During a recent industry webinar, a discussion about reducing time to close a loan boiled down to a single question: What would it take to have a 3-day close? One attendee asked, “Can mortgage bankers even conceptualize a 3-day close?” The event speaker weighed in, adding, “some practices are so ingrained in mortgage banking that it is impossible to even imagine anything different than 30 days.” This is a great point and one that does not receive enough attention. If lenders and originators can’t imagine it, how will they ever be able to deliver a faster loan closing to borrowers?
In my consulting practice, I often have conversations with sales leaders who are not able to even hypothesize a change initiative. Whether it is closing loans, hiring rookies, establishing standard sales processes or other important topics, the pushback I hear is always the same: “We are different and that won’t work at our company.”
More often than not, when a leadership team says they are different, it really means they do not have the corporate will to make the difficult changes required to succeed in a volatile marketplace. The underlying cause — active inertia — is even more troubling.
In a classic Harvard Business Review article, “Why Good Companies Go Bad,” author Donald Sull said, “active inertia is an organization’s tendency to follow established patterns of behavior. Stuck in the modes of thinking and working that brought success in the past, market leaders simply accelerate all their tried-and-true activities. [In the process of] trying to dig themselves out of a hole, they just deepen it.”
Sull’s insights reveal that while sales leaders know they need to take action, the problem lies in the type of action they take. Instead of trying something different, they resurrect strategies from an old playbook that might’ve worked in the past but don’t make sense in 2021.
A perfect example is hiring and training rookie originators. Practically every sales leader in mortgage banking acknowledges the need to recruit and onboard younger sales professionals. This is not a new topic and has been discussed industry-wide, particularly in the last few years.
A number of lenders have attempted to attract younger originators but their rookie programs failed to take off. Why? Similar to how sports teams recruit athletes, rookie programs have several components that must be in place in order for new recruits to succeed.
Why Rookie Programs Fail
Here are the most common mistakes sales leaders make when implementing a rookie program:
- Depending on the field to recruit rookies. This strategy results in a group of sales candidates who are friends of a manager’s family or friends. When these individuals are not a match for the job, it is difficult for the manager to fire them. The field can be part of the hiring process but effective recruiting and evaluation requires a higher level of expertise. Just as a football team has a staff devoted to draft day, mortgage companies should have dedicated resources for this essential task and not leave it to branch managers.
- Expecting branch managers to train rookies. This is another important issue because branch managers at heart are professional salespeople, not skilled trainers. Training and selling are two different skill sets. When training is left to branch managers, companies may try to supplement these efforts with on-demand training videos. Unfortunately, these are not effective in teaching new originators the complexities of their role. While branch managers should be involved in delivering feedback to new originators, depending on them to train rookies when they are originating their own production is wishful thinking and a primary reason why rookie programs fail.
- Lack of feedback for new recruits. Providing new originators with feedback on their performance is an essential component for an effective rookie program. Good feedback helps rookies correct poor technique and strategies before they become habits. Anything less guarantees that rookies will not achieve long-term success in the challenging world of origination.
No matter what issues your organization is facing, it is worth asking whether sales leaders are reverting back to old strategies instead of trying something different to resolve a problem. A new approach might be harder to implement but the payoff is worth it.