4 Ways to Win the War for Originator Talent

originator talent

To fuel growth and market advantage, you need the right people. In many ways this has become one of the key dimensions of competition in the mortgage industry today.

The most recent STRATMOR Group data on originator turnover found 30% annual turnover among residential mortgage originators — that means that for every 10 people you hire, at least 4 will be gone within a year, taking their training, knowledge and proverbial rolodex with them. At a macro level, skills shortages will continue to worsen as the Boomers retire at a rate of 10,000 per day, while Millennials take their place. These young originators not only lack experience, they also lack a loyal network of referral partners.

 

There is a skills shortage. It will impact your company, if it hasn’t already.

 

Branch, regional and organization leaders must implement an effective talent strategy to attract, engage and retain star performers, while cultivating younger team members to succeed.

We know a talent strategy works because we’re doing it ourselves. The challenges of talent are all too familiar to technology companies like ours — scarce resources of software developers, machine learning experts, and systems architects have driven up costs and turnover; not to mention the challenge of promoting a diverse and inclusive culture in an industry that is famously lacking in gender and racial diversity.

While Silicon Valley may not have all the answers, we have borrowed some of their talent strategies to accelerate our growth. Perhaps there’s something for the mortgage industry to learn from the technology industry — one long experienced in fighting the war for talent.

 

1. Create Belonging

There is no shortage of articles and books promoting the value of creating a culture that attracts employees. Today’s employees want more than a paycheck. They want to “belong.” In technology companies, “belonging” begins at the interview and weaves its way into the day-to-day life of an employee.

At Gusto (formerly Zenpayroll), a San Francisco-based payroll company that has raised over $200 million in venture capital and is currently valued at $3.8B, the company values are deeply instilled. New hires are evaluated on their alignment to the company’s six values. During onboarding, the leaders dig into the values, which are also weaved into every all-hands meeting. Before making any decision at the company, everyone always strives to ask “Is this aligned with our values?”

Company traditions equally play an important role to create “belonging.” I remember visiting Gusto’s offices and being asked to remove my shoes (thankfully, I was wearing socks with no holes!)— a holdover from the company’s origins starting in someone’s home. When Gusto was a smaller company, the team used to take week-long “workations” once or twice a year, when the whole company would spend time living together in a house. As they’ve grown much larger, this tradition evolved into the “Gustaway,” a series of one-day offsites where 25 to 30 people from different teams in the company come together. The detachment from the day-to-day refocuses the relationships on the team and reminds employees that they’re part of a corporate family.

If these notions seem far-fetched for the mortgage industry, you don’t have to look farther than industry-leading Movement Mortgage who processed over $13B in loan volume in 2019. Their leaders point categorically at their emphasis on culture and values as their source of organizational strength.

 

2. Sell the Vision

You run a branch or region of a mortgage company. In and of itself, that may not inspire many prospective employees. What enduring companies have learned is that vision compels engagement and drives action. Technology companies have adopted this principle wholeheartedly.

Box, the NYSE-traded cloud storage company used by 70% of Fortune 500 companies, is not just about secure file-sharing. According to their website, their work is “transforming the way people and organizations work so they can achieve their greatest ambitions.” Of course, cloud storage itself is a commodity. Yet Box’s vision has propelled it to be used by millions people at more than 95,000 businesses, with a market cap over $2B and $696 million in revenue for fiscal year 2020 (up 14% year over year). The company even employs a Chief Storyteller, whose job is to promote the very ambitions Box is helping its users achieve.

This is not just word play. As a leader, you must fundamentally believe and inspire your people that your work is about more than mortgage transactions. Your people are part of a story and a journey towards a big ambition. Maybe it is about revitalizing your local community, changing lives through homes, or creating and managing real estate wealth for your clients. It’s not just about mortgages.

 

3. Share in the Upside

Every employee at a technology company knows that their compensation is based on three components: salary, bonus, and equity. Of the three, equity by far dominates most conversations as a tool to attract, engage, and retain employees.

With equity, you are reminding your employees of two things: first, that they will be part of creating the vision for the future and two, that it will take time to reap those rewards — but they may be more significant than even their salary.

“You have to remember that when people are joining your company, they’re making a bet on its future and the value they will add to its future,” says Molly Graham, who helped build the compensation plan in Facebook’s early days. “Sometimes you need to remind them they are making a bet, and that it’s the kind of bet you have to make if you want to join.”

If structured correctly, employees start pocketing shares or options after their first full year, and the initial allocation will vest over their first three to four years at the company. That means they’re seeing the value of their ownership increase and they are incentivized to stick around to earn out even more. Star performers are bonused not just in cash but with more equity — this on a similar three to four year vesting schedule to drive retention.

In 2016, Axia Home Loans took an aggressive stance to be 100% owned by its employees through an Employee Stock Ownership Plan (ESOP).

“Studies show that employee-owned companies experience increased employee satisfaction, retention and productivity gains,” Gellert Dornay, Axia’s President and CEO, said. “An ESOP rewards employees who contribute to the company’s success by allowing them to share in the company’s future increase in value.”

If your employees don’t own a stake in your company’s success, you might have to ask yourself why exactly they should stick around for the long haul and invest their time accordingly.

 

4. Go Beyond the Cube

Mention the phrase “tech company culture” at a dinner party and most will be quick to mention the free food, lavish benefits like massages and haircuts, funky office designs, and flexible work schedules. But even as these perks have become the norm in Silicon Valley, if not cliché, the underlying logic is important: how do we create a company culture that differentiates us enough to make that employment decision an easy ‘yes’?

FullContact, a contact API company with 200-plus employees has been a consistent presence on Outside Magazine’s “Best Places to Work.” Being in Denver, the company has adopted the outdoors, encouraging its employees to work hard and play hard. During ski season, employees can take a “Powder Day” as long as they make up those hours within two weeks. Employees choose their machines, a Mac or PC, and get a free commuter or parking pass. After a year, employees are allowed to work from anywhere in the world for one month — which many pair with the company’s “Paid, Paid Vacation,” an annual $7,500 pretax stipend to take a one-week trip of their choosing. All this might seem a little too good to be true, but FullContact realized it was in a war for talent and they wanted to win.

When adding benefits, a great first step: consider your employees, how they work, what they value and what you could uniquely offer them that another company could never imagine or implement well. Increasingly in the mortgage industry, technology is playing an important role in attracting and retaining talent. Enabling your team to work productively and be happier at work means giving them the tools — technology and otherwise — to stand out.

In Closing

Technology companies who have fought long and hard for employees know that an effective talent strategy is the number one thing to implement to ensure they come out on top. Creating belonging, selling the vision, sharing the upside and going beyond the cube is an enormous challenge. Everyone reading this is starting from a different position with a different set of resources to allocate. You don’t need to do it all or as lavishly. The key is to start now. The competition for talent is a war and like any war it’s an opportunity to seize — or to squander.