Assistant Compensation:
Pay good money for good people
By Tim Braheem
President, First Rate Financial Group and CEO, LoanToolbox
When it comes to hiring employees that are critical to the overall success of the company, my first rule is: Pay good money for good people. Your Personal Assistant is one of the most important people on your team. This takes an extraordinary person that is willing to go the extra mile to ensure that you are focusing on profitable activities, with optimum efficiency.
The first step in planning out the goals and compensation for your Personal Assistant is to examine your own hourly rate of pay. Take a look at your schedule, and sort out the tasks that are a time-drag to you. If you find that you have recurring activities in your calendar, which are low in payoff and high in time consumption, then these things should be assigned to your Personal Assistant. By centering your attention on activities that increase your own hourly rate of pay, the overall profitability of the company will increase, and you must create a working environment composed of people who buy into this idea.
I went through this process of analyzing how to increase my hourly rate of pay a number of years ago, and concluded that activities such as dropping off dry cleaning, going to get lunch, or even getting my car washed were an enormous waste of my time. I calculated that it took about three hours each week to handle miscellaneous errands, and I would be better off if I could have someone else do these things for me.
This thought was punctuated in a conversation I had with my associate, Steve Silverman. I casually asked him if he was still getting his Café Americano every morning at Starbucks, and he informed me that he still indulged in his favorite beverage every day, but he no longer went to pick it up himself. Steve calculated that this was a 23-minute round trip he was making every single day, just to get a Café Americano at Starbucks. Multiplied by five days a week, and as an Attorney billing $450 an hour, it was costing him over $850 a week to get his own coffee. He concluded that no type of coffee was worth that amount of money, and promptly assigned this task to his Personal Assistant. She now picks it up for him each day on her way to work, so he can start working earlier and focus immediately on more profitable activities.
I was amazed at Steve’s ability to get his Personal Assistant to agree to this plan, and decided it was time for me to have a conversation about efficiency with my Personal Assistant. We discussed how my hourly rate of pay affected the company as a whole. She clearly understood the value of having me focus only on high payoff activities, and we started to sensibly delegate various tasks that would allow me to cultivate business more effectively.
My Personal Assistant has the ability to handle marketing, database management, and loan processing. She handles my daily calendar and assists me in every aspect of managing my business. At the same time, she is receptive to handling some of my personal affairs to create balance in my life. This type of synergy and support should never be overlooked when it comes to compensation. When my business skyrocketed and I doubled my production as a result of her cooperation, I gladly increased her earnings by approximately $20,000 per year.
Do not short-change the people who are critical to your success. When you have a strong individual at your side, make sure you secure your future with that person by compensating them adequately.
Most mortgage companies pay their employees on a salary + bonus structure, which is wise because of the cyclical nature of our industry. Paying out large salaries can be detrimental to the future of your business if the market goes through gyrations and business slows down. You are then faced with lay-offs, and having to make difficult decisions that affect another person’s future can be an unpleasant predicament.
I pay a moderate-to-good salary to all of my people, but give them incentives. A lot of Loan Officers (and I use to be one of them) pay a base salary plus "X" amount of dollars per file. The problem with this is that it really isn’t a bonus. This becomes an expected part of their compensation.
For example, if you pay your Processor $75 for each closed loan in addition to their $3,000 monthly salary, it is the same as guaranteeing that their salary will be $3,750 a month when 10 loans are funded. There is no way to take that money back. By definition this is really not a bonus, it is a glorified tiered-salary structure. Bonuses should be based subjectively upon performance. If an employee’s performance is not conducive to your objective as the employer, then you should not have to pay the bonus.
Compensation for my team is based on net profits on a month-to-month basis. At the end of each month, we run a profit and loss statement. This takes everything into consideration from the overhead of running the office, telephone bills, copier expenses, toner, salaries, my personal commission split, etc. We arrive at a net profitable figure, and 35% of that is placed in the team’s bonus pool. This amounts to approximately $10,000 each month and I disperse that among four people. I personally decide who gets what percentage of the bonus pool based on their performance over the past 30 days. This has been a very successful formula for me and has allowed my staff to make money well beyond their salaries. More importantly, they know their bonuses are based on performance. I have them tied into the bigger picture, and everyone on my team has the same objective, which is to create raving fans of our clients. The more we do that, the more volume we do on a monthly basis, and the larger the bonus pool becomes.
Remember, in the old formula you cannot take the $75 per file away. If the individual does a mediocre job, you still owe them the $75 you promised them. In the formula I just described, the team is driven to a common goal.
My team and I have set up a special link for you to watch a Flash movie called Compensation to supplement this article. Click here to see the movie on this subject: http://www.loantoolbox.com/go/comp.
Tim Braheem has ranked as one of the top producing Loan Executives in the nation for more than a decade. He is the President of First Rate Financial Group in Westlake Village, and the founder of LoanToolbox, an online training resource for Loan Originators. He has appeared on CNNfn as an authority on the subject of mortgage market trends. Mr. Braheem provides seminars in the United States and abroad to motivate mortgage professionals to higher levels of success. If you are interested in having Tim Braheem speak for your group, call 818-388-4205 or email PR@LoanToolbox.com for more information.