also helps, knowing both sides can depend on one another to be responsible for certain tasks. The processor will need to take a more proactive role than maybe they have before and accept a few more responsibilities in their daily role, but the end result will be what both sides want, which is better productivity and closed loans.

Jennifer Taisey
Chase Home Finance
Vancouver, Wash.

Fraud Prevention: A Five-Step Compliance System

If the net branch organization is the rising star of the mortgage industry, then compliance failure is its arch nemesis. We’ve seen a significant growth in the number of net branch organizations over the past several years, but just as these proliferating organizations step in to assist brokers who want to expand their businesses, so lurks the constant undercurrent of compliance failure, waiting to tear them down.

An infrastructure that doesn’t actively strive to achieve and maintain compliance has emerged as a primary saboteur among net branches and other firms, and the casualties can be brutal.

By the time a branch organization finds itself in compliance trouble, it’s probably too late to backpedal. The trick to success in compliance is to lay the proper groundwork upfront. There are five main actions that an organization can take to significantly increase its chances of achieving compliance and help prevent the costly issues that arise from fraudulent loans. If you’re a broker looking to affiliate with a branch organization, conduct research to make sure the branch organization utilizes these controls. Failure to do so could result in additional headaches, not to mention lost commissions should the organization shut down while you’ve got loans in the pipeline.

Conduct Self-Needs Analysis
Each organization should conduct a thorough evaluation of its own needs. Before we started a branch, we sat down and identified where problems could arise. We understood that while you can control a small organization, when you get to dozens and hundreds of branches you’ll need to make adjustments to ensure that compliance is a top priority. We conducted significant analyses to determine that what we needed was lots of eyes on our files. We assessed that we’d need to see the files at the same time that the investor and underwriter is seeing them, and that we’d need to be able to check the files.

In other words, if a medium or large branch organization behaves like it’s a small one, it’s clear that it hasn’t properly conducted a self needs analysis and isn’t taking compliance seriously. Without a thorough analysis, bad loans are going to slip through the cracks. It’s a surefire path to serious problems in the future.

Utilize “Watchdog” LOS Software
It’s imperative that organizations have unlimited access to review each and every loan for which they are ultimately responsible. This can be achieved by utilizing a loan origination system specifically designed to enable corporate access. We chose Encompass, a loan origination system that enables us to see every loan that gets originated, processed and submitted. Our system allows us to see loan details at every stage, so that it’s not left up to the branch location to provide us with the access we need to monitor their activity.

The governing parent organization must have access to each loan in order to have a fighting chance of achieving and maintaining compliance. The easiest way to accommodate this is to utilize a loan origination system which affords ongoing centralized control.

Implement an Auditing System
It goes without saying that loans must be evaluated thoroughly. Depending on the volume of loans that are originated and closed through branch locations, this can be a difficult and time-consuming task. The best way to accomplish this is by initiating a random self-auditing system. We send every tenth file to an outside company that evaluates files. And every day, we look at five random files. Our auditing system is intense. We go so far as to call the seller to make sure that the terms specified in the file are, in fact, what the seller has agreed upon.

An auditing system is going to cost money, but it’s money well spent in the long-term. Buybacks are just too costly and damaging to a company.

Get into Details
Many organizations fall short of success merely because they don’t recognize trigger points when they arise. When looking at a file, it’s very important to get into the details and make sure that the numbers make sense. For instance, stated income needs to make sense. We look really hard at that. We also know industry specifics. For example, this year there were 250 percent more foreclosures in Nevada than last year. If we give people 100 percent, no equity option ARMs, we understand the possibility that if they can no longer afford their payments, they’ll simply go back to renting again. Things are escalating so quickly in the real estate market that everything is overpriced, which means the house is no longer worth the money. If the home goes into foreclosure shortly after sale, the branch has to buy back a home, which is very expensive.

If you’re not looking for trigger points, like no equity in the house or a stated deal when we don’t know what the person really makes, you’re operating in very risky territory.

Hire Qualified Managers
The market has become so competitive that companies are willing to hire inexperienced managers who have never closed a loan and have no knowledge of conducting background checks. While cutting costs on salary, they’re taking a huge gamble on compliance. A smart company will invest in qualified branch managers who understand the business. That person should be well trained, and actively walk the compliance floor, and be prepared and qualified to offer assistance to originators and processors that have compliance questions.

In short, a good branch manager will not only have expertise in responsibility reports and physical inspections, but also proactively pursue compliance. Without a good leader at the helm, the ship will start to sink.

Compliance is Mandatory
I cannot overemphasize the importance of achieving and maintaining compliance. Branch organizations are at particular risk because of the sheer number of their branches. Being scattered widely across the country, these locations often create inherent challenges for the branch organization. Branch organizations need to implement strong controls, both on the local and corporate level.

By conducting a self analysis, utilizing a “watchdog” loan origination system, implementing a self-auditing system, hiring qualified branch managers and getting into the details, a branch organization will be well on its way to keeping compliant and avoiding fraud. It may be more costly initially, but it’ll certainly be well worth the payoff for the long-term growth and profitability of the company.

By Mitch Freifeld

Managing in a Tightening Market

Here we go again, another tightening of the market. The rapid deterioration of the market has caught not only homeowners and builders off guard, but the banker/broker management teams responsible for maintaining and building market share. Volume projections are down. Resale inventories nationwide are up significantly. New home sales and new home starts are projected downward and to add salt to the wound, the nation’s cost cutters are now scrutinizing every nickel spent. You now stand within this fishbowl of greater management visibility.

