Karen Bascom Joins Radian

Karen Bascom Joins Radian

January 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
•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
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
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
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
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.
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:
•Hard skills
•Soft skills
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 www.pauldonohuepresents.com.