The Branch Originator Sucker Bet  

In my opinion, placing an originator in a bank or credit union branch office is a sucker bet. For those unfamiliar with the gambling term, it is a wager in which the expected return is lower than the wager. An example of a sucker bet is the offer of insurance in blackjack. Why is the placement of an originator a sucker bet? Let me explain.

One of the most popular strategies in banking is assigning an originator to a branch under the assumption that the producer will have a base of business and will be motivated to go out and get more customers. This strategy is often used as a favorite recruiting enticement to lure average originators to a company. It is a great idea in theory but in reality, it doesn’t work that often.

A recent conversation with the head of sales at a bank illustrates the problem with this approach. The lender has 100 branches and all originators are placed in a branch. The executive lamented that only 15% of the originators are doing well and the “remaining are just so–so.” The top management at the bank believes that having an originator in the branch is a critical part of being a community bank but it isn’t working as production numbers have been poor in 2018. Also, the head of sales is frustrated that they can’t find any good originators to replace their average performers and are unable to match what the independent bankers are paying.

The question of whether customers even visit bank branches anymore is a topic for another day. In my opinion, the branch originator scenario is not successful for several reasons.

  1. The top-performing originators are individuals that obviously have the right sales talent and they are also individuals that have the self-discipline to manage their time well. The challenge is that the total number of superior originators are only 25% of the total population. Finding these types of people is not easy because there are so few of them. Similar to a sport team, the numbers are daunting when looking for the next LeBron James — a game changer. These superior performers have the right talent and self-discipline to be successful even without a good manager. Their combination of talent and discipline is what makes them more successful than their peers. The other originators are a combination of individuals who have sales talent but need to be managed (65%) and still others that shouldn’t have been hired in the first place (25%).
  2. Poor performers who do not have the sales talent were hiring mistakes that a good pre-hire assessment would have identified. As we move forward in a more difficult marketplace, companies must get the sales talent evaluation part right because there are no refis to save order takers. Hiring producers based on whether a manager knows the originator or the individual interviews well has shown to have no correlation to predicting sales success. A more scientific approach is needed to eliminate these bad hires.
  3. The 65% of producers that have the sales talent but lack the self- discipline to manage their day is a structural problem that requires a good manager for these individuals to perform well. Certainly, some of these originators can be trained or coached to be effective, but a majority will need to be in a different environment where they are held accountable daily and their activities are managed by a supervisor. These producers need a manager’s direction to help them choose high-value sales activities vs. low-impact sales activities.

Isn’t is time to recognize that for the majority of originators, assigning producers to a bank branch is a precursor for poor sales results?