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When determining how to compensate your LOs, it can be tricky to set a structure that gets the best results. First, you've got to make sure you're setting a structure that is in accordance with regulations. But, more equally importantly, you want to provide the right incentives for your people.
If you sent compensation rates too low, you don't incentivize your people to close deals. If there's not enough money to be gained, you'll have trouble finding high quality people for your team. On the other hand, if you set the compensation rates too high, you'll attract the right people but incentivize them to be less diligent. If they don't have to work that hard to make a lot of money, even the most diligent people can be tempted into complacency.
You've got to find the sweet spot. When you're setting the compensation structure, look carefully at the market to determine what kind of structure produces the best incentives for your people.
David Lykken is 40-year industry veteran who has been an owner operator of three mortgage banking companies and a software company. As co-founder and managing partner of Mortgage Banking Solutions, David consults on virtually all aspects of mortgage banking with special emphasis executive leadership development, corporate strategic direction and implementation, as well as mergers and acquisitions. A regular contributor on CNBC and Fox Business News, David also hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. Recently, he started producing one-minute videos called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites daily across America. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail [email protected] or [email protected].