Magazine article Mortgage Banking

The Jury's Still out. (Training)

Magazine article Mortgage Banking

The Jury's Still out. (Training)

Article excerpt

HERE IS A CASE STUDY ABOUT A question that is very real, very important and very challenging to some of the best companies in our industry.

Hypothetical Mortgage Corporation (HMG) looked at its staff of 400 loan officers and saw a number of things it didn't like.

First, it saw a number of inconsistencies in how loans were originated, including errors of process and documentation that could have serious consequences. Second, it saw misuse, abuse and avoidance of its front-end computer system. Third, it saw a cycle of loan officers and branch managers demanding new products and then either not selling them or selling them incorrectly. And fourth, it saw a punishing turnover rate for loan officers--in excess of 50 percent within the first 12 months of hire. This was coupled with a practice of recruiting from the competition, which resulted in more turnover and a constant bidding up of the cost of originating loans.

Top management said, "If we had a complete loan officer training course, all these problems should go away or at least improve significantly."

They asked the training department to create and deliver such a course, and the trainers said, "We will construct a course that will enable almost any person who completes it to create and execute a marketing plan, analyze customer needs, sell appropriately and take complete applications on our system."

Management added a constraint that seemed sensible and simple, but turned out to be a curve ball: "And we want you to prove the effectiveness of the training."

Training said, "We'll create a detailed and precise map of training objectives and a comprehensive set of tests and demonstrations to determine how effectively the training objectives were achieved."

Management said, "Yeah, sure, you do that. But that's not what we want to know. We want to know if this training is a cost-effective strategy for us. We need to know what it brings to the bottom line."

Training said, "We can measure the achievement of our training objectives with a high degree of accuracy and confidence. Anything else is apt to be fuzzy, and diluted by other variables. But we can certainly look at other things. What do you think we should measure?"

"Loan volume," was management's answer.

"Loan volume is much, much more dependent on interest rates than on training effectiveness," replied the trainers. …

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