We Need More Than Fancy Bonus Packages

I wrote earlier this year about the coming change to the way we work; the way we manage and the way we recruit or retain talent. That’s not just true for the mortgage industry, where I believe being an LO will mean something quite different—and fundamentally more rewarding—than it has through the refinance boom. If anything, LOs will evolve beyond the pressure to be order-takers; especially when it comes to determining needs and product fit in an origination environment of numerous, diverse markets and products.)

The Great Resignation continues into its second year. And it’s not slowing down.

McKinsey recently published an overview of its research into what it’s now calling “The Great Renegotiation.” (FKA “The Great Resignation,” “The Great Attrition,” “The Great Reprioritization”…). We know people are quitting their jobs in droves. They have been since 2020 and they still are two years later. The reasons are varied, but McKinsey posits that we’re seeing “a fundamental mismatch between companies’ demand for talent and the number of workers willing to supply it. Employers continue to rely on traditional levers to attract and retain people, including compensation, titles, and advancement opportunities.”

Needless to say, qualified workers seeking the ability to work from wherever; flexible hours; improved mental health benefits and/or a workplace where merit and collaboration are the norm aren’t as impressed with that “SVP” title as they used to be. A few numbers from McKinsey to support that:

• In 2022, the share of workers planning to leave their jobs remains unchanged from 2021, at 40 percent.
• Employees are quitting and going to different employers in different industries (48 percent of the job leavers in our sample). Some industries are disproportionately losing talent, others are struggling to attract talent, and some are grappling with both.
• In fact, 65 percent (!) of the people who left their jobs in the past two years did not return to the same industry when they did return to the workforce.

A staggering number

So there are two factors that “traditionalist” employers in any industry—but especially a highly-traditional industry like ours—had better absorb quickly. First, almost half of the global workforce is thinking about quitting. That includes 40% of your employees. Second, there’s no safety in homogeneity. An LO unhappy working for one lender no longer feels trapped by the perception that virtually all lenders have similar approaches to office culture, making resignation pointless. Dissatisfied employees are confident enough to question entire industries, rather than feeling trapped in disappointing or unfulfilling careers. Now, they’re retiring, taking on independent gigs or even changing careers altogether. All with startling frequency.

Retention and recruitment start with recalibration

According to McKinsey, it all starts with employers recalibrating their way of thinking about hiring and retention. After all, it’s clear that the global workforce (for the most part—McKinsey does believe there are a significant number of “traditionalists” who remain motivated by things like titles and bonuses) has recalibrated the way it views employment. This means reviewing and revising employment and recruitment policies and benefits to reflect greater attention to some of the larger factors driving attrition: workplace flexibility; meaningfulness of work; adequacy of support for health and well-being. And yes, according to McKinsey’s research, one very traditional incentive remains, but note the wording carefully: “adequacy of total compensation.” After all, the world’s worst-kept secret is that not all bonus structures are created equal.

What’s 40% of your workforce?

Perhaps this is the point where we should consider the possibility that it’s all irrelevant because our industry is cutting employees in droves. Until the cycle changes again. I think that kind of thinking is a huge mistake. It’s not just about volume and recruitment anymore. The labor supply is not unlimited. It’s not just the employee who’s “lucky to have a job at all.” That’s a 1970’s way of thinking. Even as our industry continues to “downsize,” the real labor issue is quickly becoming how to retain and recruit the best talent, whether we’re running “lean” or feasting off of high origination volume. Even if you’re running your operation with 10 employees, your bottom line will look much, much better if they’re engaged, creative, collaborative and productive. The way employers go about building that is changing quickly. So simply going back to the well for what used to work is a gamble. And for those with an “anywhere but here” mindset, remember, at least four of your employees are thinking about leaving you right now, too. 

We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and our new graphic-oriented series, “A Tale of Two Mortgages.”

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