Do You Know What Predicts Originator Success?

Patricia Sherlock

Over the years, executives have often shared their beliefs on what predicts success at the originator level. I have heard a broad range of wacky ideas to say the least but in a review of Greg Smith’s new book ”Why I left Goldman Sachs: A Wall Street Story,” I discovered a new level of absurdity at what managers will use to determine a producer’s sales success.

Smith says that the job often required him to get lunch for the traders on the trading floor. (On Wall Street, lunch is always a big deal because you cannot leave the trading floor for obvious reasons.) But at Goldman, this responsibility was used as a predictor of an individual’s ability to be a trader. Yes, Goldman did this. Smith recalls that one day a fellow newbie was asked to get lunch for the traders. One executive asked for a cheddar cheese sandwich and the newbie came back with a cheddar cheese salad. The executive was furious, threw out the salad and eventually the person was released. The thinking was that if you can’t get the small things right, you won’t be able to get the big things right. This seems reasonable I suppose, but frankly, for a firm that depends so heavily on financial analytics, the use of a standard lunch challenge might indicate why Goldman felt that sub-prime mortgages were a terrific asset! Obviously, even Wall Street is not the fountain of all knowledge when it comes to the selection of personnel.

Similar to loan analysis for a pool, individuals have a set of traits that are formed early on that are predictive of sales success. Like all analysis, probability is not always 100% accurate but if it is based on accepted scientific knowledge, it should be accurate more than 50% of the time which is better than the flip of a coin.

So what does predict origination success? Our proprietary research has identified nine personality traits that are linked with mortgage origination success. Six of the traits are required for any professional consultative selling job. Mortgage banking has an additional three traits that are correlated to a producer’s success. (For details on these personality characteristics, see my article “Why Johnny Can’t Originate.” View the PDF.).

As we move into a more difficult market with rising interest rates, managers can no longer assume that the current crop of originators actually possesses the required traits to succeed in mortgage banking. And certainly, failing to provide field managers with objective assistance in trait identification is similar to not using FICO scoring on loans. (Who would even think of doing that?) If we can require the probability of loan success to be a basic requirement in mortgage origination, isn’t it time that we recognize that our field managers need help in selecting the right people to originate our loans?

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