Nobody likes layoffs. There’s a very real human and emotional cost to them. There’s also a very real expense that comes with the perceived cost-cutting that usually drives layoffs. And while sometimes layoffs are necessary, that doesn’t mean we can’t end the cycle.

The Recurring Cycle

The cycle to which I’m referring, of course, is the cycle of hiring and layoffs that often accompanies changing market cycles. When volume is improving, we hire as fast as we can—especially on the front lines and points of borrower contact. When we anticipate a decline in order volume, we lay off those same points of customer contact, for the most part. This explains why, after two or three incredibly strong years, we’re seeing stories about layoffs far too frequently. 

On the balance sheet, the strategy is somewhat understandable. People are generally a business’ greatest asset. But they do come at a price. So, from an accounting and cost management perspective, the hire/fire cycle isn’t sheer lunacy.

Disrupting the Cycle with Tech

However, if we take a step back and ask what many of the employees constantly coming through and going out the door actually do, a lot of it could have been automated in the first place. We can also find dozens of other processes and tasks throughout the mortgage workflow (and this is true for just about any mortgage-related business…title, valuation, you name it) that really don’t need human beings to get done. A lot of data entry or stare-and-compare types of tasks.

Wouldn’t it make more sense if those routine processes were handled by technology, so that the people being forced to do them could be redeployed on things that do require humans? Like marketing, discovering prospects’ needs, and then fitting them to the best products for them and the business?

The Road to Retention and Employee Satisfaction

This is not a new hypothesis. We certainly have offered it many, many times before. So have others. And we’re seeing that the best businesses automate anything that’s “automatable,” so that the humans can do more human stuff.

What if the idea that tech puts your employees out of a job was a myth? What if effective automation and digitization actually allows employers to mobilize their people to more engaging, rewarding jobs that require more complexity and ownership? More often than not, an employee who is challenged and empowered is also a satisfied employee.

The cost savings are evident. While effective automation may lead to less “binge hiring” cycles, it should also limit mass layoffs quite a bit. And if you think hiring new employees is expensive, compare it to the cost of laying off those employees…then hitting a new cycle, recruiting, hiring and training new employees a year later. 

Not every element of the cost savings created by effective technology is immediately apparent. But the long-term rewards and ROI of using effective technology to replace the ramp up/cycle down approach? Simply more evidence that doing the right thing is often also the most effective business practice, too.

Got an idea for a future Deeper Thoughts or LLL? Let me know at jpaolino@lssoftwaresolutions.com.