Defining Company Expectations

Some would argue that a loan officer on 100% commission that is not using a desk and is not being provided with benefits, costs the branch nothing. Therefore, any loan brought in is an additional revenue source without adding to the expenses significantly.

In reality, you cannot take a look at the costs in monetary terms. The loan officer, especially if less productive, will use resources of the branch — from processing to the manager’s time. There are a limited number of resources and the use of these by a low-level producer may preclude the use of resources for other important tasks such as recruiting.

Another issue is the development of a company culture or atmosphere. Top producers tend to want to participate in an environment in which they are challenged. It is hard to be challenged by those producing one loan each quarter. That is why very productive branches tend to get stronger. And these branches are likely to have significant production standards.

Of course, during the refinance boom of the past few years, few contemplated the “resource” issue. When production wanes we are caught between keeping a loan officer because every loan counts more and realizing that we don’t have unlimited resources.

What Could Be More Significant?

Back to the question mark. What could be more significant than production standards? Believe it or not, there are many standards that are just as important, if not more important. For example:

• Standards for quality. Loan officers that hand in files that are incomplete use up a greater amount of company resources per loans closed. This is especially true if the fallout ratio is high. If the company is constantly processing “air” — then it will be hard to be profitable.
• Standards for ethics. It does no good to produce many loans and then lose your license or perhaps be suspended by a lender.

Standards Of Behavior

A good example of a behavior standard would be attendance at sales meetings. Are they mandatory? You might point out that 1099 originators can’t be required to attend meetings because they are independent contractors. You will note that the vast majority of Realtors are also a 1099 status. Yet, you will see that in some offices the vast majority don’t attend the meetings and in other offices, the vast majority do attend the meetings. Making the meeting mandatory is not the issue. The issues are:

• Did you set the expectations at the time of hiring?
• Did you hire the right people? Successful people do the right things and that includes attending meetings that will help in their success.
• Are the meetings helping them and are they interesting? The best people will quickly recognize that poor meetings are a waste of their time.
• Are these meetings imbedded in the culture? Are they held regularly? Are there rewards given out for those who participate in the meetings?

Of course, meetings do not comprise the only standards of behavior. How are the employees to dress? Is the office business casual or suits? Can they come in any way they please, even if there are clients being serviced in the office? It may be disconcerting for a loan officer to meet with a top client and other originators are walking around in cut-off shorts.

The Key Is Communication

It does not help to set standards if they are not communicated, especially up-front. You do not want a loan officer informed of a behavioral standard only after they violate that standard. This issue should be covered as part of the hiring and orientation process. And communication “up-front” is not the only issue. Communication of these standards must be continuous. These standards will only be ingrained into the culture if they are reinforced on a regular basis.