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Battling fiefdom mentality.

Professional support staff are crucial to running a successful business. But it takes informed, hands-on top management to prevent the accountants and the lawyers and the systems people in your company from becoming fiefdoms unto themselves.

LARRY, THE COLLECTION MANAGER, called accounting twice and sent a memo to that department's staff before they stopped charging him for the salary of Colleen, who transferred to closing four months ago. After two more memos and an angry phone call, they performed what in personnel accounting is called a "reversal" crediting him for the cost they had mistakenly charged him. Still, his year-end number didn't quite look right.

Painstakingly analyzing the journal entries Larry found that someone, for reasons unknown, had reversed the reversal, and Colleen's salary was still attached to his cost center.

Denise, the servicing manager, asked the head of systems for a report that would break down overtime and temporary help expenses by cost center. She was told to fill out the three-page Systems Service Enhancement Request Form B-311. She did so, explaining that the report she wanted would enhance her ability to plan staffing and save the company money. She submitted the B-311 and waited. Nothing happened. After six weeks, she called the head of systems again. "Oh," he said, "that request came up in the committee and got shoved way down the line. We won't get to it for a year at least. But," he added helpfully, "you could extract the data from your P&L and the overtime report and put it together manually."

Paul, the St. Louis branch manager, called to see if purchasing could get a better price on a software package he needed urgently. He was told that regardless of the price, he couldn't have the software. It wasn't on the "approved software" list.

Lesley, in the Southeast regional office, called human resources for permission to write her own recruiting ads. Permission denied. Then she asked for copies of preapproved ads. Request denied.

Stories like these abound. Talk to managers about their working relationship with accounting, legal, training, systems or any other staff function and you will hear (from more refined managers) words like "unresponsive," "bureaucratic" and "uncooperative." Less-refined managers use other words.

Why is it like that? And more importantly, what can we do to build staff functions that are credible, responsive and effective?

What are staff functions anyway?

A good place to start is by defining a staff function. It is, I suggest, a specialized facet of the business performed by specialists so that operating management is free to get on with the essentials of the business, untroubled (well, less troubled) by peripheral concerns.

For example, when you open a popcorn stand, you do everything yourself. By the time you expand to your tenth popcorn stand, you hire an accountant. When you get to your twentieth, you have added a lawyer and a facility manager. Twenty more, and you have a purchasing manager and a personnel specialist. Another fifty locations, and your original accountant has a staff of nine, calls himself chief financial officer and wants to know why you don't buy him a corporate jet.

If we can agree on this definition, then our individual and collective experience tells us that some staff functions seem to work effectively and some don't.

I suggest that the degree to which a particular staff unit functions effectively is the degree to which it follows four operating philosophies that specifically define and circumscribe staff functions.

The first flows naturally from our definition. It is that a staff function deserves to exist only if (and only as long as) it provides a service to the operating management better and cheaper than the operating management could provide it for itself.

For example, Denise, our servicing manager, could conceivably defend her company against an equal employment opportunity lawsuit. But it would take a disproportionate amount of her energy and time, and she would almost certainly not do it as efficiently as a staff attorney would. Similarly, she could--after a fashion--design and configure her own work area, her telephone system and the benefits package she offers her employees. But it is doubtful that she would do better than a marginal job at any of those functions. And if she did perform them, there certainly would be no time left over to do what she was hired for: to manage the efficient and profitable servicing of mortgages.

Clearly then, there is a mandate for some degree of staff support so Denise is free to perform her essential job functions. The question is, "What degree?"

How do we determine if a function needs a staff allocation or falls to the employees under the catch-all heading of "general management."

To answer this, look at the function in the light of three variables. First, how much is this particular function performed? If it comes up very rarely (e.g., purchases of audiovisual equipment), it is probably not cost effective to create a staff function to support it. Second, how specialized is the function? Systems design and legal defense, for example, are so specialized that leaving them to non-professionals is courting disaster.

Third, what efficiencies could a staff person bring to bear on the function? For example, if you believe that your supervisors can train your processors as well as a staff trainer could, then there is no motivation for you to create a training position. Or again, if you believe that one highly trained and perceptive recruiter can slash expensive hiring errors, then there is a strong case for adding a staff recruiter.

