This is the second in a short series covering the practical aspects of creating and maintaining efficient private lending operations processes.

How do we make our companies more efficient, more productive, more scalable? The biggest problem we see in lending operations is the reluctance, or even fear, to go back to the beginning and reestablish roles, departments, and titles while keeping the ship sailing though the open waters of business.

Ah, the mystery that spans ages, generations, and coffee machines: What is my job here supposed to be? It’s a question that’s boggled the minds of employees and employers from cubicle to home office for a millennium.

Seriously, have ever really considered that your employees have no idea what their jobs are? Consultants who work with companies to revamp and increase efficiency see it all too often. People were hired for a position, but the position eventually became the person rather than the job. The position became whoever was filling the role and not the role itself. Maybe you hear it in your office: “Oh, that’s a Rachel issue,” or “Stephanie does those.” These hires became task gatherers for loose-end operations no one else was doing. It ended up with those people because, hey, it worked one day.

So, if you are feeling lost and confused about what your employees’ job duties are, you’re certainly not alone. In fact, it seems most employees these days operate in a perpetual state of “huh?” when it comes to their daily tasks.

If you want to improve your operations, you must start by simplifying the duties and roles. Define them so your staff understands what they should be doing.

You may be shrugging and thinking: “I did this already.” Did you? When? When you opened the company? Since then, have just kept adding people and putting them in roles that have no clarity?

If you have not completely restructured your company and how it operates and, importantly, communicated it with the staff, acting on the following five definitions can help you reorganize your company, make your employees feel confident about their jobs and their positions, and make your private lending business more stable operationally.

Definition 1: Define Company Departments

First, make a list of departments for your company—not departments for the employees you have today. Appropriately define each department, its purpose within the company, and its executable goals.

Start by listing all your current departments. Remember, departments, not people. So, do not make a list of your employees; make a list of departments: originations, processing, draws, servicing, accounting, human resources, operations, collections, payoffs, etc. You may be surprised to find that you don’t have as many departments as you need.

A common problem with defining departments is it’s easy to just list “originations,” “processing,” “servicing,” but it becomes increasingly difficult when you realize there’s no department that doesn’t overlap in your company. Embracing this will be a key part of increasing your efficiency. To begin, list each department with its own checks and balances. Then, make notes when a department begins to overlap with others. Being aware of these areas of overlap will help you create effective communication between departments.

Definition 2: Define Positions in the Department

Again, define roles, not people: loan officer, processor, draws servicer, collections, etc. Defining roles for each department allows you to start considering the resources each department needs to be successful. Remember, you are not yet at the stage of defining what each role does, just which roles are needed. Below are some common roles for you to consider. These roles may be defined with one individual or many.

Executive

• CEO, COO, CMO, CFO
• Directors of departments

Originations

• Loan officer
• Loan officer assistant
• Processor
• Underwriter
• Quality control

Servicing

• Draws inspection and review
• Administration assistant insurance and note compliance
• Administration assistant payments, payoffs, and escrows
• Administration assistant quality control
• Bank line bookkeeping and accounting

Human Resources

• Accounting and payroll
• Personnel and recourse manager

Definition 3: Define the Duties of the Positions

Define the duties of each position. Remember, not the person! This can be difficult when you’re used to hearing “That’s a Rob thing” or “That’s a Rosalie task.” When you base positions on people rather than defined roles, you feel anxious about taking the hit that comes when that person leaves because no one quite knows what that person does.

Generally, duties per position should not exceed five things—five simple things, done well that overlap with the “five things” of other positions. Of course, each “thing” will require multiple steps, but for the purpose of this exercise, make it simple for your staff. You define five things and allow the people in your positions to evolve into critical-thinking problem solvers.

For example, if you apply the “Five Things” rule to the position of loan officer, the duties may look something like this:

1. Generate leads.
2. Follow up on new and old business.
3. Generate educational content.
4. Manage the loan process.
5. Network in person and virtually daily.

Yes, there are a multitude of tasks within each of these duties; however, each person has their own set of skills at which they excel. Making the duties easy to understand so your staff can easily execute them is important to the success of the person in that position. So, list the five simple tasks that are to be completed each day.

Definition 4: Define Position Overlap and Management

Two of the most common failures in the development of the operational structure are the lack of effective communication (1) within the department and (2) between two departments.

Think of the human body. You have multiple systems, including the endocrine system, circulatory system, nervous system, etc. They are all very impressive, but they are basically useless alone. You only live effortlessly when these systems work together. Taking that analogy to the company level, when you have defined systems in place, you can spot sicknesses in your “company body” as one of the overlapping systems starts failing.

As managers, it’s your job to be the specialist. You must either treat the problem internally or refer out the failing or broken system to be fixed. Only then can the “company body” function well again.

The more you segment your company rather than embrace overlaps, the more you will experience catastrophic failures as employees leave, stagnation, and a lack of communication across the organization.

Effective communication, in particular, is key to a growing operation. If your positions and departments overlap in the transfer of information, your communication becomes more effective. Failures in these overlaps indicate early-stage communication failure. But if managers catch the communication gap quickly and address it, they increase their chances of recovering before things get out of hand.

Definition 5: Define the Person

Finally, the person. Yes, you do have to address the person or “personality” of each role. Only when you have the previous four definitions in place can you turn your attention to defining this part of the operations process.

What type of person best fits this role? Is this a relationship role? A data and process role? Choose a personality test (Myers-Briggs, DiSC, Gallup, etc.) suited for your company. How does each person fit in? You may be surprised to find that a problem employee you have today is just in the wrong role. For example, a problematic loan officer may end up being a fantastic processor and admin assistant after being ineffective at sales and relationships. Once you understand the personality types of your employees, nurture them to create a vibrant work environment in which all your employees feel appreciated and valuable.

Now you have defined everything you need for your departments and personnel. Now you must implement it. Frankly, implementing your plan shouldn’t be the operational nightmare some of the other processes you may have had to put in place were.

Why?

Because you spent time on people instead of just the process. You’ve ensured the person understands who they are, where they work, what they do, who they report to, and how they solve issues when they run into one. An overwhelming sigh of relief will come from many of your staff members, although you may still have some normal grumbles from the ones you tend to expect it from.

In the last issue, we focused on effective communication. In this article, you’ve learned how to structure your company and its personnel. As we dive deeper into exploring operational efficiency, you will need these as foundational blocks. With these in place, we can begin examining how to improve the service side of your business; that is, how you serve your borrowers from soup to nuts to grow your bottom line and valuation of your company.