Some managers will rise to the occasion, recognizing that a tightening market has far reaching implications, the least of which is how a slowing market impacts their management skills. Others will say, “I have been through this before and this too shall pass,” leaving modifying management skills to others. Another potential reaction is the “I don’t think I can take any more of this” and allowing yourself to become a victim of current market conditions. The “woe is me victim” does not inspire those around him or her and therefore, cannot possibly be an effective leader. The “this too shall pass” manager hardly encourages individual initiative.

Managers who seriously analyze how market conditions impact their leadership will be the ones to win. The following steps are designed as a management self-assessment. As you review each, answer this question: “Is this an area I can brush up or do I have it nailed down?” Only you are answering these questions, so you can play all the games you want, but remember, as Zig Ziglar said: “In the subconscious, there is only witness for the defense”

KEY POINTS:

1. Avoid the knee jerk reaction. Drastic layoffs are not necessarily the answer. A knee-jerk reaction that involves a reduction in staff to save overhead is an easy trap into which many managers fall. The long-term ramifications of this move must be considered. Too often this move is perceived as a short-term gain, only to ultimately become a long-term loss. It is true that a significant decrease in volume may not warrant continued staffing levels, but an across-the-board cut without serious study of the potential fallout is a mistake.

2. Be careful with comp plan changes. If you believe your compensation plan does not accurately reward the behavior you expect of your personnel, then a change is in order. Sometimes it takes a downturn to reveal “this comp plan does not encourage nor measure what it should.” However, the downside risk of making changes to your comp plan, no matter how minimal, can be significant. Be careful that your changes are not perceived as a “takeaway.” It is therefore incumbent upon managers to give serious thought to phasing in comp plan changes over time. Or announcing the change in September to become effective January 1, 2007.

Changes to your comp plan may be appropriate and warranted. Announcing a wholesale change to be effective immediately runs the risk of creating disenchantment levels that will serve only to increase turnover. Why run the risk of losing good employees because you tried to squeeze too much too fast? While introducing the new comp plan, discuss the business reasons behind the plan and help the team find the wins in the new plan.

3. Don’t pretend the skills you need in an “up market” are what you need today. When markets tighten, frustration levels rise. This reality can become a heavy burden upon all team members. It is easier to find fault when there is more time to focus on how much the market has changed. Increased market volatility is often followed by internal warfare where office politics trump working as a team. Your management skills will be severely tested in not only building the communication bridges required, but in expecting your team to travel them. The skills you applied in a “rock ‘n roll” market must therefore be amended for effective application today.

4. Determine if you are a mother hen or captain of the ship. It does not matter if you are in the “hard landing” or “soft landing” camp. What does matter is that you do not minimize the challenges your team faces. More importantly, it is imperative that you involve them in the decisions on how best to weather the storm. Managers who try to insulate their personnel from market realities are not doing themselves a favor. Employing a “mother hen” attitude to protect your “flock” from harm actually does more harm than honestly calling the game. If you minimize the issue, you undermine your personnel’s propensity to take remedial and immediate action. This is a classic management blunder.

5. Don’t think you are “above the fray.” If a manager’s sleeves were ever to be rolled up, now is the time. If all you do is stand at your white board and “pontificate from the pulpit,” you should rethink your time and energy allocation. Sure global visions and long-range thinking are required, but if you are in meetings all day, how do you really know what is going on? In times like this, it is imperative that all managers forget both ego and title and get into the trenches for an intimate look at the trials and tribulations facing their teams. The ivory tower is a splendid destination resort when markets are flush. It can be a debilitating prison when markets are not. Get over your “holier than thou” attitude and get a grip on what is happening.

6. Help your team to anticipate. What changes in product knowledge will be required to meet a changing market? When markets are hot we normally do not prepare for changes in products and guidelines. When things get tight, it is important to understand what product features may once again be in vogue and how their use will generate more business. Case-in-point: 3-2-1 Buydowns. This once popular feature has minimal value in a low rate environment. Today it will begin to gain ground. Are your personnel prepared and knowledgeable on how to position and use this feature correctly? Seller-concessions are another example. This feature is not real popular when markets are rolling. It will gain popularity as the market continues to tighten. Is your team prepared to anticipate these and other changes in product features?

7. Provide a vision for the future. Your team will actually “go to the moon” for you if they knew where the moon is. “Here is where we are.” “Here is what we are going to do. For example, we will cross train staff/departments for the next wave.” “Here is how we are going to do it.” These are all issues successful managers address. When loan volume takes a hit, so do individual confidence levels. Successful managers today realize that they must, by word and deed, present a definitive direction and vision for the company. Anything less will cause your team to question the wisdom in hitching their wagon to yours.

A successful manager is a lot like a marionette master. Pull the right strings and the show is a success. Pull the wrong strings and you are in trouble. In pre-edition testing, most managers have identified more than one of the seven issues above as worthy of greater individual attention. If you fall into that category, pick one issue and work on it until you have it covered. Then, move on to another, keeping only one on the burner at a time.

By Bill Evans

Sales Management Starts With Selection Process

Most of us have read hundreds of articles on sales management and attended a seminar or two focused on this critical topic. I’d also imagine most of them were very worthwhile. However, it never ceases to amaze me how many mortgage sales managers will only attend a seminar if their company suggests it or pays their way to attend. If you have not personally invested in your career and attended a mortgage sales management seminar, now is certainly the right time. Mortgage sales managers truly earn their compensation in declining markets, and those who can’t adapt will be “outed” by a slow decent on their company’s ranking reports. These articles and seminars will typically focus on how you will hold your originators accountable through goal setting, inspecting what you expect and various other well-recognized sales management practices. However, I suggest that unless the average mortgage sales manager changes his or her approach to hiring, we will continue to be plagued with these challenges and high turnover in our industry.