A caveat

There is only one caveat to all this: you may have to create a staff function (or live with an inefficient one) if companywide consistency is an overriding consideration. For instance, if production, secondary marketing and servicing have each bought incompatible computer systems and configured them to their particular uses, you will be in deep trouble if you ever need merged or "apples-to-apples" data. You would have been better served if all systems acquisitions had been channeled through a hard-nosed and farsighted systems manager, even though he or she would seldom be popular.

One final point needs to be made. The question of whether or not a staff function deserves to exist is never answered in perpetuity. If the only reason you can think of for having a purchasing department is that you had one last year, maybe it's time you got rid of it. Businesses evolve--ours faster than most. And just as surely as this industry develops new staff needs, existing ones lose their focus and relevance. When this happens, these positions need to be redirected, trimmed and sometimes eliminated. But this will never happen without energetic management intervention. Because when a staff function is created, it will inevitably seek to perpetuate itself and grow.

Staff functions live to serve

The second critical operating philosophy for a staff function is that a staff function exists to serve the managers and staff, not to dictate to them.

A typical manager thinks that the legal department exists to tell him he can't fire anybody. Training staff exists to tell him they can't train his people. Purchasing exists to prevent him from using his vendor of choice. Benefits exists to deny claims. Accounting exists to tell him he can't buy anything, and the mail room exists to lose mail. Is it any wonder he thinks "staff support" is an oxymoron?

Everyone who works for a staff department should be taken off-site once a year, lined up at attention and addressed by a Marine drill instructor rented for the purpose. The drill instructor should explain to them in the clear, forceful manner that drill instructors are famous for that:

* Staff people have no reason for existing except to help line employees get on with their business more effectively and efficiently;

* The monthly P&L (profit and loss statement) of a staff function always simply shows an "L": staff functions bring no money into the company;

* It's easier to cut functional support staff than operating management personnel; and finally,

* Staff people should eliminate, "no," "you can't" and "you have to" from their vocabularies.

The third critical operating philosophy is that a staff functionary has a duty to learn the business in which he or she is serving.

A few years ago, I saw a senior vice president of human resources rudely walk out of a basic presentation on mortgage products, saying that she "had never been so bored in her life and it had nothing to do with her job anyway."

I take violent exception to the value system underlying that behavior. How can a person who can't read a year-end mortgage account statement recruit telephone customer service reps to explain such statements to 100,000 bewildered borrowers?

It seems obvious that the odds of a staff function working effectively are drastically reduced if the people doing the work don't understand the industry to which they are providing business support.

It also seems to me that a conscientious member of a staff department would want to learn the business and would actively strive to do so. Failing that, I would expect upper management to require staff people to become involved in the business. But they don't. A casual audit of the enrollment of several recent Mortgage Bankers Association of America (MBA) School of Mortgage Banking courses shows only about 5 percent of the enrollment to be from staff areas.

Mandatory customer exposure

Here's a simple suggestion. Each of your staff people should spend one week each year working (not observing, working) in some part of your company that has heavy contact with real customers.

This concept was pioneered in the 1960s by a major car rental company. Incidentally, the president loathed it--but he did it. And having done it, he was absolutely unsympathetic to the panicky excuses of his systems and personnel people when they tried to explain that they didn't have time or should be exempted. You could tell the degree of terror the staff person felt at facing a live customer by the creativity of their copout. One manager actually maintained that his child had been hospitalized with a bogus ailment in order to plead medical emergency.

Being reasonable about rules

The fourth operating philosophy is that the rules are there to take up the slack when the brains run out. Policies and procedures evolve to cover routine operating situations, and generally they do so in a satisfactory manner. But an astute and courageous manager knows that his job is not "to enforce policy," it is "to do the right thing." Policies are to be interpreted in the light of the particular circumstance.

A recent example from a New England mortgage bank vividly illustrates this precept. Our personnel are Tom, the production manager, and Allison, his secretary, who was bright, hardworking and very excited about having her first "real" job.

