Recruiting and retaining top talent has always been a challenge. With the added stress of the pandemic and record loan volume, lending institutions must be thoughtful about keeping their valuable professionals. Using research from several studies and insight from first-hand stories, we’ll explain how pressing this issue is. Then we’ll provide suggestions for strengthening retention efforts at your lending organization.
Loan officer and originator turnover is a significant issue. A 2016 study conducted by the STRATMORE Group found the average annual rate of mortgage loan officer turnover is 40%. Compare that with a 16% average turnover rate for all banking professionals, and you can see that loan officers leave their jobs more than twice as often as others in the industry.
Studies also show that high-achieving loan officers are even more likely to switch jobs, and they usually give their employer less than a year to decide on their fit. According to an industry compensation and retention study conducted by mortgage POS provider Floify, about ten percent of high-achieving loan officers will only give their employer three months before deciding to leave.
Frequent turnover like this is disruptive, and it’s costly. According to the Society for Human Resource Management, the cost to replace an employee can be as high as 50%-60% of the employee’s annual salary. But the total cost of turnover is even higher than that. Factoring in associated production loss, workflow disruption, and institutional knowledge gaps, the actual turnover cost is as high as 90% to 200% of the annual salary.
With loan officers earning hundreds of thousands of dollars annually, an organization’s cost to lose and replace even two or three loan officers each year is too high.
As we said earlier, lending institutions need to prioritize employee retention if they want to keep the best talent, and here are some ways to do it.
Build a Supportive Organizational Culture
To start, a supportive culture makes all the difference for long-term happiness and productivity. We heard stories about working for organizations with a “churn and burn mindset,” making an already stressful job untenable. From verbal abuse to unrealistic production expectations, organizations like these are great places for industry newcomers to learn because the loan volume is exceptionally high. But they don’t engender loyalty, nor will they keep the best and the brightest around.
Instead of fostering a corporate culture that makes employees dread Monday morning, leaders should create a supportive environment that helps employees flourish. Trust and respect are at the heart of this type of culture, and everything else builds on this foundation.
Offer Attractive Compensation Plans
When evaluating employment opportunities, loan officers reported that compensation is one of the most important things they consider. Since loan officer compensation can be structured in many ways, it’s essential to be creative and offer compensation plans that attract and retain top talent.
Whether it’s an initial salary during the onboarding period, the ability to draw against future commission when needed, or a generous benefits package, organizations that think creatively about compensation will come out ahead.
Mentor and Develop Your Team
After culture, salary, and benefits, a lack of upward mobility is the next greatest motivator for employees to change jobs. But just having professional development programs in place is not enough. A recent banking industry study revealed that most employees aren’t aware of in-house leadership development opportunities despite them being available. The takeaway should be that executive leadership and management should be looking for ways to help their team grow and develop.
Provide the Right Tools and Technologies
Loan officers and originators want to be productive. So it’s no surprise that 80% of high-performing originators said they need access to technologies and systems to manage high loan volumes and scale their business. Today this means an end-to-end seamless digital workflow with AI and conversion optimization technology. Tools like these ensure mortgage professionals can work efficiently, maximizing organizational productivity and profitability.
Foster Open Communication and Seek Feedback
Employee surveys and exit interviews are priceless tools for understanding what employees want and need. They are also an HR best practice. Exit interviews are especially helpful because they generate valuable insight into why an employee is leaving. They can also help an organization save a valued employee before they leave. All employers should solicit regular feedback and conduct exit interviews if they are invested in employee retention.No matter the industry, organizations are only as good at their team. With the right professionals in place, lending institutions can thrive no matter the market conditions.
Of course, the right technology makes success easier. If you would like to learn more about Home Captain’s AI technology and how it streamlines workflows and increases capacity, visit our Enterprise page or contact us today.