“Recruiting” and “Retention” are two of the most frequently spoken words in the mortgage industry today. Often, our retention issues are primarily two-fold. Good originators leave to go to the competition and weak originators do the same or get out of the business. So rather than focusing on managing our originators once they start dropping down the production reports, I would like to concentrate on avoiding our future challenges, thus increasing our retention rates. And yes, it has a lot to do with recruiting.

Doug Smith, my friend and fellow M.O.M contributor, recently conducted a sales management and recruiting session for the sales leaders of our company. One of the messages we came away with was the term “recruiting inference.” Doug described it as tailoring your interviewing questions to get the answers you want to hear from the candidates you immediately like. How many of you have done the same thing? Sharp candidate, great suit, very professional, strong vocabulary and simply very impressive—all things you have formed an opinion on prior to asking the first in-depth question. We see it with reports every day. A big celebrity is in the chair and what do they ask them, controversial questions or fluffy ones? A fluff question: “Don’t you think it is important to invest in your business through marketing and database management?” Do you think you would get better information if you worded it like this: “Can you give me a few examples of how you have invested in your business over the last 12 months. What did you do and what were the results?” Everyone reading this will agree the latter question will result in better vetting of the candidate. But in an interview setting with the picture-perfect candidate, most of us forget to take charge and conduct a thorough, probing interview. The following are some questions that are designed to elicit more information from candidates, thus helping you make a more informed hiring decision.

Application and Closing Volume
You want to understand the candidate’s production numbers and which products they use the most so you can ensure a fit and also avoid a slower ramp-up period. Questions:

  • Let’s talk about your current and most recent production numbers. How many loans have you closed YTD and what is the dollar volume?
  • What was the lowest closing month you had recently and what did you close? How did you react?
  • What are the top five products you sell on a consistent basis and why do you personally sell them?

Referral Sources
You want to know if they know where their business comes from and if they have developed relationships that will carry over to your company if they are hired. If you can’t get comfortable with understanding how the candidate develops relationships, I suggest you pass unless you are hiring for an inside or captured position. Questions:

  • Give me a rough percentage breakdown for your sources of business, such as Realtors and builders.
  • Let’s discuss your closings for last month. How many units and what was the volume? Tell me the source for each loan. If it was a referral, why did they send it to you?
  • What was the biggest mistake you have made on a loan that was referred to you by one of your better sources? How did you handle it, what was the outcome and do you still work with the source?
  • What segment of your business (Realtor, builder, captured, affinity, past clients, etc.) would you like to see have the largest percentage increase? Why and how are you going to achieve it?
  • What Realtors are currently working with you and how did you start? What type of business and amount of closings does each have?
  • Let’s role-play a minute. I am a Realtor, you are the originator. You just convinced me to go to lunch with you and we are at the table. Tell me how you would handle going forward.

Work History
You want to go company by company and find out why the person joined and then left each one. Look for patterns. If the candidate complains about their underwriting or processing, be sure to ask for specifics. Questions:

  • I see on your resume you were at ______ company. Why did you decide to go to that company and why did you leave?
  • What are you personally most proud of in your career?
  • Who was your favorite manager and why did you like working for him/her?
  • What was the best coaching a manager gave you and what was the result?
  • What was the most difficult obstacle you encountered in your job and how did you handle it and what was the result?

Getting To Know Candidates
Your goal is to understand the work ethic, the drive and motivation, the ethics, and the type of employee you will have once they start working for you. Questions:

  • What are you most proud of outside of work?
  • In high school or college (depending on the candidate) what organizations or clubs did you belong to? Which one did you enjoy the most and why?
  • What organizations do you belong to today and how do you participate?
  • Describe a time when someone in your office did something unethical. What happened and how did you react?

The average mortgage sales manager spends far too much time trying to grow $8 million producers to $12 million originators. The most effective and productive use of your time is growing $20 million producers to $40 million originators. Not all candidates can achieve this level, even with the best training, coaching, products and price. It is up to you to determine if the candidate has the traits and characteristics to achieve these levels. Being relentless with probing questions during the interview will make your role as a sales manager easier and more enjoyable, and increase production and decrease turnover.

By A. Blair Glenn

The Golden Rules of Sales Meetings

If the mortgage sales manager is the most critical position in terms of developing a team and growing local market share, then the mortgage sales meeting is the critical vehicle. I have facilitated my fair share of sales meetings and sat through even more as an originator. Been fortunate to have some great leaders and equally fortunate to have some pretty lousy ones too! I learned a great deal from all. Ask the average originator to give an opinion of the average sales meeting and you will get an earful. A waste of time is the typical response. Our collective challenge—sales managers have a hard time sticking to the Sales Meeting Golden Rule. Those who have mastered the Golden Rule lead sales meetings that mortgage originators want to attend.

Sales Meeting Golden Rule
The Sales Meeting Golden Rule is quite simple since it is based on the classic 80/20 ratio. Keep your meetings comprised of 80 percent sales and 20 percent or less operations and office issues. Anytime I hear “housekeeping” it makes me shiver. All those salespeople sitting through a meeting reviewing memos that were either distributed earlier in the week or could simply have gone in mailboxes or e-mailed out to the team. We continue this time-tested, time-wasted practice principally because many originators don’t read memos and training materials. However, we should set the proper expectation, starting with the interview stage, that originators are required to read all memos and e-mails sent to them from the company. Yes, some will slip through, but setting this expectation and managing to it will begin reversing this practice. Reading these in a sales meeting is not only an ineffective use of their time, but those who actually do read the memos will stop doing such if they know they will be covered during the next sales meeting. Following the sales meeting Golden Rule is respectful of your originators’ time and creates a meeting environment more conducive to honing sales skills that will grow your team’s production.

