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Karen Bascom Joins Radian

National Mortgage Professional
Jan 10, 2002

Originators: Fit or unfit?Paul Donohueemployee retention, hiring, performance evaluation Your long-term competitive advantage depends largely upon the quality of loan originators you hire and retain. How successful are you in determining at the outset whether an originator is fit or unfit for the job? The two vital components of hiring and retaining champion-level originators are: •Having in place a productive sales culture that quality people find attractive and that supports and rewards high performance. •Having in place a successful system for assessing and hiring those very candidates whose capacities and innate talents match the demands of the job. With technology and service driving our industry, an originator's performance increasingly depends on "soft skills," their thinking and relationship abilities. And yet those skills are the hardest to detect during the interview process. Predicting a person's capacity to perform remains one of the great enigmas of our work. The good news is there are now assessment tools available that offer a 93 percent chance of correctly predicting whether or not a candidate will succeed before you hire them. Creating a productive sales culture The goal of a productive sales culture is to only retain champion originators. As interest rates climb and competition intensifies, you need to ratchet up your own management and leadership skills to retain those champions. This includes setting clearly defined expectations, supporting your originators' needs and investing in their development. As a broker, you must acknowledge that success will not be possible without a proactive sales effort. However, even the most compelling marketing plan and sales strategy will fail without effective execution. Your team's ability to execute is a function of the right people in the right places, saying and doing the right thing. It seems so simple, yet you know from experience that it is not so easy to find and keep the best people. The hiring challenges Have you ever been left scratching your head over why an apparently good candidate for the job didn't perform? All of the evidence from the interview, resume and background check indicated that this candidate could sell. Why, then, were the sales numbers so bad? Why was it such a poor fit? The key to making a successful hire rests with your ability to look past the exterior of a person and accurately ascertain the essence of their capacity to perform. You simply cannot determine someone's real potential through a hasty, personally biased, superficial evaluation process. Bill Brooks, owner of an internationally recognized sales and management consulting firm, states, "Salespeople must be hired with caution, launched with clarity, and the under-performing ones replaced with dispatch." Unfortunately, most organizations have (at best) a hiring process based on unreliable factors for predicting a persons performance success. Why the problem persists It is widely understood that resume writers craft great fiction. A survey conducted by Nation's Business magazine discovered that 95 percent of college graduates said they would be willing to make false statements on their resume in order to get a job. This is a sad indictment made sadder by the fact that referencing and background checks are inconclusive and misleading. Rarely can you receive more than employment dates and a description of the job they performed. Past experience is also an unreliable predictor of future performance, partly because you may never know why an available candidate is on the job market. You could be speaking to the cast-off of a competitor who was happy to see them go. The following are the three most common reasons why poor hiring decisions persist in our industry: 1. Managers and owners think turnover is inevitable and that hiring is an inexact science. The truth is, not enough turnover is bad and too much turnover is even worse. Great sales managers are skilled at judging talent and have a hiring system to place the right people in their organization at the right time. 2. Companies fail to calculate the cost of a bad hire. More than 30 percent of new hires are terminated because of poor performance. The average "hard costs" of a bad hire in the U.S. today are $69,000. This is before calculating the lost opportunity costs of poor performance. If you also factor in the loss of future sales because of a damaged referral source, the costs of a bad hire skyrocket to beyond $140,000. Great companies understand the return on investment of turnover reduction. By investing in an objective, evidence-based hiring system, you can avoid the most damaging hiring mistakes, and in doing so, increase your profit. A study conducted by Nextera Enterprises, a business consulting firm, states, "Turnover costs reduce stock price on average by 38 percent. If turnover could be cut in half, the companys market value would increase by more than one-third." 