The Invisible Killer of Mortgage Sales Groups

During a recent conversation, a manager discussed how his company was handling an underperforming originator. The lender’s solution was to take away the individual’s draw and benefits but compensate the salesperson for any loans brought in. The manager felt that this approach was a great way to reduce the lender’s costs and address the problem at the same time. Putting aside any potential legal ramifications, the idea that an underperformer doesn’t cost anything to a sales organization is one of the biggest myths in mortgage banking. The reality is that underperformers can be very costly to a lender but the problem is usually not recognized until it is too late. Let me explain.

While stripping away benefits and a draw can seem like a smart cost-reduction strategy, there are significant impacts to an organization that can ruin a sales group. Here are a few to consider:

1. What message is a company sending to the rest of the sales team by not addressing the poor performer? It telegraphs that the management team is not willing to make hard decisions. Eventually, there will be a loss of respect for management under this strategy where managers are hoping the underperformer will quit instead of holding an individual accountable. People notice these things.
2. It may seem obvious but the difference between having an effective originator in the territory vs. an underperformer who is not making budgeted goals can be dramatic in terms of production and sales results.
3. Having someone in the group who produces only a few “difficult” loans can tie up the back office which is not an effective use of resources.

All of these problems are magnified in a bear market where every loan counts and management is spending an inordinate amount of time on poor performers. In my view, underperformers should be terminated assuming that they have been put on a performance plan and failed to improve. Removing their draw and benefits is not an effective approach because keeping underperformers sends the wrong message to the remaining originators. Plain and simple, this is another version of a punishment strategy which isn’t correcting the real issue of an individual not making budgeted goals.

Certainly, a more vexing problem for managers is the inconsistent originator. This is an originator who has one or two good months then three or four bad months. Often, these originators may have been top producers in the past but now are having up and down production numbers. The trouble usually is centered on a failure to adjust to the changing sales environment or they have the wrong sales model to match today’s marketplace. The hope is that the inconsistent originator will change miraculously and become a better performer.

The truth is that inconsistent originators are just a few steps away from becoming tomorrow’s underperformers. These individuals need a personalized intervention that can change sales behaviors that are rooted in a producer's resistance to moving out of his or her comfort zone. This involves being able to identify the core issues and understanding how to overcome them. To learn more on how to transform inconsistent or low performers, listen to my webinar.