By Pat Sherlock

During one of my recent presentations, there was a lot of discussion about how to handle underperformers. The managers I spoke with agreed that some originators were not performing and needed to be fired. Many managers blamed HR for not letting them terminate the underperformers for fear of triggering a lawsuit. This is something I hear quite a lot. Unfortunately, this is an excuse for why managers are not addressing sub-par sales professionals. Considering that an estimated 60% of mortgage originators are not meeting performance standards (Stratmor), I thought it would be a great time to review the parameters for firing originators who are not making budgeted goals. As we all know, the marketplace is changing dramatically and underperformers can no longer be financially supported.

[caption id="attachment_9789" align="alignright" width="300"] Pat Sherlock[/caption]

In my opinion, there are three signs that a manager should seriously consider terminating an underperforming originator:

1. When the time and resources needed to change the originator would be better spent with other team members. If sales professionals barely hit production goals after a manager has spent considerable time in trying to help them, it may be time to cut the cord. Inconsistent sales performance is an indicator that an originator does not have the sales talent to match what is required to succeed in today's difficult marketplace.

2. After sales training or coaching, the originator is not progressing or changing his or her sales activities. One topic to focus on is prospecting. If the underperformer is not prospecting and getting new referral sources, it is time to hire someone who will.

3. When the sales professional constantly complains that operations (or everyone else) is at fault for poor production. This is a clear sign that the producer is not self-aware enough to change his or her behaviors. Frankly, these individuals are not willing to learn new selling techniques.

Of course, there are other red flags but in my experience, most managers know the warning signs but are hesitant to terminate sales professionals because it is difficult to recruit new originators. Producing managers who are the primary volume generators may also feel that any volume from secondary players is fine with them.

While no one wants to say the words "you're fired," these dreaded words are needed now more than ever. Letting go of underperformers is something that no manager wants to do but in a more challenging market, it is a requirement for sustainable success. The fact that an originator is on 100% commission does not mean that there is no cost of having someone in the position who is not generating a profit, clogging operations, has a negative impact on the group or is wasting the manager's time. I haven't even mentioned the lost sales opportunities associated with having the wrong hire in the position.

While HR gets cited as the reason that underperformers are still in place at many banks or mortgage groups, the real reason is that managers have failed to document poor performance. Managers need to keep a written record of all warnings; any improvement plans agreed upon and any probation plans provided. A paper trail is an essential component when termination is being considered.

While firing an employee is never easy, sometimes an employee's performance does not match a lender's current needs. The time to take an honest, objective look at originator performance is now.