Assuming you follow the Sales Meeting Golden Rule, I strongly suggest you have weekly meetings. Sales managers who don’t run effective sales meetings probably will question the weekly time commitment; I say give it a chance for one month. See if a more structured approach to sales management might not actually help you manage your time more effectively by managing your team’s production one primary time each week, rather than one-offs all throughout the week. The additional benefit is more focus on sales, which is typically followed by greater production. Alan Greenberg, former Chairman of Bear Stearns, is renowned for his unique memorandums to his employees. A collection of these unique memos is the basis for “Memos from the Chairman,” by Alan C. Greenberg. He found a way to make the most ordinary communication tool interesting. If he could do that with the memorandum, imagine what you can do with the sales meeting.

The 80 Percent Concept
This 80 percent segment of your sales meetings is what drives your success in the market. Yes, you may have a hotshot or two that brings in great numbers and doesn’t see the value of the old sales meeting, but your reformatted meeting following the golden rule will benefit your core team and those few seasoned professionals.

Most sales meetings start with the housekeeping segment to get that out of the way, then move onto the substance of the meeting. I suggest flipping this around and commencing with the sales portion followed by the housekeeping segment. Should you run out of time, the housekeeping segment is by far the most expendable. Another suggestion to keep meetings vibrant is to hold at least one outside each month. Why do we interview candidates outside our office? Why is it better to have serious employee discussions in a room with a round table rather than sitting across the desk from one another? The same reason we need to take our team to a different environment on occasion. We have their full attention in a different and more comfortable environment.

Here are some suggestions for getting the most out of the 80 percent:

  • Plan your sales meetings; winging it works for birds, but not mortgage professionals.
  • Have an agenda and keep to your time allotment, generally two hours or less.
  • Hold at least one sales meeting a month outside of your office, such as in the conference room at chamber of commerce (if you are a member), back room at a local restaurant, someone’s house or hotel conference room.
  • Don’t try to conduct each sales meeting yourself. Rotate facilitators between you and your originators. Assign topics or let them pick their own.
  • Rotate who brings snacks or breakfast. For example, requiring the lowest producer from previous month to bring the refreshments provides great motivation to succeed.
  • Go to your community library or go online and rent motivational videos. They have great collections.
  • Form your own “Book of the Month” Club. Pick a different book each month and give a copy to your originators. One suggestion is “Raving Fans,” by Ken Blanchard and Sheldon Bowles. Assign a chapter to your originators to present to the group at the next sales meeting. Your originators will also appreciate your gift and the fact that you are investing in their business.
  • Assign a product per week to a different originator to discuss and train other LOs in depth.
  • Invite spouses/partners to join the meeting at an appropriate venue. Have the meeting the first two hours then invite the partners to join in at the bar, bowling lanes, or other location. Have fun and be creative. People seldom leave a company solely because of basis points.
  • Create a Jeopardy or Wheel of Fortune board and have a contest with categories like underwriting or products. Play the game in your sales meeting each week for a few minutes and give out a few prizes. Pick prizes that are business development related such as books, newsletter or magazine subscriptions. Make it educational and entertaining.
  • Invite a top producing Realtor or builder to come in and discuss what he/she looks for in a new originator.
  • Role-play effective sales calls and phone inquiries. This could include how to turn rate shoppers into buyers, how to sell against an option-ARM, how to sell points and other topics.
  • Start a file of articles and clippings that you can discuss in sales meetings. Pick a topic each week to focus on and discuss. Make it easy for you to find material for your meetings.
  • Zig Ziglar espouses on the value of scripting as one of the keys to selling excellence. Introduce scripts to your sales team by coming together as a group and composing scripts for objections like, “your rate is too high” or “your fees are too high.” Get all to agree and then memorize them.
  • Invite a CPA or divorce attorney to discuss leads and the best way to build relationships with these professionals.
  • Have the group come up with a sales contest and implement the contest.
  • If your team supports bank branches, periodically invite bank department heads to discuss their areas and how to cross sell more effectively.
  • Ask each originator what calls they made last week, what they have set up this week and what is on their schedule for next week. Be very specific so no one can hide. This is the best exercise in which to predict short- and long-term success.

The 20 Percent Segment
Use this time to discuss important operational issues within the office or company. Don’t review memos you recently sent out. However, if the topic deserves additional discussion this is the proper time. I realize some will say eliminate this portion all together. I have tried that but I just don’t that that is realistic with all we juggle on a weekly basis in our offices.

I once had a sales manager who would allow IRS representatives to visit our sales meetings to speak on the tax code as long as they brought bagels. Drove us crazy. Invariably, it was a closing agent or attorney no one ever would use who would feed us, talk about why we should use their company and leave after 30 minutes or so. Well, that is a big percentage of the typical sales meeting. I tried a different tactic as a sales manager when approached for time in my meetings. I asked the vendor to partner with my originators first and then I would put them on my schedule. I even coached many of them by suggesting they partner with specific new originators by setting up appointments with Realtors or builders with whom they had relationships. Nothing is more effective than a warm referral. If they proved they could help us build relationships and grow our business, I would gladly give them face time in my meetings.