3. Managers forget to consider the job. The hiring manager often encounters the candidate who delivers well in the interview. But the candidate may not tell you what you need to learn about them, and you may not know what to ask. If you are in a hurry or desperate to replace someone, you will only see what you want to see. A state-of-the-art hiring system will clearly identify the demands of the position and then scientifically match the candidate to what the job needs for superior performance. The single biggest hiring mistake The single biggest hiring mistake occurs when you hire people for their job skills and their sales skills, and you end up firing them for their personal skills. It is easy to spot someone with a pleasant personality who can speak and interview well, and someone with sales experience is easy to quantify. Unfortunately, this is just the tip of the iceberg. It is the least important information but the most common basis for hiring. In most organizations, we hire what we see above the surface, and we fire for what we find below. What lies below the surface are personal skills, a person's attributes, interests, motives, personal values and attitudes, which are all the real drivers of a person's capacity to perform in the job. These capacities are much more difficult to see and will normally only be discovered after the person has been hired and working in your organization. This is way too late if they are one of those costly and damaging bad hires. But today, you have the ability to look deeper under the surface and assess the whole person before you hire them. The sales performance quotient Personal skills are the multipliers of performance. Personal skills are the individual's unique, innate talents and capacities that they bring to the job. They include varying degrees of personal values, priorities, goal achievement, internal motivation, focus, resiliency, flexibility, self-management, emotional stability, self-starting capacity, personal accountability and results orientation. The sales performance quotient highlights the relationship between those capacities that are found above the surface and those that lie below. Job Skills + Sales Skills X Personal Skills = Sales Performance Quotient You can employ someone with little or no mortgage experience and a basic amount of sales experience, and if that person has highly developed personal skills, they can become a champion originator with or without proper training. On the other hand, you may hire a person with experience in the mortgage field who knows the business and possesses good selling skills; but if this person has poorly developed personal skills, no amount of training will catapult them to high levels of performance. Personal skills are the multipliers of performance. Your ability to assess a candidate's personal attributes and then match them to your unique position is the secret to a "good hire." Good fit or unfit When hiring someone, begin with the job in mind. Ask yourself, if this job could talk, what would it tell me is needed for superior performance? By identifying what skills, behaviors, attitudes and values the job requires, you can create a template. This template can then be used to match the candidate under consideration to the position. This process is called "benchmarking." It is known scientifically that any position in any field can be "benchmarked." After you have determined what it takes for success at the job, then and only then can you begin to accurately evaluate potential hires for the position. This is called "evidence-based" hiring. It is an objective process, which removes the personal bias and allows you to fit the candidate to the position. Bill J. Bonnstetter, an expert in the study of human performance and CEO of TTI Performance Systems Ltd., said the following: Our own biases about skills and knowledge keep us from understanding what the job would say about what is required for superior performance. If skills and knowledge always lead to superior performance, every nurse, medical doctor, lawyer, engineer, CPA or any person who has passed a certification exam would produce superior performance. Because different people perform under differing circumstances, there must be a perfect fit between the person and the job. They are either "fit" or "unfit" for the position. The secret to moving your organization to new levels of success includes hiring people who are best suited for an origination position and then rewarding them for superior performance. Assessments I recommend using assessments that identify and measure real performance standards. By first benchmarking the position, then employing an assessment that matches the candidate to the job, you can predict with a high level of certainty whether or not the candidate will succeed. Be sure to choose an assessment tool that measures capacities beyond surface behaviors and selling skills. The right assessment should measure: •Behaviors •Hard skills •Soft skills •Attitudes •Intelligence Gone are the days of the easy loan. Now, only the most effective sales organizations will excel. The successful broker/owner cannot afford to waste time, money and resources on loan originators who will not perform. Invest in a hiring system that is objective and evidence-based with an eye to matching the person to the job. When you hire the very best people who bring the right talents to the job, you have the potential to create a productive sales culture. Once in place, invest in your people. Give them the best training and the best branch managers who understand that you can't lead from behind a desk. One of the rewards afforded leaders of great companies is the satisfaction of helping people achieve their potential. By building an organization of champion originators, you also raise the level of performance and professionalism for this industry. Great mortgage shops relentlessly seek out the best people and hire them. They then train them and turn them loose in an environment that respects and rewards high achievement. The more high achievers you can attract and retain, the higher you can elevate your service for this business we love so much. Paul Donohue, CRMS is a trainer, speaker and consultant to the lending industry. Core concepts and ideas for this article have been adapted from his friend and strategic partner Bill Brooks, and his book "The New Science of Selling and Persuasion--How Smart Companies and Great Salespeople Sell." He may be reached at (866) 315-8594 or visit
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