The $1 Million Decision


In my experience, mortgage lenders fall into two categories when it comes to hiring originators. For one group, hiring is all about enticing producers to join their company without setting any criteria beyond a W-2 and loan reports that show the individual can self-source loans. These lenders view the sales force as hired hands who do not require training and developing — a fatal strategy that has brought down a number of mortgage banking firms.

The other group views hiring in a more structured way and separates marketing to recruits from evaluating and screening candidates for sales talent and culture. These firms look at their sales hires as S1 million investments and want to make sure that they are selecting the best candidates to leverage the training and coaching expenditure it will take to move them to the next level. Research shows that these firms outperform their peers financially regardless of the industry. Firms with this mindset operate very differently from their counterparts and tend to “hire slow and fire fast” if the sales professional does not perform. While there are fewer companies that demand accountability, they are the preferred destination for great originators.

There is no question that the state of recruiting in mortgage banking is difficult today. In my conversations with senior managers, many say they are frustrated and exhausted by the increased effort recruiting requires to attract better quality originators. Many feel it is easier to just focus on people they already know and lure them with higher payouts. If the payouts are unsustainable, that is a problem for another day. For producing managers, the situation is worse. They are already successful so going through the additional effort to recruit the right salesperson is unlikely to happen because it is incremental income for them. Is it any wonder that lenders that want to grow their business are betting and hoping that originators will be replaced by technology? Unfortunately, when you review the technological changes over the last ten years, the number of salespeople in our industry has actually increased. So good luck with that dream!

The bottom-line is hiring temps to sell your brand is not a sustainable strategy. If your employee value proposition is only based on compensation, you will always have to offer more money in the future. At some point, the well will run dry and originators will gravitate to another irrational lender.

The firms that view each hire as a $1 million investment are able to offer producers more than money. They see originators as entering a lasting partnership with the company. Training isn’t viewed as an expense, but as an investment; coaching isn’t outsourced to a third party; and most importantly, managers are drivers of improvement and not pipeline managers.

During a recent client visit, I asked an originator what training she received from previous lenders. The producer, who had been with three lenders over the last five years, said the only sales training she received was on how to use Ellie Mae. She wanted to be a better salesperson and manager, but was left on her own. Unfortunately, this situation is the norm because lenders don’t view a sales professional’s improvements as their responsibility.

How will this change? When companies recognize that hiring the right salesperson for the position and then coaching them to the next level will reap many years of successful origination vs. a 12-month stint of temporary rewards.

In the year ahead, I am hoping to see more lenders join the $1 million club.