By investing the time to have well planned and designed sales meetings, you will realize multiple key benefits. Your team’s production will grow. Your retention rates will increase because your people are more successful. Your quality of life will improve, as you are managing with a plan and I bet you find yourself with less management headaches. Your recruiting will be easier because increased production and retention is a powerful ally on the street and competitors will take notice and so will their originators. Plan, implement, be creative and have fun and then watch your team’s production take off.

By A. Blair Glenn

The Right Keys to Management Success

Creating an environment of success in the mortgage industry is a challenge at best because of the multiple dynamics management has to consider. From different levels of commitment to staying in the business for the long run and not for a quick buck, to the level of experience of originators, processors and underwriters, managers have a lot to contend with in any given mortgage office. On top of that, there is the ever-present need to train people on the latest technology, policy and procedures, and new products.
Even with all of these dynamics, there are a few key elements to management success. Frequently, we forget to look at the big picture of how our organization is run and focus solely on today’s or this month’s sales. We must realize that many subtle factors, including the ones below, affect sales and the long-term success of a company.

Hire right or correct bad decisions quickly. Be sure you know who you are hiring and do not simply fill a position, because if the person does not fit, it will never work. For example, a loan originator will more than likely have to handle calls on leads; therefore a call-reluctant, shy person should not be hired for this position. While the person maybe qualified on paper, the personality will not fit the requirements of the position. This might seem simple, but managers make this kind of hiring mistake every day. The time it takes to hire the right person is less than the time it takes to fire, re-interview, re-hire and re-train a replacement.

Inevitably, all good managers will make some bad hiring decisions. The vital thing to do when this happens is to take corrective action quickly. Unfortunately, managers may leave a bad hire in place far too long because they hope that the employee will get better. Sometimes improvement is possible—when the problem is a training issue, for example. But oftentimes there is a fundamental problem with the employee being a good fit for the job and when that happens, the employee often will spread low morale around the office like a bad case of the flu. And worse, the problem can become cancerous, which will require drastic disciplinary measures and sometimes multiple terminations. A good manager must make these problems disappear for the health of the rest of the organization, and like a bad disease, treatment is best performed early.

Provide proper tools for success: training and education. A good manager knows that training does not stop when a new employee closes his or her first deal. It must be an ongoing effort that is integrated into the office routine. Proper equipment and technology are also required tools for success in today’s marketplace. Be sure to continually invest in your organization to continually be competitive.

Communication is critical. Many organizations have great people who all aspire to achieve the same goals but fail miserably. Often they are all working on similar projects without knowing it, which is why clear and frequent communication is essential. In our business we sometimes find that our loan originators and processors do not communicate with each other, and an originator does not communicate well with lenders and vendors (Have you ever had a closing delayed because the appraiser said he never received an appraisal request?) Communication starts at the top of the organization and must be maintained at every level of the company, but more importantly management must be a role model of effective and timely communication.

Create variable compensation. It should be based on something of which the recipient has control. I find that management often sets commission or bonus programs for an employee based on criteria that are not in the control of that employee. A great example of this is paying a production manager based on net profit but not empowering the production manager to manage basic operating expenses. The only way for that manager to create a higher bottom line is to bring in more top line revenue and hope that whoever is spending the money does not spend anymore. Another example is paying a processor a bonus based on the number of files closed in a given month. That works when you have more files originated than is realistic to process with the number of processors available at the time. But realistically the processor has no way of controlling originations and is often precluded from obtaining a bonus when he or she is doing an outstanding job. Perhaps a better way would be to bonus processors based on achieving turnaround goals or based on what percentage of files given to the processor close within a certain time frame. Only then are you providing an incentive that is within the processor’s control. If management sets bonus programs based on goals outside of the employee’s scope of control, we set everyone up for disappointment.

Abolish the “Yes” people. Every organization needs employees who are encouraged to and are given a forum to speak their minds. Management is not the source of all good ideas. The receptionist, processor, loan originator and copy clerk have ideas that can change the way things are done for the better. But if they do not express those opinions because they are always agreeing with the boss, the company will not only miss out on great ideas, but the company will become very one dimensional with employees who feel more like factory line workers than team members who are charged with helping an organization succeed. Encourage employees to speak their mind, but be sure they also know that whenever management makes a decision, everyone should fall into place to work as a team.

Share success stories with acknowledgement. This can be accomplished by randomly recognizing outstanding achievement as well as healthy competition in which people who have reached their individual goals and encourage others to become better. Create sales contests, but also recognize support staff. The support staff in a sales organization is often passed over in recognition programs. Additionally, do not recognize only the top sales achievers. Too often the same group of individuals wins all the awards because they are always leaders in sales. Recognize the most improved, the best mentor, the highest quality files or some other achievement that is not necessarily related to sales. Remember that while sales directly affect the bottom line, many other factors go into a successful organization. Keep all recognition positive. Never ostracize—even in a joking way—those who do not win awards.

The small things count. Management should demand that offices be kept clean and neat and make sure the break room is always spic and span. Offices and cubicles should always be tidy—even in areas that are never seen by guests. The environment does not have to be fancy, but tidiness is essential. It creates a cleaner mental state in which to work and productivity is higher in an organized and clutter free office. Other small things count as well, such as bringing in lunch for the office randomly, offering free coffee and tea service, current newspapers or magazines in the lobby, monthly birthday recognitions, employment anniversary recognition, and the like. Study after study reveals that employees will stay at a lower paying job where they feel important and wanted in a good environment over jumping ship for a higher paying job where they may feel more like a number. In the late 1990’s, a dot-com executive claimed it was too expensive to compete with other dot-coms in terms of expensive benefits and stock options. He said his company’s least expensive employee benefit was by far the company’s most popular and cost approximately $12 a month. It was ranked in surveys as a high-ranking factor in job satisfaction among the company’s employees. The benefit: free sodas, juices and snacks. Small things count.

