Operational Plan for Revenue Performance

Home Loan corporation/Lending Tree Sales Operations Support (SOS)

Operational Plan for Revenue Performance
Beyond Critical Mass

Submitted to

Anthony Hsieh, Chief Executive Officer
Tomo Yebisu, President
Sean Wilson, Senior Vice President
Pat Lee, Vice President Production Processing
Jess Smith, Director of Sales

By

W. D. Cravenor

Aliso Viejo, California

Table of Contents


I. Purpose & Introduction—Why SOS?


II. Process: SOS Strategic Goals & Objectives

A. Concentric Organizational Structure—Circle 1 Management

B. Transfer, Translate & Inculcate Cultural Values

C. HLC/LT Employee Recognition and Incentive Management System

D. Tear Down and Re-build the Recruitment & Training Process

E. Implement a Formalized Career Growth & Migration Planning Hub

F. Revenue Metrics Management—A Bottom-Up Approach

G. The HLC/LT Experience—World-Class Customer Satisfaction


III. Payoff: Key Benefits & Concluding Words


I. Purpose & Introduction—Why SOS?

HLC/LT leadership is dedicated to enhancing long-term revenue attributed to the establishment of a one-stop-shop nationally recognized point of reference for all services pertaining to the finding & financing of real estate and related product & service offerings.

Baseline Observations

A primary step in the development of an operational plan to secure long-term, EBITDA positive, scalable growth is to identify and analyze baseline criteria—a snap-shot of the current state of affairs within HLC/LT. In this regard, the following observations demand notice:

As HLC/LT continues to experience exponential growth, the need to refurbish and re-engineer the infrastructural base—enabling on-going maturation­— becomes more intense. Present resources are already being stretched to capacity. Infrastructural absorption—an index of recourses to utilization is a key metric to predicting the proximity of critical mass.

HLC/LT cannot afford—in its present state— to incur the fixed costs required to achieve 20,000 units without a paradigm shift. At the current rate, HLC/LT will need a minimum of 20 buildings and 6,000 employees to achieve this production goal—assuming current efficiencies are not adversely impacted. The demands of scalability require a refocus of resources to achieve primary corporate goals (a partial listing):

Corporate restructuring plan completed
Market share dominance achieved
Loan volumes in excess of 20,000 units
EBITDA performance at or above planned expectations
Scalable, sustained growth insured
Corporate values enriched
Brand valuation enhanced
Shareholder valuation increased

Unless specific, measurable, attainable, relevant and timely action plans are promulgated—addressing the above-stated corporate goals—being endorsed by all concerned parties, the opportunity for sustained growth beyond critical mass will be severely diminished or eliminated.

To achieve sustained revenue growth beyond critical mass, the following seven broad-based strategic objectives (developed in conjunction with SOS) should be given careful consideration.
II. Process: SOS Strategic Goals & Objectives

A. Concentric Organizational Structure—Circle 1 Management

HLC, since its genesis, has adopted a top-down corporate structure. This structure, during the earlier stages of the company, was necessary to impart the vision, values and entrepreneurial spirit of Anthony Hsieh.

As HLC/LT has grown, the reach and penetration of leadership’s values among rank & file revenue-producing staff has significantly diminished. Continued erosion, combined with planned exponential growth, has the potential to create a breading ground for asymmetry to standards—jeopardizing sustained revenue potential.

As the coping mechanisms within the existing infrastructural resource base become overtaxed—a present situation—negative externalities ensue, and threaten to stymie progress beyond critical mass.

These negative influences are diametrically opposed to the harmony and long-term well being of the enterprise. Indicators of the need for change include:

· Average Revenue Contribution (ARC), (per revenue-producing employee) is decreasing or not being optimized
· Greater reliance on true (net growth) to sustain the pace of sales and EBITDA performance to plan from existing revenue-producing employee base
· Increased PIP enrollments, as a percentage of total, among revenue-producing employee staff
· Increased revenue-employee attrition, as a percentage of total, month over month
· Reduced revenue-employee retention, as a percentage of total, month over month
· Greater percentage of recruitment effort assigned to back-fill vacated revenue-producing positions rather than fill new openings generated from true, net growth
· Increased lead to lock cycle times
· Decreased overall lead to stip conversion
· Decreased overall stip to lock conversion
· Increased lost sales
· Decreased overall conversion
· Decreased repeat revenue
· Reduced order quality
· Ratio of activity to locks diminishing
· Ratio of leads and locks to cancels increasing
· Degradation of corporate culture
· Internal diminishment of brand valuation
· External diminishment of brand valuation
· Decreased borrower satisfaction

