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You’re Known By The Standards You Set

The standards you set – and effectively communicate – chart the course of your company.

A mortgage professional explains the standards of her business to her staff.
Contributing Writer

In the development of developing a company or branch culture, we must start by setting your expectations.

These expectations will many times take the form of standards. The standards of your branch or company will be a reflection of your expectations. In addition, they set the stage for effective coaching and monitoring—two topics that we focus upon in our leadership course. 

The Most Significant Standard?

It is more likely that the branch or company will have a productivity standard than any other standard. For loan officers this may include volume, number of loans or gross revenue produced per month, quarter and/or on a yearly basis. For a processor or closer, it may be the number of files that go to closing each month. We will address the question mark after the above caption in a few moments. First, let’s address a very central question—

For commissioned loan officers, should there be a production standard? 

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 they are 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.  It could also be argued that less productive loan officers use a disproportionate amount of the company’s resources in this regard. 

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. 

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 not do 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 to be 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 of attendance 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.

This article was originally published in the NMP Magazine December 2021 issue.
About the author
Contributing Writer
Dave Hershman is an author for the mortgage industry with eight books and several hundred articles to his credit. He is also senior vice president of sales for Weichert Financial Services, head of OriginationPro Mortgage School…
Published on
Dec 11, 2021
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