Foster teamwork. Even in a sales environment, there should be team spirit. In mortgage shops, people tend to think that teams are for companies where employees are not commission-based, or when there is a group effort in business-to-business sale situations. After all, each LO gets paid on his or her own loans, right? Wrong. When a team environment exists, one LO is happy to take a call for another to create good customer service, one LO will gladly take a loan application for another while his co-worker is out sick and one LO will gladly give up an early closing time with an afternoon closing time at the settlement agent when his teammate has an important purchase closing and his own closing is a refinance. Processors and LOs understand that they are co-dependent and work together to achieve common goals and solve common problems. Therefore, a good management team facilitates the development of relationships and gets to know employees as people with feelings, hobbies and lives outside of work. When employees feel a human connection with their colleagues, they are far more loyal than when they feel like another number. An organization that focuses on team building will always out-perform an organization of individuals.

Establish the rules. Management should have written policies and procedures. It is difficult to fault someone for not following the policies and procedures when they were never clearly defined. As the phrase “good fences create good neighbors” applies to a good living arrangement, the same applies with employees and employers. People generally want to follow the rules, but so often the rules are murky or unknown. The policies and procedures created by management should be regularly updated. A living document of this type has no page numbers but does have chapters with broad subjects and within each chapter it would be beneficial to create a policy number. So, if chapter one is “Origination Policies” and the first two topics in that chapter are “Timing of Disclosures” and “Rate Lock Policy,” they would be Policy 1.1 and 1.2, respectively. Now, within chapter one management will have the ability to create an infinite number of policies without ever repaginating the manual, thereby making it easy to maintain.

Empowerment and delegation. No matter what the role is, empower the employee to blossom within that role. Delegate the right work to the right people; teach them how to do it and then watch it happen. Sometimes employees must be given the room to fail and realize the failure so they can do a better job the next time. Unless that failure will cause the company true harm, the manager must allow it to happen.

Management in the mortgage industry can be trying and require creative approaches because of the very nature of the business. However, if a well-crafted management plan is put in place, success is inevitable. And a successful management team knows the importance of constantly making improvements to meet the changing needs of the business.

By Daniel Jacobs

Sales Management Lessons From a Possum

Let’s be honest. How hard has it been to find a few loans per month the last few years? Even our rookie originators made money and covered draws. There was so much business that it seems everyone obtained his or her mortgage license. If they didn’t, they know someone who is an originator. Today presents us with a different challenge; one we have not faced in many years. With the market slowing down, acquisition of new business is the primary strategy of most companies. If that doesn’t create the impact needed to drive operations and profitability, you will start seeing even more staffing reductions in our industry. As the engine is to the car, the mortgage sales manager is to our industry. This position significantly impacts what happens next; therefore, making the right hire is critical.

When interviewing and managing mortgage sales managers, I try to determine where they fit in my “O.H.G.P. Mortgage Sales Manager Profile.” Identifying enough examples of past behavior, one will be able to determine future behavior. Yes, I agree this is a BFO (Blinding Flash of the Obvious), as Todd Duncan likes to say. But I have seen way too many instances where sales managers will not ask probing questions to get “down and dirty” in the details or roll up their sleeves to fix a complex issue. The results can be devastating for an organization; especially in a down market when recruiting smart, sales management and expense control are the order of the day. Situational questions during the interview stage, conversations with industry insiders and former employees can help you effectively identify past behavior. So, once you learn to identify traits, you can recruit and manage for optimum results.

The O.H.G.P. Mortgage Sales Manager Profile:

Ostriches
We all know these sales managers. From pricing issues to underwriting challenges, there is rarely a day when something doesn’t come up that requires problem solving or crisis resolution skills. Maybe a complex deal is blowing up at the table. Maybe the company is tightening pricing. Whatever the challenge, it seems the ostrich is not effective in problem solving, dispute resolution, or strategic planning. They pretty much disappear when the going gets rough. We see a lot of talk, but not too much in the way of results-oriented action. It is amazing how many ostriches survive in our industry…but they do, primarily when they also report to an ostrich. The million-dollar question is: how do we manage ostriches? I have spent too many valuable hours on ostriches in the past. I realize I spent so much time because I hired the ostrich and didn’t want to admit my hiring mistake, so I kept trying to get them to perform as expected. I am learning to cut my ostriches as quickly as possible. Your best management strategy for ostriches is to avoid hiring them in the first place. Ostrich resumes are easy to spot—a lot of job-hopping is one obvious sign. They also spend more time telling you what their past companies didn’t have than what they will do during their first 60 days to perform at your company. Ostriches rarely come prepared with detailed plans.

Hyenas
These folks are the ones who complain about everything…the market, the company, pricing, products and especially their last bonus. You always hear them during breakout sessions at sales rallies, but they are smart and try to blend in during these events. But the minute a negative is thrown out, they pounce and show their teeth. Their bigger problem is they rarely have solutions and never create anything worthwhile for themselves or their team. Hyenas have possum-like tendencies as they are both scavengers at heart and have a lot of energy. I would equate a hyena to a high-maintenance, low-producing originator. Obviously those two traits together are poor. But I will take high-maintenance and high-production all day. If the hyena can transfer the negative energy into helping us fix the issues, we have a winner. Someone who is viewed as a complainer is a good person to have in your company if those complaints are followed by ways to improve upon the issue.

