Hiring your first employee can be a daunting task for the independent broker. Andrea Cornish of our sister publication MPA explains the process and how to avoid some common mistakes
Many brokers maintain that hiring their first employee marked a major turning point in their career. Choice Capital’s Nick Caple says when he took the plunge it felt like a massive decision, but turned out to be a great thing for him and his business. He initially only wrote commercial and construction finance and it was his PA who suggested they write home loans. “I said I didn’t want to bother and so she asked if she could and that’s how we started writing home loans — it was sort of an accident,” he recounts. “It was a funny way for it to happen, but now we’re writing $150 million a year in residential loans.”
According to Advice Centre Consulting’s David Fox, one of the major benefits of hiring someone is not only the ability to distribute the workload, but it’s the opportunity to bring a new perspective to your business. “As a sole business proprietor, you think you’re the only one with all these problems,” he says, “but when you’ve got someone else, you’ve got someone to talk to about these issues, they can help you, they can provide a different perspective. Good, talented people that can help you grow the business and share your enthusiasm and vision are a fantastic asset.”
If you’re questioning your ability to make the leap from solo broker to “plus one,” you’re not alone. Toowoomba Home Loans’s Paul Taylor hired his first employee in 1998 and described it as “a real terror.” “I was plagued by a number of concerns,” he says. “Can I afford them? Will I pick the right person? What if I train them and they start up in opposition?”
While a daunting decision, Taylor says he came to the realization that he couldn’t do it all by himself, and if his business was to grow then he would have to learn to rely on others. “You must take risks in order to grow and learn,” he says.
But you can mitigate some of the risk by getting your financials to a level where taking on an employee won’t bankrupt you. Daniel O’Brien of PFS Financial Services says he expanded his monthly trail to a point that could pay for his mortgage, his office and cover the wages.
“Once I hit this goal it did alleviate a lot of the stress and worry in making that big step of growing the business:’ he says. “Getting my trail to pay for core expenses was the best thing I could have done. It meant working my butt off for a few extra months, but at least the business was at a level that warranted a second person:’ While having financial assurances in place makes sense, Fox suggests that mortgage brokers don’t always need to wait until they can afford an employee. “My view is that very often you will never be able to afford an employee if you take that approach,” he warns. “Once you’ve made that decision that you want to move towards having a business that is bigger than just yourself, that is the time to employ someone and then to arrange whatever funding is necessary.”
Regardless of which approach you take, the next big question is: what next?
Step 1: Plan the role According to Fox, mortgage brokers need to sit down and think about the role they want their employee to fill. “The most important thing and something that is really not done well is to get clarity around what this role is,” he states. “It’s not only the tasks involved in the role, but also what the role needs to achieve and what the criteria of success are. Typically, brokers are not very good people managers and therefore they would employ someone to do 10 different tasks, but if that person has some talent they will not stay around for very long. They need to employ someone for a future role as well. So that person will be able to develop into that.”
Step 2: Deciding remuneration Once you’ve outlined the job description and are clear about what you want your employee to do, it’s important to research appropriate remuneration levels. Just as important is developing an incentive structure for your employee, Fox says. This will help retention and keep your employee motivated.
Step 3: Finding someone There are a variety of ways to find an employee — the most obvious being through advertising, networking, recruitment agencies or via referral. But the most important aspect of this part of the process is to not choose the first person who walks through your door. According to Fox, you should take the time to find someone who is not only capable, but is a good cultural fit. He also advises brokers to look for someone they can mentor and coach into a more senior position.
“A lot of brokers will be employing someone for that support role and that’s the end of the story,” he says. “But if you want to grow your business, then you need to employ someone who is capable of moving into a more senior position. Getting a younger person who is enthusiastic and willing to learn over time is usually the best choice.”
Step 4: The Interview Questions in the interview should reflect the job description you developed in step one. Ask candidates how they meet these criteria and for examples from their previous roles that demonstrate they would be capable of fulfilling the job role. Most importantly, familiarize yourself with discrimination legislation. Questions relating to age, marital status, race and religion are just a few areas you’ll want to avoid.
Step 5: Checking up You can avoid some nasty surprises by thoroughly checking the applicant’s referrals. In addition to providing verification of the applicant’s identity and proof of former employment, the referral source should be able to indicate whether the candidate has demonstrated skills in previous roles that are transferable to the role you are offering.
Step 6: Put it in writing Once you’ve made an offer to your new employee and they’ve accepted the role, make sure you put it in writing. Have your solicitor look over your employee contract. It should include a start date, salary, benefits, details of the job and working conditions.
Step 7: First day Be prepared for your employee’s first day. They will need an appropriate workspace and equipment, as well as somewhere to keep their lunch and personal belongings. Make sure you spend enough time training your employee so they are comfortable completing the tasks you’ve set out for them. Make sure your new employee takes their lunch break or, better still, take them out to lunch.