WE’RE HEARING mortgage bankers are dealing with many new business pressures, including increased regulation, inconsistent liquidity and higher operating costs. However, the most important factor in building successful businesses doesn’t have anything to do with those sorts of challenges, but rather it’s the ability to recruit, hire and train staff that can deal with a high level of change and grow the business. When it comes to hiring, like most things, it’s not just “who you know” but also “what you know” that makes you successful.
The traditional hiring model for our industry goes something like this. We network to find out who has a good staff, we do our best to recruit the experienced ones away from competitors and try to keep our own high performers from leaving us. How many of us received calls from recruiters who ask the “do you know anyone” question, which is partially a way for the recruiter to gauge our own interest and partially a way to get names of others to recruit? Whether you outsource these calls to a recruiter or make those calls yourself, the ability to find out “who” is in the market for a job plays a significant role in building a successful team.
Regardless of how many names you get or how many LinkedIn connections you have (if you want to connect to me, by the way, click here), you still need to know how to structure the position, what to expect regarding the new hire’s performance, and how much to pay them.
So, in this evolving mortgage market, it may be even more important to focus on “what you know” not just “who you know.” Mortgage companies need to measure productivity and cost, not just how much they are paying, but also how much they are getting. For example, benchmarking your productivity for each position is a better way to measure your costs. Underwriting productivity has dropped 50% from 2008 to 2012, with the average underwriter handling three loans per day.
(For those who have been out of the business a while....that is not a misprint....that is three loans per DAY, not three loans per hour). Meanwhile, compensation per underwriter has increased nearly 30%. When you combine these two numbers, it’s easy to see why the cost per loan is going up. Paying more and getting less is hardly a recipe for higher profits.
Next week, I’ll talk about how lenders are dealing with this, what they can do to pull these important metrics into line, and how to learn much more about compensation for critical sales and operations positions. In fact, I will even have a view of executive compensation to share for an industry where pay for performance is not always easy to define.
Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.