To defeat these influences, HLC/LT executive management will need to develop a new concentric organizational structure, dedicated to establishing the preeminence of every revenue-producing employee (at the center) of the HLC/LT organization.

Under the new structure, at the most fundamental level, there are only two classifications of employees: revenue producing and non-revenue producing. All revenue producing employees are at the center of the corporate structure—inside the inner circle (Circle 1) that represents the heart & soul of HLC/LT—REVENUE!

Everyone else is outside of this circle. Their primary functions are also simple—support everyone in Circle 1.

Concentric circles radiate from the center. The greater degree of contact and influence extended on revenue-producing employees requires greater proximity to the Circle 1. As influence diminishes on revenue production, the circles grow larger and larger in circumference, extending the radius from Circle 1.

Six circles radiate from Circle 1. Executive management resides in Circle 7—the least influential group in the process of producing revenue.


B. Transfer, Translate & Inculcate Cultural Values

Due the degradation of signal quality, HLC/LT management will need to translate, and then imbed the existing cultural values within the heart, mind & spirit of each employee.

These values must be transferred from the top to the center of the HLC/LT organization. Circle 1 employees must be the values of HLC/LT­—to simply articulate these values will not suffice. Additionally, what the values are is not as important as how to live them. SOS has recommended a five step values progression, as follows:

1. Adopt the re-visited, translated corporate culture—everyday
2. Adapt to change—it’s inevitable!
3. Abound in performance and attitude—it’s no longer optional
4. Achieve your personal & professional goals—you earned it!
5. Anticipate personal and professional growth—you deserve it!


C. HLC/LT Employee Recognition and Incentive Management System

SOS will develop and implement a broad-based employee incentive and recognition management system. System attributes will include:

· Source and conduct semi-annual Peak Performance company-wide recognition trips, catalog merchandise programs, collateral and cash incentives—themed HLC is ME! or LT is ME! These incentive & recognition initiatives will be managed by a third-party vendor experienced in staging such events. SOS will manage bid process.

· Produce and distribute departmental and company stack rankings, detailing all revenue-producing results for all revenue-producing employees.

· Develop & implement company-wide promotional events, dedicated to enhancing revenue results.


D. Tear Down and Re-build the Recruitment & Training Process

Re-engineering the recruitment and training process for all revenue-producing employees, including front-line management staff, is critical.

Recruitment

Key specifics related to recruitment include:

· Develop and implement a behavior and experience based Targeted Selection Recruitment Protocol, using the Development Dimensions International (DDI) model. Under this protocol, SOS will prepare detailed questions pertaining to the following operational disciplines:

a. Time Management
b. Organizational Skills
c. Overall Sales Ability
d. Dedication and Ownership of Opportunity (Attitude)
e. Ethical Considerations
f. Teamwork
g. Communication Skills

Respondents are required to provide detailed answers to each question in the form of a specific Situation, Task or Action and Result (STAR) for each question. Information is collected, analyzed and tabulated during a final data integration session prior to making a hiring decision.

Training

Key specifics related to training include:

· Training Bill of Rights—HLC/LT management will need to commit to adopting the following twelve ideologies:

1. Training is not just a box on the organization chart–it is everyone’s responsibility—especially those outside of Circle 1

2. Training is a continuous activity–it never stops

3. Training should promote continuous improvement–good enough is never good enough

4. Training involves day-to-day communication with staff–to exhort, encourage, and exchange ideas for process, performance and revenue improvement

5. Training (in a formal classroom setting) should not consume peak sales time (7 AM to 7 PM). Brown bag lunches, if necessary

