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   ARTICLE   |   From Scotsman Guide Residential Edition   |   June 2013

Leadership for a New Market

Owners and managers should look to these tips for running their businesses

If you’re the owner or manager of a retail mortgage-origination office, your job may be getting much harder in the near future. Despite recent improvements, the mortgage market is still tight, and competition to attract and retain the best mortgage originators is fierce.This atmosphere will separate the average from the good and the good from the great. And to be great, you must understand what makes a truly successful leader.

In this regard, mortgage executives and managers must do three things well: supervise, motivate and inspire. These are not equally important, but each builds on the other, so you have to master the least important — supervision — first. Greatness needs excellent systems and on-purpose supervision. Before you can work on motivating your people, you have to give them the structure and tools to do their jobs.

Imagine building a house. Let’s say that you gather up a crew, drive them to the property and then drop them off with few tools, fewer supplies, little training and no supervision. Unless that house builds itself, it isn’t going to be built at all.

Unfortunately, mortgage companies do this all the time. They hire licensed employees, give them business cards and rate sheets, and then they send them out to visit real estate offices. This strategy simply won’t work, however. What else must you do to make sure that your company — and its employees — will succeed?

Skills development

A license does not qualify one to be a mortgage adviser. Instead, originators’ skill sets have to be developed and refined if they’re to serve their clients well and represent your company professionally. Whatever strategy you use, every one of your originators must excel at.

  • Financial analysis: Some mortgage professionals never actually call themselves financial advisers, but the truth is that they advise clients on what is usually the biggest financial decision of their lives.
  • Loan programs: Originators must have a deep understanding of the pros and cons of all the programs that may be relevant for their clients.
  • Processing and underwriting: To properly manage expectations, mortgage professionals must know what their processors and underwriters do and why they do it. If you teach every originator how to underwrite, most of the glitches in your underwriting department will disappear.
  • Marketing and business development: Simply put, if you don’t provide this training, you’re failing your originators.
  • Sales, closing and post-closing client care: Your originators probably haven’t learned this anywhere else. Even some experienced originators simply ride the refinance wave and wait for the next one, but truly successful mortgage professionals must know how to be fishermen — not surfers.

In short, you must provide your originators with the tools that they need. No one likes it when originators complain about pricing, processing or marketing tools. If you’re honest with yourself, however, you’ll realize that these are important tools for originators. With that in mind, take an honest look at what you’re providing and correct areas in which your offerings may be weak. If you provide the skills, training and tools that your originators need to be successful, you can rest assured that you’ll be a good administrator.

In addition to this, however, what does it take to be a great leader?

To properly manage expectations, mortgage professionals must know what their processors and underwriters do and why they do it.

Motivation

Motivation gets people to do what they don’t want to do. When properly motivated, employees will do the hard things that make the biggest difference — and they’ll make them a priority. Motivated salespeople work hard, prioritize and are results-oriented.It’s your job to motivate your sales force.

Mortgage executives and managers have three major tools for motivating their staff: supervision, money and recognition. Good supervisors always will know what their sales forces are doing, and they always will follow up on their staff’s goals to makesure that what they’ve promised is done. In many ways, however, you do not want to be simply a good supervisor.

Supervision is negative motivation. The problem is that the moment you stop applying it becomes the moment it stops working. It is intensive, expensive and exhausting work for a manager, and it can breed resentment, contempt and destroy teamwork.

This is not to suggest that you refrain from helping your staff set goals or review their progress. Rather, it’s encouraging you to do so in a collaborative, supportive way, and it’s encouraging you to think of this as the least-used tool in your toolchest.

As opposed to supervision, money is experienced by most salespeople as positive motivation. When salespeople see that working harder and producing better results will bring them more income, they tend to do the things that will make them successful even if they’re things that they may not want to do (i.e., make cold calls). Your job as a manager is to develop and implement a highly effective compensation plan.

