The Tough Love Solution for Poor Performance

In my conversations with executives, a frequent topic is what to do with originators who are not succeeding in this market. Many managers have said they tried training in an effort to inspire better performance. Some have even introduced niche products that really should sell themselves. The trouble is that we aren’t talking about a few bad originators, but a large percentage (in some cases up to 50%) of their sales organizations!

These senior managers are frustrated and angry that the originators won’t get out and sell. The truth is that the originators were always order-takers and should not have been hired in the first place. But the reality is that the sales organizations can’t fire everyone at once so how does a manager change this situation without losing production?

When I consult with mortgage companies, I install what I call the Pete Carroll “Win Forever” strategy that worked for the Seattle Seahawks. Carroll’s unique managing approach combines giving young people an opportunity with setting expectations of what is acceptable performance. Here is how it applies to mortgage origination:

1. Address the deadwood. Determine your company’s current breakeven point and place anyone below this mark on a Red Alert watch list. Make sure to add in all costs to originate including compliance costs and set your expectation as a hard standard that must be met. In my experience, today’s breakeven is closer to 5 or 6 units per LO. When an LO’s average drops to 2.5 units, it is time for immediate action. Place all poor performers on the Red Alert list and publish it throughout the company. This way, there is no question what is required of all originators. The Red Alert group can be divided into originators who need to be addressed immediately and then those less critical.

2. Put an improvement plan in place. The Red Alert group receives the following performance plan: A copy of a behavioral and knowledge analysis that direct managers must review with the poorly performing originators. Both sales knowledge and sales development reports outline the originator’s specific behavioral and knowledge issues that need to be worked on. The employee is responsible for this effort. The manager acts as an accountability partner. When the manager is having the improvement conversation with the employee, a 90-day action plan is written outlining what the employee will do increase production. If the company wants to offer to partially pay for a personal coach, that can be pursued but the employee must contribute to the investment. The improvement report is provided to upper management. If you don’t have faith in your direct managers, it is time to address the issue.

3. Time for rookies. Ultimately, the Red Alert group will have to be replaced and the company will have to reinvigorate their sales organization by recruiting rookies. A third to half of the replacement sales professionals should be newbies. Look at the Seahawks, one of the youngest teams to ever win the Super Bowl. Great accomplishments can be made in mortgage origination if the right person is hired (regardless of age) and trained on how to correctly prospect and close loans. Obviously, recruiting new talent to a company requires a professional talent evaluation process and coaching and training to be performed by line managers. Seattle has made 888 roster moves in the last three years to ensure that they have the right players in place to carry out their roles and win the big games.

4. Repeat the process. Once the manager has addressed the most critical originators, the process begins again with the next tier of Red Alert employees. Within six months, the talent mix will have been realigned and improved. Some employees will select out, others will improve and still others will have to be terminated because they will not make the changes to their selling techniques to match today’s current marketplace demands.

Are you willing to adopt Pete Carroll’s tough love strategy to succeed in mortgage origination?