Market Uncertainty Creates Staffing Challenges -- December15, 2006 (Also appearing in the MBA NewsLink)
Eleven hard and fretful months in 2006 have come and gone in an industry plagued by uncertainty and insecurity. For some of us, December brings out a jovial spirit of warmth and compassion to help those less fortunate in our society and communities. For mortgage decision makers and executives, it must feel like they are looking into the eyes of the “ghost of Christmas yet to be.” So much unknown and fear as to what should be done to get beyond the quandary of “where do I invest?” “How can we become even leaner, while increasing back-office productivity and pipeline production?” More importantly, “What level of staffing and retention should be adopted for 2007?”
The challenge for mortgage professionals is that in times of change and uncertainty, those “proven” models that helped our organizations realize profit, growth, and market share may no longer be appropriate. Just as our staffing adjustments have historically lagged our quarterly reporting and results (e.g., production overcapacity), our organizational preparation and projection efforts lack a robust forecasting model grounded against the new market circumstances. Matt Johnston, CEO of Workway states, “In the past, mortgage lenders have hired people on a permanent basis. However, with every refinancing boom, they need to hire fewer people on a permanent basis and more temporary workers in order to manage their fixed and variable costs. Employers need to analyze the people they work with and determine if the staff on hand is doing what they need.”
Lacking omnipresent insight, industry leaders and organizations must assess and project their needs utilizing a combination of proven and quantitative cross-industry disciplines, at the same time as enhancing these with measurable internal relationship management disciplines and continuous process improvements.
Ensuring Quality and Consistency: While a certain amount of staffing reduction and turnover is healthy for new ideas and growth, a key challenge for an organization is determining what levels are acceptable before production and throughput are compromised. With our industry’s staffing models (and needs) getting increasingly specialized, there is considerable risk both operationally and financially that will be implicit within given functional roles should cutbacks be required or with attrition. What are the key roles and personnel within your organizational core processes and what are you doing to actively retain and grow them?
Education and Training Investments: It’s an area we’ve talked about for decades yet it often time yields the least return. This unpopular assessment is a direct result of poorly understood and essential personnel improvement actions and programs that directly correlate to measurable organizational objectives. As a result, executives and organizations in challenging times, forego all but regulatory and compliance needs resulting in stale personnel and lack of innovative ideas to improve operational performance. To ensure continued advancement of personnel and organizational adaptation, what programs will be needed to directly impact performance and results? What is the measurement process and is it organizationally accepted?
Streamlining of HR and Sourcing Processes: As the mortgage industry struggles with the effects of globalization and sourcing models, a recent poll conducted by IMD on “Setting the 2007 Corporate Agenda” clearly shows that staffing is the number one concern for organizations around the world. However, a key and often unrecognized challenge is the archaic and inefficient internal functions that serve in staff identification, management, and retention. These often times fragmented and inefficient processes should be a key priority for those organizations struggling with “what to do about our personnel resources.” The options for improvement include:
human capital management programs,
automation, technology, and systems,
adoption of best-practices and lessons learned from others, and even
shared services or outsourcing of functions within the entire value-chain.
Mr. Johnston emphasizes, “In the employment arena, it is going to become increasingly important, not only in 2007 but going forward, to put emphasis on how to hire and train people. A distinct minority or mortgage lenders currently have employment and training processes and about half of mortgage companies will put these into place by next year. In order to establish these rules, companies must make sure senior management understands the importance and the consequences of poor leadership and a lack of strategic planning when it comes to human resources issues. Additionally, mortgage lenders must install practices where they can put a metric on each of their employees to see if they are getting what they are paying for, and push the metrics so that it encourages employees to be more productive.”
Alas, without a “magic happens here” button, we need to map out a flexible change approach that is grounded in realistic forecasts. Our organizational ability to not only survive but prosper in times of uncertainty is definitively linked to our personnel. Therefore, a forceful and comprehensive approach to staffing must be a top priority for 2007 – one that is accommodating but defined. Just as in the “ghosts of fiscal years” past, we don’t want to be shown these avoidable errors by our replacements or acquiring organizations.
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