Creating an environment of success in the mortgageindustry is a challenge at best, because of the multipledynamics management has to consider. From different lev-els of commitment to staying in the business for the longrun (and not for a quick buck) to the level of experience oforiginators, processors and underwriters, managers have alot to contend with in any given mortgage office. On top ofthat, there is the ever-present need to train people on thelatest technology, policy and procedures, and new products.

Even with those dynamics, there are a few key elementsthat provide a solid roadmap to management success. Alltoo often we forget to look at the big picture of how ourorganization is run and focus solely on today’s or thismonth’s sales. We must realize that many subtle factorsaffect sales and the long-term success of a company.

Hire well and correct bad decisions quickly. Be sureyou know who you are hiring and do not simply fill a posi-tion. If the person does not fit, it will never work. For exam-ple, an originator will more than likely have to handle callson leads; therefore a call-reluctant, shy person should not behired for this position. While the person maybe qualified onpaper, the personality will not fit the requirements of theposition. This might seem simple, but managers make sim-ple hiring mistakes every day. The time it takes to hire theright person is less than the time it takes to fire, re-interview,re-hire, and re-train a replacement.

Inevitably though, every good manager will make somebad hiring decisions. The vital thing to do when this is real-ized is to take corrective action quickly. Unfortunately,managers leave a bad hire in place far too long because theyhope that the employee will get better. Sometimes improve-ment is possible—when the problem is a training issue, forexample. But often times there is a fundamental problemwith the employee being a good fit for the job and whenthat happens, the employee often will spread low moralearound the office like a bad case of the flu. And worse, some-times the problem can become cancerous, which willrequire drastic disciplinary measures and sometimes multi-ple terminations. A good manager must make these prob-lems disappear for the health of the rest of the organization,and like a bad disease, treatment is best performed early.

Provide proper tools for success: training and educa-tion. A good manager knows that training does not stopwhen a new employee closes their first deal. It must be an

ongoing effort that is integrated into the office routine.Proper equipment and technology are also required tools forsuccess in today’s marketplace. Be sure to continually investin your organization to continually be competitive.

Ensure open communication. Many organizationshave great people who all aspire to achieve the same goalsbut fail miserably. Oftentimes they are all working on simi-lar projects without knowing it, which is why clear and frequent communication is essential. In our business wesometimes find that our loan originators and processors donot communicate with each other, and an originator doesnot communicate well with lenders and vendors (Have youever had a closing delayed because the appraiser said henever received an appraisal request?). Communication startsat the top of the organization and must be maintained atevery level of the company. More importantly, managementmust be a role model of effective and timely communica-tion.

Create variable compensation based on an elementthe employee has control over. Often I find that manage-ment sets commission or bonus programs for an employeebased on criteria that are not in the employee’s control. Agreat example of this is paying a production manager basedon net profit but not empowering the production managerto manage basic operating expenses. The only way for thatmanager to create a higher bottom line is to bring in moretop line revenue and hope that whoever is spending themoney does not spend anymore than is necessary. Anotherexample is paying a processor a bonus based on the numberof files closed in a given month. That works when you havemore files originated than is realistic to process with thenumber of processors available at the time. But realistically,the processor has no way of controlling originations and isoften precluded from obtaining a bonus when he or she isdoing an outstanding job. Perhaps a better way would be tobonus processors based on achieving turnaround goals orbased on what percentage of files given to the processorclose within a certain time frame. Only then are you pro-viding an incentive that is within the control of the proces-sor. If management sets bonus programs based on goals out-side of the scope of control of an employee, we set everyoneup for disappointment.

Abolish the “yes” people. Every organization, large and

Keys to Management SuccessA Basic Guide to Effective Management.

By Daniel Jacobs

Not for reproduction - this copy used with permission from Mortgage Originator.

As seen in

Mortgage Originator April 2005

small, needs employees who are encouraged to and aregiven a forum to speak their minds. Management is not thesource of all good ideas. Often the receptionist, the proces-sor, the loan originator, or the copy clerk has an idea thatcan change the way things are done for the better. But ifthey do not express those opinions because they are alwaysagreeing with the boss, the company will not only miss outon great ideas, but will become very one dimensional withemployees who feel more like factory line workers thanteam members who are charged with helping an organiza-tion succeed. Encourage employees to speak their minds,but be sure they also know that whenever managementmakes a decision, everyone should fall into place to work asa team.