6. Training should be progressive–leveraging technology to connect staff to core competencies

7. Training is pragmatic–meeting the real-world needs of real people to produce real results

8. Training is spontaneous–addressing needs in a timely fashion before they become problems

9. Training is specialized–to meet the specific demands of individual Circle 1 staff in their position and level of maturation

10. Training is localized–if at all possible, should be conducted in the closest proximity to the location wherein desired results are to be achieved

11. Training is results based–there are no substitutes for desired results

12. Training is dynamic–quickly adapting to the changing needs of employees

In light of the renewed focus on training, the following actions should be taken:

· New “pit focused” curriculum developed

· Specialization—discipline specific instruction offered—those who do the work teach their areas of expertise

· Revised and expanded new-hire class—more emphasis information that matters most

· Pit Practicum’s—Intense one-on-one, instructor-to-employee, sessions designed to attack specific performance opportunities—at their work station

· Revitalize Success University – See Career Planning (section E below)


E. Implement a Formalized Career Growth & Migration Planning Hub

Under the HLC/LT is Me! umbrella, develop and implement a formalized Career Growth & Migration Planning Hub within a re-vamped Success University.

Key attributes pertaining to career migration planning should include:

· An intranet-based Career Growth Matrix, permitting any employee to accurately access the steps required to qualify for any position within the company—regardless of their current position, education or ability.

· An intranet-based transcript system, detailing dates and grades of courses taken in pursuit of any career migration plan.

· A formalized policy developed & endorsed by executive management that requires every employee to have a career migration plan on file with Success University.

· Career Planning Progress Reviews should be offered quarterly to all employees to insure sufficient employee progress to their individual plans.


F. Revenue Metrics Management—A Bottom-Up Approach

SOS should become the central data base for Revenue Metrics Management within the HLC/LT organization. The need for centralized metrics management is critical as the organization continues to grow.

The drum-beat of the top 2% of producers within the company is not sufficient to sustain growth. Circle 1 employees must be managed from the bottom-up.

The lowest common dominator among revenue-producing employees holds the greatest promise for incremental revenue growth. Seemingly insignificant increases in performance within this sector will translate into substantial revenue. Only once all employees in this sector have been energized and challenged to raise their performance above the corporate average for each and every performance metric will HLC/LT achieve their overall revenue goals.

Economies of scale in the utilization of performance data, at the employee level, will serve to drive increasing effectiveness and efficiencies in the process of producing revenue. Key considerations include:

· Standardized daily stacks—ranking every revenue-producing employee by market, division, function

· Extrapolated month-end performance to plan projections detailing progress & pace

· Recognition updates on contests, promotions, Peak Performance, etc.


G. The HLC/LT Experience—World-Class Customer Satisfaction

As HLC/LT continues to grow, the task of leveraging the brand valuation will become increasing more challenging. HLC/LT will need to begin the Customer Satisfaction benchmarking process to transition the service offering into a world-class experience.




Customer Service Excellence—key initiatives:

· Pursue ISO 9000 series recognition for process control and Customer Relationship Management (CRM)

· J.D. Power & Associates Customer Satisfaction Index (CSI)—an excellent source for navigating the CRM/CSI process

· Complete the Six Sigma black-belt certification process



































III. Payoff: Key Benefits & Concluding Words

HLC/LT is—to be sure—a great company! Notwithstanding these sentiments, transitioning this enterprise into a dominant, world-class corporate giant will be a daunting task.

The remaining distance of the journey for HLC/LT is far greater than that previously covered. Along the way there are numerous obstacles—and opportunities.

This Operational Plan for Revenue Performance Beyond Critical Mass was written to insure that HLC/LT arrives at their appointed destination on time—having achieved every goal and objective.

To accomplish these goals & objectives, the Lending Tree brand must be surpass Countrywide and other online lenders. Are these brands anticipating & planning for similar growth? Most assuredly!

What will differentiate HLC/Lending Tree from the rest of the market? Here are a few suggestions:

A highly compensated, motivated, incentivized and informed work force
Abundant and robust opportunities to stay and grow within the company
A highly loyal work force
A scalable infrastructure that nourishes, rather than stifles, growth
A corporate organizational structure dedicated to revenue production
A corporate culture that is real to all Circle 1-6 employees
A CRM system second-to-none within the real estate lending marketplace