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