12 Jan Aligning Incentives With Desired Results
Are you upbeat? Most people that I encounter are. There seems to be a renewed sense of optimism this time of the year especially. Why is this the case? People are thinking about what they’re going to do in order to grow in 2011.
As these talks unfold, a lot of similar conclusions come up. What happens in a lot of cases is those companies looking to plan an aggressive growth course for 2011 start by bringing on new sales talent or telemarketers. And if you’re a lender you bring on more LOs. However, all this new staff may not be the answer. So, what is? I’ll tell you.
When the lender or the vendor brings these people on they don’t align proper incentives with expectations. What do I mean? In theory you hire these people to bring on new business and that’s great, but often no further thought goes into these new hires. You need to think: What size business am I looking for? What target market do I want to attract? Do you want 20 new deals or 10 new deals? If your terms are fuzzy to start with, you will be disappointed six months later when you don’t get results.
At some point you start to look back and think, “Hey, why am I losing money?” How did you get your company into this situation? The company was not razor sharp as to what they were trying to do so results didn’t follow.
For example, if you hire an LO and you say you want 10 new borrowers a month and you go so far as to pay commission based on those expectations, you may be disappointed. Why? You didn’t specify what type of borrower you were looking for. What happens if 7 of the 10 new borrowers get prequalified but don’t close? You might be better off asking for 6 high-quality loans instead of just new borrowers. Be specific when setting goals and expectations.
When we talk telemarketing you are after leads in most cases. A good telemarketer might get 20 leads a week, but how many of those turn into business? So, should the incentive be to just get leads? Maybe there’s an additional incentive for closed deals.
What am I trying to say to you in a nutshell? At the end of the day it’s great that there’s renewed optimism, but just bringing on sales people won’t get you those desired results unless your compensation is very narrowly defined. So, think it through and be specific.