One day Tom was fired. When he told Allison, she said, "What about me? What happens to me?"

Tom replied as gently as possible, "I really don't know. I can't help you because I don't work here any more."

Allison, in tears, went to personnel. "What do I do?" she asked.

"You weren't fired," she was told. "You can just keep doing your job."

"But my job is to support the production manager and he's gone," she replied. "I don't have anything to do."

"We'll be replacing him in a couple of months," said the personnel manager, "and in the meantime, you can answer the phone."

"It's not going to ring," said Allison.

At this point, the underwriting manager, who was terribly understaffed, stepped in.

"I'm way behind, and Allison does great work," she said. "Let her transfer to me until you hire a new production manager, then she can transfer back to production."

The personnel manager consulted the policy manual. "She can't transfer," he said. "She hasn't been in her current position for six months."

"Who cares?" said Allison and the underwriting manager together.

"Sorry, but you can't do it," said the personnel manager.

So Allison went back to her desk and got paid for doing nothing, while the underwriting manager brought in a temp and spent a week training her.

Three weeks later, Allison quit.

The moral of the story

Fairly obviously, this situation could have been better managed if the personnel manager had possessed the rudimentary common sense to make an exception to policy. The only danger is that in doing so, the company is setting a precedent that could cause trouble later on.

This is a real danger, but not an unmanageable one. The manager making the call (personnel, in this case) needs only to ask himself, "Am I being asked to make this exception for simple expediency, or to cover somebody's mistake? Or am I being asked to make it in the company's long-term best interest?"

These four operating philosophies provide the conceptual framework for managing effective staff functions, but they are necessarily broad in scope. Let's get down to the specifics of day-to-day management: What do you actually do with all those accountants, lawyers, trainers and computer hackers wandering your halls?

I suggest five guidelines.

Control the number of professional support staff

First, keep them lean. Like "The Blob," staff departments will consume people and grow endlessly if given the opportunity. It is naive and dangerous to expect anything else from them. A wise executive knows that any staff manager will, without provocation, erupt with graphs and reports showing that he or she is understaffed and that any productivity failures can be fixed by simply adding bodies. The wise executive reads these reports with enormous cynicism.

Never add someone to a staff unit until every last iota of efficiency has been wrung from existing people. This practice has some ancillary benefits:

* It keeps them busy.

* It reduces the time they have for inventing new forms or for intramural backbiting.

* It makes them wonderfully grateful when a new person is finally added.

Management talent is crucial

Get the best manager you can find. Not surprisingly, much of the best management talent often gravitates to operating management operations, where the guts and the glory and the big bonuses are said to be found. In a way, that's a shame, because the facilities, computers and capital resources need to be managed every bit as much as the branches and the servicing portfolio. And if they are mismanaged, the damage to the company is every bit as great as the damage caused by a branch snafu.

Frequently, staff management positions are filled from within by promoting technical contributors: programmers, accountants and the like. A company taking this route should do so with a very clear understanding that its new comptroller used to have one profession (accounting), and now has three (accounting, management and mortgage banking). I see no problem with this, provided that the comptroller also is given carefully chosen developmental opportunities in his or her new professions.

The alternative path is to recruit and hire a fully functional comptroller. The advantage is that the time and expense of developing the expertise has already been invested--by someone else. The potential disadvantages are the time and expense of recruiting, the risk of bringing in a key player about whom you know little (the best recruiting and selection techniques are far from foolproof) and the time it will take for the new employee to learn your culture.

Given the relative scarcity of good staff management talent, there is much to be said for doing national searches making use of a professional placement firm. The cost is high, but it is nothing compared with the cost of a poor hiring decision.

Guide their contributions

Give them crystal-clear direction. Earlier, we defined staff functions as specialized facets of the business, performed by specialists. These specialists tend to be good at their specialty--be it paying tax bills, programming reports or dreaming up training programs. Also, they tend to be enthusiastic about the value of their contributions. Given these two facts, it is not surprising that they tend to be prolific. If unmanaged, they will produce training programs or computer reports in a great, tangled, useless mass--something like a waiter dishing up spaghetti.

