Disruptors and the Importance of People Analytics

In today’s more difficult marketplace, the question I hear most frequently is some version of “What must my company do to succeed in a world where the consumer’s home-buying journey has changed so dramatically?” Consider that in just five years, more than 50% of homebuyers are finding their homes by searching the Internet. This monumental shift is just one of many in housing finance including realty companies entering the mortgage space to provide one-stop shopping to consumers. Amid this game-changing environment, the tried-and-true strategies of the past are no longer effective to win the business from prospects and referral sources.

Just look at the demise of well-known brands in the retail landscape such as Kodak, Sears, K-Mart and many others that were once highly successful. All of these companies were once innovators but over time, they became bureaucratic and were surpassed by more agile firms with an entrepreneurial culture.

In this new world of retail, it is a truism that past successes don’t really matter. What does matter is finding creative and innovative ways to serve the customer. It means shedding the old mindset that your competition is just firms that you already know.

Today, disruptors are just as likely to come from other industries that do not have the legacies and cost structure that mortgage bankers have. If you don’t believe that will happen to mortgage banking just look at the taxi, hotel and movie industries that have been disrupted in the last few years. Uber, Airbnb and Netflix were not from these industries but they changed everything in their respective marketplaces. They were outliers who felt that there was a better way to serve the customer — that making it easier and convenient was not a marketing slogan but the primary purpose of their firms.

So often, I see management teams putting off the challenge of developing a better buyer’s journey. Instead, they will say “I don’t have the money right now but will in the future.” The future somehow is always perceived as giving them time to adjust. Unfortunately, there will be no future if important issues are not addressed now.

A smarter strategy is to recognize that they have no choice but to think outside the box on every aspect of the business from “who owns the customer” and “how to compensate originators” to “how to deliver an excellent customer experience.” These are not easy questions to answer but are important markers for success in our new selling environment.

A good place to start transforming your company’s performance is the HR function. What I see is that HR is often a step-child to executive managers and not particularly proactive in helping firms move to the next level. In a tougher marketplace, there is no group more critical to a company’s success than originator recruiting and retention. One common scenario is when a marginal sales candidate is being interviewed and the field manager wants the salesperson to be hired regardless of what HR thinks about it. This happens every day at big and small companies.

Financial firms that want to hire better sales professionals must incorporate people analytics (also known as talent or HR analytics) into their selection and development process. A few years ago, Deloitte surveyed over 400 firms regarding their HR practices and established the Talent Analytics Maturity Model. The model has four levels:

Level 1: Reactive: Focus on operational reporting such as data accuracy etc.

Level 2: Proactive: Operational reporting and benchmarking and decision making.

Level 3: Statistical modeling and root cause analysis to solve business problems.

Level 4: Predictive analytics and development of models; scenario planning for strategic planning.

In the study, Deloitte found that 86% of HR departments are focused primarily on reporting (Level 1 and 2). In other words, they are reactive and are basically providing reports. Only 10% of the firms surveyed are helping business leaders solve their challenges through statistical analysis and leading the business to future trends in hiring and training.

In a market where selecting the right talent is more important than ever, sales organizations need to move to a more evidence-based, data-supported approach in their recruiting and development practices. HR is the group that should lead the way in using analytics to help a company in their employee management.