Managing a hyena isn’t easy, but some drivers are honesty, respect, and empowerment. First, explain how the hyena is viewed within the company. Then discuss how many of the issues brought up are valid, but lacking is the solution. Empower the hyena to run a task force to research and recommend solutions to one or two issues. Create an environment where the hyena can take stake in the solutions. If we can channel that negative energy into positive actions, we could end up with a possum.

Gators
These people know how to adapt and they will make a correction, but it will take time and their regions or offices will suffer during the transition. They know they have originators who will not make it, but they take too long to require call reports or put originators on probation. When they lose a top originator, they start recruiting the replacement. They can be successful in replacing, but the result may be three or four months of reduced volume, which could blow the quarter and possibly the year. The gator may get around to doing the things they need to do, but with closer supervision and direction, they can be pushed to do it quicker. Most gators lack the drive or strategic thinking of the possum so expecting to grow to possums may set them up for disillusionment. Understanding the weaknesses and managing to those will help a gator realize results quicker.

Possums
Being from the South, I have always admired the possum. Talk about adaptability! If a possum’s food source dries up on Monday, I guarantee they have found a new one by Tuesday. If we take down a tree a possum lives in, they quickly find a new home. The possum is a master in the art of survival. As such, the possum manager makes changes within the shop quickly and before too much harm is done. He or she also collects good market data before complaining about pricing to corporate, knows the competition well, makes decisive decisions and is always thinking about surviving. A possum is rarely swayed to gamble on weaker producers, but typically goes for the better hire even if it takes longer to get. Most importantly, the possum is a self-starter, needs little motivation or direction and is adaptable enough to change with the market or as your company needs them to change.

Mortgage sales managers are the key drivers in our organizations. Selecting the right leader for a team, or to build a team, is a critical decision that has far-reaching impact. Every company is different and unique. Some are highly political and others purely numbers driven. Being able to identify the four management profiles not only helps make better hiring decisions that fit your organization, but also allows you to use situational management skills with existing team members. You would manage a possum differently than you would manage an ostrich. An ostrich would require hands-on management with very frequent assessments and guidance. A hyena does best surrounded by positive strong-willed people and hands-on management. Don’t allow the hyena to surround himself with other hyenas—unless you have no interest in attempting a conversion to a possum. Gators represent your steady leaders, your rocks. Getting those gators to be more proactive and more aggressive will significantly impact results.

By A. Blair Glenn

Success Tips From Sharks

We sure don’t seem to have much downtime in the mortgage industry today. We are either struggling to get loans processed, closed, and underwritten due to spikes in volume or working overtime to strategize on growing our application numbers. In the meantime, we hold sales meetings, send memorandums, and personally coach our originators on the value of investing in themselves by reading sales-related publications and books to improve themselves personally and professionally. As sales leaders, we need to practice what we preach. The problem is, who has the time? Well, you need to find the time, or, I guarantee your originators will not find the time either. You are their example. If it isn’t important to you, it sure isn’t important to them.

I recently re-read one of my favorite books, Swim With The Sharks Without Being Eaten Alive, by Harvey Mackay. Whether you are a 100 percent outside-sourced originator, inside originator, mortgage sales leader, or homemaker, this book is packed with exceptional sales ideas and lessons for life. I first read the book back in the late eighties and have revisited it every few years since. A co-worker with our bank noticed my copy of Sharks when we were flying recently and we spent a good portion of the flight discussing how each of us has used Mackay’s lessons. I have put many of these lessons into practice and find their application to our industry is highly effective. I have pulled out just five Mackay lessons that can have a significant impact if implemented by mortgage sales leaders.

Lesson 4: The 66 Question Customer Profile
The obvious interpretation of this lesson is knowing your Realtor, builder, and affinity referral sources so you can be more effective when making sales calls and supporting the relationship. I suggest we take it further to include other “customers,” as mortgage sales leaders have both internal and external customers. As leaders of our respective organizations, we should consider our originators, originator prospects, sales support team members, and vendors as customers. Mackay writes, “All of us gather data about other people—especially people we want to influence. The only question is how well we understand it and what we do with it.” Some suggestions and observations on using the Mackay 66 (TM) with your originators and prospects:

  • Originators: Utilization of the list of questions. You know what motivates your originator and how best to manage to achieve maximum results for you and maximum benefits and job satisfaction for originators. Use this list to continue supporting (and continue recruiting) your originators after they have joined you.
  • Originator Prospects: The collection of knowledge and the capacity to effectively use it is what makes a great recruiter. Lets face it, mortgage sales leaders should always be recruiting. The Mackay 66 is not a tool to be completed in front of a prospect at one sitting, but a vehicle by which you can collect and store information on candidates over a period of weeks, months, or years. It sometimes takes years to hire top candidates. The more information you have about the candidate, the more effective you will be in the recruiting process. If a candidate likes to fish, then charter a boat and go fishing. When the candidate’s college football or basketball team is in town, invite them to go to the game with you. Does their spouse or partner like the opera? Send them two tickets. The object is to get to know the recruit personally and your success rate will increase.

