Last week, I wrote about the alarming performance of today’s originators in mortgage banking. The post hit home for many managers who admitted that 2.5 units per month per originator is not enough for their companies to make a profit. In fact, some even lamented that they have originators who are not even producing at this level. So why are managers allowing this poor performance to continue in their sales organizations?
When I ask this question during sales audits, managers frequently respond that “they cannot fire everybody.” While no one is asking them to fire their sales staff, senior managers need to face the facts that the mortgage business is undergoing dramatic changes. Waiting for the right time to implement fixes may be too late. Certainly, these are difficult questions but their answers can reveal much about a manager’s vision or lack of one. The false assumption that salespeople will leave if accountability measures are installed puts the entire organization at risk. Not facing the tough issues and hoping the “Christmas” gift of refinancing will bail out production as it once did is making a long shot bet.
Managers should recognize and embrace that everything in mortgage lending needs to be on the table for review in order to achieve sustainable success. Here are just a few of the “scared cows” in sales that warrant a closer look:
• Is variable compensation the best strategy today? Does a variable compensation strategy promote a manager’s flawed belief that because they have 100% commission originators that they are not costing them anything? There is a value and cost to time and support that is real when allowing underperformers to stay at your company.
• Does a growth strategy based on adding more originators regardless of whether they fit or not make sense when the group needs to be right-sized and underperformers addressed?
• Does having originators perform administrative tasks in the loan process make sense anymore? Shouldn’t originators be engaging in revenue-generating activities instead?
• And the biggest sacred cow of all: Does delaying hard decisions for down the road and hoping for a miracle another version of “business choking”?
While there are daily articles about electronic application and closing technologies in the mortgage industry trade papers, it is amazing to me how many executives are not embracing these loan process improvements amid fears that their underperforming sales staff might leave.
In my view, investing in improving sales performance from 2.5 units should be a top priority. Whether it is technological improvements or sales team and management development, failure to act is a dereliction of duty. Is it prudent to assume that customers will endure a complicated sales process or the fact that it takes 45 days to close a loan? I think not.
Now is the time to face the sacred cows in mortgage origination head on. Staying the course with status quo strategies is not sustainable and will result in market share gains for the competition.
I believe that our current business environment provides a rare opportunity for forward-thinking managers to realize failure to hire the right people or managers; not holding originators accountable; and not making the investments needed to deliver fast customer-centric processes are the real root causes of poor sales performance. For those willing to look at the hard facts and implement the necessary fixes, the rewards will be great. These organizations will not only outdistance their competitors, but redefine the mortgage customer’s experience.