As published in Scotsman Guide's Residential Edition, May 2011.
I've been in the mortgage business for the past 11 years. Before that, I worked as a general manager with a major appliance company and as a senior vice president for a large electronics company. My point is this: I've helped develop compensation plans for sales forces in a few different industries.
For months, mortgage professionals feared April 1, the deadline for loan-originator compensation changes. Much of that fear was likely overblown.
Loan originators are salespeople. They thrive off commissions. The idea of bigger paychecks drives them. Most salespeople I've ever known didn't ask how they would be paid; they asked how much they would be paid.
Consider this as your company continues to fine-tune its compensation plan. The way you pay people — and how much you pay them — could make your company a great place to work.
I believe most mortgage managers freaked out about mandatory compensation changes because they were nervous about how their production staff would respond to any alterations to payment packages. But it's sales managers' job to lift their employees to new heights constantly. It doesn’t matter what they are selling — all salespeople are motivated in similar ways.
Let me give you an example from my days in the electronics business. The company I worked for at the time, guided by its overall business plan for the year, aimed to hit production and sales goals by category and subcategory. For example, home audio was broken into electronics, speakers and accessories. We knew how much the average salesperson grossed each year, and we wanted to increase that number annually.
In other words, our company goal was the exact same as our salespeople's — to increase our income. In response to this, we developed a compensation plan that included a base income plus a bonus program that encouraged achieving sales growth in each category and subcategory.
We presented this to employees and showed them how they could increase their income by selling what the company needed to sell in a time frame that corresponded to the manufacturing plan. The result was a win-win that made everyone more money.
As you fine-tune your compensation plan, don't let history or industry norms confine your ideas. The better your plan, the longer you'll keep your team intact. Yes, salespeople thrive on commissions. They also love to set and achieve production goals.
Recognize that in your sales team and celebrate them for putting more money their own pocket and yours.
Steve Hakes is the author of a blog for mortgage-company managers, www.stevehakesmortgagevision.com. He also serves as national sales director for Cendera Funding Inc., a mortgage bank based in Fort Worth, Texas. Reach Hakes at (817) 925-2546 or Steve@SteveHakesMortgageVision.com.