Frequently this tendency is allowed to go unchecked because executive management doesn't have the time (or perhaps the inclination) to learn enough about what the specialists are doing to direct them effectively. The result: staff size begins to grow; staff output increases, but the value of the output to the core business of the company deteriorates.

The prescription is self-evident. Executive management must become sufficiently conversant with these functions to keep the specialists' feet on the ground and their energies directed toward adding value to the company.

Monitor and measure

Measure their performance. Measuring performance in professional support staff areas is notoriously difficult, but that doesn't mean we shouldn't try. In general, staff performance in dimensions such as quantity and timeliness can be measured without undue difficulty; quality dimensions may be unmeasurable, or so difficult to measure that most people don't think it's worth the trouble.

For example, I can measure with the greatest of ease how many management training classes were run, whether or not they were conducted on a timely basis and how many managers attended. Measuring whether or not the participants were better managers after the class--and how much better--is frankly beyond my scope. Similarly, it's not hard to track how many job candidates your personnel recruiter surfaced and how long it took. But how will you know if the best candidates were located?

Although exact measurement of quality performance may not be feasible, indications of quality are everywhere. If the managers are fighting to get into the training class, it's probably good. If they're fighting to get out of it, it's probably bad. Feedback of this kind, coupled with numerical data from quantifiable aspects of the job, is generally enough to keep a staff group on its toes. Frankly, any kind of regular, formal performance feedback will be a new experience to many staff groups. And the simple knowledge that performance is being measured--however the measurement is done--tends to improve the performance.

Avoid mindless staff growth

Grow staffs logically. Frequently, if your company prospers and grows, the staff functions will also need to grow, but this growth should be controlled and should be part of an overall plan. More often, the growth is haphazard, with corresponding loss of efficiency. The following case from a Midwestern mortgage company (which is true, although I have condensed and simplified some of the incidents) illustrates the point.

* 1985--The company begins formal training by naming a training director. The director was a middle manager displaced by the new management team. He reports to the servicing manager.

* 1986--The training director hires two trainers. The production manager wants some sales training. He calls the training director and is told that it will be months before a sales training program can be designed. The production manager doesn't believe that someone with a servicing background can train salespeople anyway. He hires a sales training director, reporting to himself.

* 1987--The training director adds a trainer. The sales training director hires a trainer and a training administrator. The systems manager hires someone called a user-interface support manager whose duty is to train people in the company's computer systems.

* 1988--The customer service manager, angry that the telephone inquiry reps can't take calls when they finish their training, hires a dedicated customer inquiry trainer reporting to herself. The user-interface support manager has her title changed to systems training manager. She hires a trainer. The training director and the sales training director hire a trainer each.

* 1989--The company hires a consultant to do some management training and team building. She stays on as the director of management training and development, reporting to the director of human resources.

* 1990--The management training and development director hires a trainer, and the customer service manager hires a second trainer reporting to the first trainer.

What has happened? In six years, the company has added five training managers with eleven trainers and an administrator reporting to them. The inefficiency of having five people (reporting every which way in the organization) to manage twelve people is obvious. The duplication of effort, the hostility, the jockeying, the recriminations and the paranoia are less visible but no less real and no less a drain on the organization. And finally, none of the training managers will have the credibility or the clout that a single training manager would have had if training had been managed and allowed to grow in a controlled and directed fashion.

The solution? Well, in the next business contraction some of those positions are virtually certain to be eliminated. Others may be consolidated. Both of those are positive steps for the company, although that is certainly no consolation for the unemployed trainers.

It will probably take a decade of reconfiguration and image-building before training can have the stature and effectiveness it could and should have. The moral: if you need a barge, it's better to build a barge than build a suspension bridge and then try to figure out how to make it float.

Andrew S. Hubbard is vice president of training and development for Barclays American Mortgage Corporation, Charlotte, North Carolina.
COPYRIGHT 1993 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:personnel management techniques for mortgage banks
Author:Hubbard, Andrew S.
Publication:Mortgage Banking
Date:Apr 1, 1993
Previous Article:Preserving quality in the pressure cooker.
Next Article:Tactics for smarter hiring.

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