in Blog, Incentive Compensation, Mortgage Lending by Kelley Mangel

Going Multi-Channel Makes Managing LO Compensation More Complex, But These 3 Approaches Can Help

Finn Klemann Director of Business Dev at LBA WareBy Finn Klemann, Director of Business Development at LBA Ware

finn.klemann@lbaware.com

Managing compensation across multiple loan origination channels can be complex, because the key roles in each channel are paid differently. With retail loan officers (LO), wholesale account executives (AE), correspondent AEs and even reverse mortgage specialists in the mix, compensation can gobble up a lot of resources without proper planning.

Here are a few tips for overcoming these challenges that will help you keep payroll running smoothly, ensure commission-earning employees feel valued and even run your business more efficiently.

1. Get Your Systems Talking to One Another

Wholesale and correspondent commissions may seem simple, but having to view and manage that data on separate platforms that aren’t connected to your retail LOS is anything but easy. Every pay period, your compensation team will have to pull data from each system of record before running calculations and preparing reports for distribution to commission-based team members. The more systems you have, the more time this takes — and the greater the potential for errors along the way.

Instead, get your systems talking to one another so that compensation data automatically flows into one centralized location in a consistent format that is readily understood by your compensation team and easily shared with employees. Having all your compensation data on one platform will not only reduce the resource cost of running payroll, it will also give you a much-needed view into loan-level profitability within each channel — something many lenders don’t have for their wholesale and correspondent channels.

2. Ditch the Excel Spreadsheets

Using Excel spreadsheets to manage retail commissions is a messy proposition to begin with. Often, we’ve seen lenders create separate tabs for each compensation plan — and there might be nearly as many compensation plans as LOs. Once you add wholesale AEs, non-delegated AEs and delegated correspondents to the mix, you’re looking at multiple workbooks, each with numerous tabs. Updating all those spreadsheets each pay period is resource-intensive, and minor errors like a flawed formula or keystroke error become monumentally difficult to find and rectify.

Once your systems are sharing data, the next step is to nix the spreadsheets in favor of automated compensation calculation and payroll allocation. Handling tiers, splits, overrides and lead source allocations programmatically — rather than manually — will eliminate errors and allow your compensation team to focus on tasks that actually require a human touch. Plus, automation will allow you to calculate compensation as soon as loans close. That kind of transparency is highly valued by originators, cuts down on back-and-forth communication and can even allow you to pay originators with greater frequency, if you so desire.

3. Build a Framework for Flexibility

Once you decide it’s time to start sharing data between systems and automating manual processes, the obvious question is how to accomplish that from a technology perspective.

Some lenders choose to purpose-build a system that is specific to their comp plans and comp schedules. The appealing aspect of this approach is that lenders get exactly what they want at a given point in time. A potential downfall is that these homegrown systems tend to lack the flexibility to support on-the-fly changes to compensation structure. If you decide to change your comp plans, or if you acquire or hire a team whose negotiated compensation plan doesn’t fit in your existing structure, you’ll have to free up internal resources (or hire someone) to modify your code.

Proprietary systems also tend to be process-focused, not insights-focused — so while they might get the job done with greater efficiency, they are not necessarily designed to give managers ready access to reporting and data insights that could inform business operations. What many lenders love about CompenSafe™ is that it offers turnkey support for automating and managing even the most complex compensation plans across multiple origination channels — AND it offers the flexibility lenders need to think creatively about how they incentivize employees.

And with CompenSafe, clients can tap into their loan-level profitability data using one of our 120+ built-in reports, or they can use our API to transfer data to their own warehouse or an outside system.

No matter what path you choose, an investment in flexibility will save you a lot of money and hassle down the road.

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