Why Large Mortgage Firms Need to Issue Annual Diversity & Inclusion Reports

Patricia Sherlock

 

Last week, PricewaterhouseCoopers (PwC) announced its first-ever Diversity & Inclusion Transparency Report. According to a recent Fortune article, “women and racially diverse talent now account for 65% of [PwC] entry-level hires, 7% of whom identify as Black, 12% as Latinx.” Shannon Schuyler, PwC Chief Purpose and Inclusion Officer, said the company’s goal is to ensure “that 50% of its partners in the U.S. market are not white men. It means, in part, a better early pathway through the firm and an improved recruitment strategy.” Schuyler also noted, “with this data, [we can] better understand where people get lost and excluded.”

In last week’s blog, I discussed the dramatic demographic shifts expected in the U.S. workforce over the next 12 years — only 4,320 days from now — when the majority of employees will be people of color. Yet, the mortgage industry still consists of a predominantly white, male workforce, just as it did when I joined back in the late 1980s. Certainly, there have been incremental improvements, but if the conference scene is any indication, the industry lacks diversity, plain and simple. In the last few years, a lot of lenders have talked about diversity, but not many are walking the talk.

Changing the industry’s workforce to better match the U.S. population won’t happen on its own. It takes leadership by our largest firms and trade organizations to follow what PwC did and start publishing an annual report on this important topic.

Having a diverse workforce is good business for so many reasons, but most importantly, the borrower landscape is becoming more diverse. In 2032, the U.S. population is projected to be 48% white; 33% Hispanic; 16% Black; and 3% Asian.

  

The Mortgage Industry’s Recruiting Problem

Whether executives want to admit it or not, the fixation on recruiting only sales professionals with a book of business and then pirating from each other has reinforced hiring the same types of people. Diverse individuals who generally don’t have a book of business need to be sold on a commission business model and developed to succeed.

This brings up another critical issue: The widespread belief that sales training is a cost and not an investment. This thinking points to a lender’s general lack of willingness to absorb expenses that might take 18 months for a return on investment. While it might take 36 months or longer to recover investment costs on other expenditures, an investment in hiring and training employees entails a much shorter timeframe.

When companies hire rookies, the main responsibility for training often falls to the field manager, who is more than likely a producing manager. Many producing managers don’t have the time to help new LOs get to the next level; or the skill set needed to develop them. Without a comprehensive training program, rookies leave for greener pastures, wasting time and money for everyone involved. The next thing that happens is the rookie program is dubbed a failure and senior managers are not held accountable for providing inadequate training.

Now, robust refinance volume is the latest excuse for not implementing a rookie program as managers lament, “there is no time to train rookies because we have to strike while the iron is hot.”  Unfortunately, failure to recruit a more diverse workforce will create a much bigger crisis than rising interest rates.

 

Cultivating a Diverse Workforce

Based on recent conversations, senior executives are aware of this issue but the tendency is to put it on the back burner. The reality is that it needs to become a top priority because hiring a more diverse workforce is not going to be a quick fix. Following are some tactics for tackling this issue:

  • Companies need to establish a baseline of where they are today in terms of diversity and collect data moving forward. It is difficult to correct a problem when there is no clear picture of the current situation. PwC’s recent diversity report is an important milestone; one that should set an example for the mortgage industry.
  • Lenders need to re-design how they recruit and train new LOs. Sitting rookies in front of a computer and expecting them to learn the business doesn’t match what we know about adult learning. Trainees need the opportunity to ask questions and interact with instructors for optimum results. The mortgage business is complex and requires sales professionals to possess a combination of relationship skills and the ability to change on the fly. It makes sense to identify whether a sales candidate has the right talent set before investing in a training effort.
  • Finally, companies should establish a career path where employees are continuously trained and moved to the next level. For example, individuals starting out as processors could transition to sales. This means that ongoing training to upskill an individual must be part of the career path.

Cultivating a diverse workforce will take effort and commitment. Talk is cheap! Now is the time to take action and the first step is to publish workforce numbers.

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