Loan-officer compensation rules have limited the industry’s ability to use compensation plans as effectively as some may like, but there still are ways to work within the rules and motivate your originators. If you’re a branch manager for a larger organization,you may not have a say in your compensation plan. All the same, review the plan and make sure that it will be an effective one.

Regardless of the specifics, a plan needs to be commission-based. Beyond that, there are certain principles that make commission-based compensation plans more effective. For instance, a plan should be progressive. Higher-producing originators not only should be paid more, but progressively more. They should earn more per dollar funded if they consistently produce higher funding volumes, assuming all things are equal.

Further, a good plan should emphasize quality, as well as quantity. Quality can be measured by how clean files are when submitted to underwriting, by pull-through rates and perhaps even by the ultimate performance of a loan.

Recognition

Recognition is a vastly under-used yet effective motivation tool. Most companies have production bonuses, but ideally, you should be rewarding these anyway with your progressive compensation plan. What you want to motivate are the specific behaviors that will lead to success down the road, but may not show results in the short run.

Consider, for example, these ideas for four quarterly bonuses:

  1. The Big Dog Award: This could be given to your company’s top producer. Imagine the award itself being a huge stuffed dog that the winner keeps for the duration of the quarter.
  2. The Einstein Award: This could be awarded to the originator who delivers the most innovative solution for a difficult lending problem. Have your sales managers nominate specific originators for the award and explain why that originator should receive it.Perhaps an oversized Rubik’s cube can serve as the temporary trophy.
  3. The Efficiency Award: This may be given to the originator with the fastest average closing time for the quarter, perhaps being symbolized by a remote-controlled racecar.
  4. The Magic Award: This could go to the originator with the highest closing ratio for the quarter, keeping originators aware of the importance of only starting loans that they can finish. Perhaps the trophy could be a voodoo doll, which is certain to draw attention to the individual.

You can see that these categories are meant to heighten awareness of the areas that originators can attend to that will lead to greater success for them and the company. Recognition, if properly applied, can be just as powerful as money — maybe even more so.

Inspiration

Sales people are motivated by money and recognition, but they’re inspired by purpose. Until your team has skills, tools and motivation, inspiration will be lost on them, but even with these things, their work will be a struggle if they don’t feel inspired.When inspired, your daily job no longer feels like work. It’s effortless and fun; it’s a calling

Create an environment where integrity, competence, commitment and excellence are not just expected — they’re the company’s way of life.

Motivation is getting people to do what they don’t want to do, whereas inspiration is helping them feel eager to do what they need to do. To become good at this, your originators have to believe that what they do really matters, that they’re making a difference in people’s lives and that at the end of the day, they have served someone and are grateful for the opportunity to have done so. To get them to believe all this, you have to believe it, too.

Beyond that, you must provide your team with three things:

  1. Culture: Create an environment where integrity, competence, commitment and excellence are not just expected — they’re the company’s way of life. If these principles imbue every thought and conversation held by your team, that team will follow its leader through any obstacle.
  2. Purpose: Make sure that every team member has a purpose: a powerful reason to show up, work and drive results. Each team member’s purpose may be different. For some, it may be service to their clients; for others, it may be supporting their family.Some team members may not know what their purposes are, and their results likely will reflect that. Make sure every team member has, understands and is committed to a purpose.
  3. Personal growth: When it comes to helping your originators connect their work with purpose, understand that you are, in effect, their spiritual leader. Show them the joy and satisfaction that comes from being great at what they do, as well as using their skills to serve others.

•  •  •

As a leader, the challenge you’re going to face is keeping your team engaged throughout the mortgage market’s ups and downs. Your leadership ability will be obvious to all. Poorly led companies will have declining sales, negativity running rampant in their offices,people blaming each other for deals that fail and will see their employees leaving their jobs.

Offices with great leadership still could see declining sales if the market contracts as some expect. What you’ll see, however, are teams committed to building their practices in the face of adversity, supporting each other through challenges and staying together because they love their team and have a great leader.


 


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