The mortgage banking industry is cyclical. In high-demand periods, experienced talent becomes costly. Companies bid up the price for personnel in scarce supply, such as underwriters and processors.

At the same time, today's highly competitive business environment requires controlling costs. The solution lies in increasing the value obtained from available talent.

There are two major approaches to reengineering the mortgage banking organization. The first is to redefine jobs in existing locations to create flexibility, increase efficiency, or reduce demand for a highly skilled staff. The second is to restructure the organization for efficiency.

And there are four major approaches to redefining the existing jobs:

* Creating a flexible staff through cross-training.

* Managing key resources by designing jobs to concentrate major skills in a limited number of employees.

* Using flexible staffing in which part-time people to float to areas where they are needed.

* Reengineering -- that is, restructuring work into teams to match employees to customers.

Cross-Training

In setting up a program of cross-training, jobs are analyzed for their similarities and the key skills involved -- skills such as such as reading loan documents, knowledge of data, or interpersonal abilities.

Staff needs are then forecast, taking cyclical variations -- peak periods and normal sustained performance -- into account.

Finally, staff members are trained for new duties to achieve the desired flexibility. For example, customer service staff may be prepared to move from servicing to originating.

Key Resource Management

The same two first steps -- job analysis and forecast -- are the starting points for key resource management. But then jobs are redesigned to concentrate higher-level skills in a small number of more highly-paid jobs.

That leaves a large number of lower-paying positions that demand less skill.

Work assignments are restructured, and the effects on other work areas such as telecommunications and data processing identified to ensure necessary support.

In the job of processors, for example, activities requiring significant knowledge and judgment are review and verification of 1040s, handling the customer information calls, and providing updates to the loan officer.

Less-skilled personnel can check for the completeness of the file, verify the receipt of a credit report, order key documents, and enter the file into the computer system.

Flexible Staffing

The objective of flexible staffing is to identify which jobs can be done part-time.

This includes first finding a flexible part-time work force.

Reengineering

The company can use temporary agencies and contractors, former employees, students, permanent part-time staff, or substitute teachers.

Creation of empowered work teams -- the philosophical opposite of key resource management -- is what typically goes into reengineering.

The first step is to identify work areas to be included. From the customer vantage point, review the needs of the organization, combining jobs into major functions.

Then the required data and the access requirements should be identified. The information flow and processing required within the data base must be established.

The next step is to establish work teams to service specific customer groups. In production, this could combine underwriting, processing, closing, and customer contact. Servicing can include key borrower areas including new loan, boarding, escrows, payoff assumptions, and customer service. Similarly, all investor services may be combined in the teams by groups of accounts.

Finally, plans should be reviewed with the affected management.

Mr. Carl D. Jacobs is president of Carl D. Jacobs & Associates, Woodland Hills, Calif., a consulting form specializing in organization strategies and executive compensation.

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