Lesson 10: Short Notes Yield Long Results
I remember when I first put this lesson into practice. I started writing a note to each selling and listing agent on every application I took. I included my card and my processor’s card and I know they contributed to my success. Personalized notes are not only great sales tools, but they can be significant tools when recruiting originators and leading your team members. When was the last time you received an e-mail from someone, a minute ago? Maybe you received 10 since you started reading this article. Now, when was the last time you received a handwritten note from anyone? Was it this week, last week, last month? With the onset of instant e-mail communication, handwritten notes have become a dying communication tool. But I suggest it is an extremely effective communication and sales tool for our industry. Do you remember the airline commercial a few years ago, which featured a manager handing out plane tickets to his salespeople so they could go spend face-to-face time with their customers? I still think that was a tremendous commercial. Sending a personal note is the same thing just on a smaller and less expensive scale. Some practical suggestions for implementing and using personal notes:

  • Send one to each recruit you meet with. You may not be interested in the candidate, but they will remember being treated with respect even after you inform them of your decision. The candidate may have the opportunity to give someone their opinion of you in the future, or they may turn into a SuperStar who you may want to approach in the future.
  • Send a note to vendors thanking them for their support, referrals, and extra special attention to the relationship. Vendors can be your unpaid sales and recruiting force if you treat them with respect and show some appreciation.
  • Send to your top producers, rookies who had a good month, sales leaders who hired a top recruit, bankers who referred a big deal to you, joint-venture partners, and sales support team members such as processors, closers, and underwriters.
  • Take Mackay’s lesson one step further and create customized notecards personalized with your photo. Customers, referral sources, and originator prospects will remember your face more quickly than your name so take advantage of an opportunity to put your “face” in front of the reader.

Lesson 14: If You Don’t Have A Destination, You Will Never Get There
“One of my good friends gave me her definition of a goal, and it’s the best one I’ve ever heard,” wrote Mackay. “‘A goal is a dream with a deadline.’ Write yours down-because that’s the only way you’ll give them the substance they need to force you to carry them out.”

Yes, this is another great sales leader telling us to have a business plan. You can’t pick up any leadership or sales strategy book without at least one chapter devoted to business planning. There is a simple reason…they work. What do you do the night before the last day at work prior to a weeklong vacation? You plan everything you are going to do that day. On the last day, you come in early, you don’t participate in idle chitchat, you manage each minute, and accomplish a few days work into one day. We always say the day before a vacation is our most productive day. Why? Because we developed a plan, implemented it, avoided being sidetracked, and reviewed it periodically throughout the day to ensure we were doing everything on our list. It sure works perfectly the day before a vacation, so, why do so few mortgage sales leaders and originators have a written plan? I imagine many of our originators feel it is a one-time exercise each fourth or early first quarter and the plans are rarely referred to again. The “day before vacation plan” is easy to monitor and track results. A yearly plan is not if it’s completed in December or January and seldom reviewed again. Do you, the leader, have a plan you refer to on a continuous basis? Is it is living document you update and manage to, or is it completed and shelved? Many mortgage sales leaders have the greatest intentions but we get busy with our day to day business of meetings, fire drills, operational flow issues, pricing problems, guideline changes, program roll-outs, personnel issues, and the like. However, if we are not leading by example and also periodically reviewing individual plans with our originators, why put much effort into the process? Well, we must get away from the completion of the plan being a task to it being a part of our formal sales process. The plan needs to be a living document referred to monthly and updated consistently. This starts with sales leaders leading by example and dedication to review plans on a monthly basis with our originators.

Lesson 49: It Isn’t The People You Fire That Make Your Life Miserable, It’s The People You Don’t
This is one of Mackay’s shortest chapters because most agree this is the one of the most obvious management lessons. Why do we as mortgage sales leaders continue to believe that originators who consistently produce below expectations will finally “see the light” and become contributors? Why do we accept poor service levels from originators whose customers call us to complain about unreturned phone calls, improper expectation setting, expired locks, and poor service? I believe we do so because we naturally hate confrontation and don’t want to give up on someone we may have personally hired. Think about your headaches day-to-day. I bet they are caused by a handful of weaker producers and maybe a high producing/low-scoring originator.

High maintenance I can live with, but when you add low customer service scores, that is a recipe for disaster. While we may move slowly, we will eventually ask our weaker producers to leave if they don’t respond to coaching. However, our track record in dealing with the “high/low LO” is not good. It happened to me the other day. There are red light blinking on my phone, I check the message and listen to a frantic customer complain about an originator’s poor execution. I think back to how many times I asked this originator’s sales manager to get the service levels up or get him out. You no doubt have experienced the same scenarios, but then the originator has a few great months, makes you some money, and you move on. The resulting problem is not only the impact to your company’s reputation on the street, but you have lowered the “service bar” for your office. If left unchecked, you will see a slow decline in your overall service level.

Lesson 63: I Have Never Seen A Bad Resume
I don’t know about you, but I have made my fair share of hiring mistakes. There are two critical hiring mistakes sales leaders tend to make: hiring flash without substance and hiring originators who may not fit your business model. I am guilty of hiring an originator because of attire, gift of gab in the interview, and talking a “big game.” Mackay Envelope Company is extremely selective in hiring and the process is long and arduous. He also warns against hiring based on a great resume. Mortgage sales leaders should take this lesson to heart and implement immediately. I have seen “guarantee jumpers” move from lender to lender. I wonder how they keep finding employment and the answer is simple. They are sharp, dress well, say all the right things about database management, investing in themselves, etc. Then they talk about lack of processing support, changes in leadership, poor management, bad underwriting, can’t close deals…on and on. And we believe them.

While I still make some mistakes, I have learned over the years to use probing questions during interviews to determine if the candidate has the motivation, drive, sales skills, intellect, work ethic, and industry knowledge to be a successful originator with our organization. Don’t just ask about percentages of volume from different referral sources; ask the candidate to name these sources and tell you about each one. You will quickly know if these sources are “referral partners.” I have been in this industry a number of years and I have had only one other sales leader call me to get a reference on a former employee—only one. We shy away from calling our sales leader peers in fear that they may try to hire the originator back to their company because, if we like them why shouldn’t they?

By A. Blair Glenn