Share success stories with acknowledgement. This canbe accomplished by randomly recognizing outstandingachievement as well as healthy competition in which peo-ple who have reached his or her individual goals encourageothers to become better. Create sales contests, but also rec-ognize support staff. Often the support staff in a sales organ-ization is passed over in recognition programs. Additionally,do not recognize only the top sales achievers. Frequently,the same group of individuals wins all the awards becausethey are always leaders in sales. Recognize the mostimproved, the best mentor, the highest quality files, or someother achievement that is not necessarily related to sales.Remember that while sales directly affect the bottom line,many other factors go into a successful organization. Keepall recognition positive—never ostracize, even in a jokingway, those who do not win awards.

The small things count. Management should demandthat offices be kept clean and neat and make sure the breakroom is always spic and span. Offices and cubicles shouldalways be tidy—even in areas that are never seen by guests.The environment does not have to be fancy, but tidiness isessential. It creates a cleaner mental state in which to workand productivity is higher in an organized, clutter-freeoffice. Other small things count as well, such as bringing inlunch for the office randomly, offering free coffee and teaservice, current newspapers or magazines in the lobby,monthly birthday recognitions, employment anniversaryrecognition, and the like. Study after study reveals thatemployees will stay at a lower paying job where they feelimportant and wanted in a good environment over jump-ing ship for a higher paying job where they may feel morelike a number. For example, one particular manager claimedit was too expensive to compete with other companies interms of expensive benefits and stock options. He said hiscompany’s least expensive employee benefit was by far themost popular, and cost approximately $12 a month. In fact,it was ranked in surveys as a high-ranking factor in job sat-isfaction among the company’s employees. The benefit: freesodas, juices, and snacks. Small things count.

Foster teamwork. Even in a sales environment, thereshould be a team spirit. In mortgage shops, employees, and

even managers tend to think that teams are for companieswhere employees are not commission based, or when thereis a group effort in business-to-business sale situations. Afterall, each LO gets paid on his or her own loans, right? Wrong.When a team environment exists, one LO is happy to takea call for another to create good customer service. An LOwill gladly take a loan application for a co-worker who is outsick, or give up an early closing time on a refi in order tomeet with another originator’s settlement agent in a pinch.Processors and LOs understand that they are co-dependentand work together to achieve common goals and solve com-mon problems. Therefore, a good management team facili-tates the development of relationships and gets to knowemployees as people with feelings, hobbies, and lives out-side of work. When employees feel a human connectionwith their colleagues, they are far more loyal than whenthey feel like another number. An organization that focuseson team building will always out-perform an organizationof individuals.

Establish the rules. Management should put in writingpolicies and procedures. It is difficult to fault someone fornot following the policies and procedures when they werenever clearly defined. People generally want to follow therules, but so often the rules are murky or unknown. Thepolicies and procedures created by management should beupdated often. A living document of this type has no pagenumbers but does have chapters with broad subjects, andwithin each chapter there is a policy number. So, if chapterone is “Origination Policies” and the first two topics in thatchapter are “Timing of Disclosures” and “Rate Lock Policy,”they would be Policy 1.1 and 1.2, respectively. Managementwill have the ability to create an infinite number of policieswithin each chapter, without ever repaginating the manual,making it easy to maintain.

Empowerment and delegation. No matter what therole is, empower the employee to blossom within that role.Delegate the right work to the right people; teach them howto do it and then watch it happen. Sometimes employeesmust be given the room to fail and realize the failure so theycan do a better job the next time. Unless that failure willcause the company true harm, the manager must allow it tohappen.

Management in the mortgage industry can be trying andrequire creative approaches because of the very nature of thebusiness. However, if a well-crafted management plan is putin place, success is inevitable. And a successful managementteam knows the importance of constantly making improve-ments to meet the changing needs of the business.

DANIEL JACOBSis CEO of 1st Metropolitan Mortgage, Charlotte, N.C. 704/926-6104

Not for reproduction - this copy used with permission from Mortgage Originator.

Daniel JacobsDivision PresidentAmerican Financial Network, Inc.704.769.0541Djacobs@afncorp.comwww.afnretail.com