Lev Hojda of Freedom Mortgage on Changing the Conversation within Organizations
As director of Organizational Development at Freedom Mortgage, Lev Hojda identifies and evangelizes best practices throughout the organization. Here he reflects on how there might be new ways of defining and doing performance management.
In this episode, we explore:
- The inevitability of culture change when existing processes no longer meet the needs of the organization.
- Why there’s no one-size-fits-all when changing performance management processes.
- The problem with achieving consistency among ratings.
- How a company mission that inspires your employees creates a high-performing team.
Also mentioned in this podcast:
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Michael: Yes, this is The Performance Management Stories Podcast. I love this because having done a bunch of them now we get to hear real people who are right at the cutting edge of trying to figure out how to many performance management work in their organization. It’s not about the theory, it’s not about the highfalutin, look, here’s our generalized story in Harvard Business Review. It’s like this is somebody who’s got dirt under their fingernails as they’ve tried to figure out how to evolve their performance management process.
Today I get to speak to Lev Hojda. Now, Lev recently promoted to Head all of Learning and OD of Freedom Mortgage Corporation. He is a strategic and systems thinker with a passion for people development. He covers a broad area of work. His areas of expertise include evaluating talent, identifying successes, hire potential talent, and of course overall development.
You can guess if you’re listening to this podcast you believe like I believe that this performance management process is just a central tool in all of that, getting the talent, keeping the talent, helping the talent thrive. Lev, welcome. So nice to have you on the call.
Lev Hojda: Thanks, Michael. It’s great to be on this call. Appreciate the opportunity.
Michael: Yeah, my pleasure. Tell us a little bit about Freedom Mortgage. How big are you? Are you all over the States? Are you global? I don’t know much about you as an organization, so paint the picture for us.
Lev Hojda: Sure. Freedom Mortgage Corporation’s been around for over 25 years. Our size, last year we were noted as number five in terms of loan organizations. That’s just purchase and refinance of all the big companies.
Michael: Okay. Right.
Lev Hojda: We have 5,400 employees with varying amounts of contract staff.
Lev Hojda: We are all over the United States. Our headquarters are at Mount Laurel, New Jersey.
Lev Hojda: If you were to think of us, we’re a collection of businesses under the umbrella of Freedom Mortgage. Our goal is to grow our mortgage loan portfolio. We grow it through retail customers, like a bricks and mortar store.
Lev Hojda: We also grow it through refinancing folks in our current portfolio. We also grow it through white labeling our mortgage services to other mortgage brokers. We also buy a lot of mortgage portfolios who … From smaller mortgage companies that may not have the ability to service their loans. We generally keep and service all of our acquired loans.
Michael: I love it.
Lev Hojda: That’s part of our business. The other part is this shared services, if you will, that go along with managing a business well, so HR, legal, IT, analytics, marketing. We have a variety of personalities. We have the driven sales types. The driven folks, and then we have analytical types. We have marketing types. Lots of different types of personalities in our organization. We’re a results-oriented culture. If you think of our culture, we’re achievement-driven and goal-focused, so that largely defines who we are.
Michael: Love it.
Lev Hojda: We’re very susceptible to market conditions, interest rates, so there’s a lot of volatility. There’s an emphasis on speed and growth and coming up to speed quickly. A lot of battlefield promotion, so there’s a lot going on generally.
Michael: Yeah. So often the classic performance management process is not one that deals well with volatility, with speed, with that kind of need to make decisions in the moment. How long have you been at Freedom Mortgage Corporation, Lev?
Lev Hojda: As of March I’ll be three years at Freedom Mortgage.
Lev Hojda: Yes.
Michael: How have you seen the approach to performance management change or evolve at all at Freedom Mortgage Corporation?
Lev Hojda: When I started we had just transitioned from a paper process to a process that was managed by our newly-acquired HRIS system. We were using technology. The technology basically mirrored our paper process, so there was some automation that went on with that, so the kind of getting used to how that worked. That was the biggest change that I saw, and then through that time we are trying to evolve and tweak our process to meet our needs a bit better. The one thing that has been the big issue since day one is people rate each other. Managers will rate other folks differently, so if you take a collection of managers, they will all rate people differently. Marcus Buckingham is indeed correct when he says, “The idiosyncratic rater is in play.” It’s really hard. In fact, I think it’s impossible to train people to rate people, other people, the same way.
Michael: Right. How do you manage that? Because as Marcus Buckingham and others in the press talking about ratings, and how ratings can be random and demotivating, and you’ve got that tension that your organization kind of wants to know where people stand. In fact, people want to know where they stand, and yet they get demotivated by specific ratings. How have you tackled that?
Lev Hojda: Well, I wouldn’t use the past tense of tackled it. We’re still dealing with it.
Michael: Right. How are you tackling that?
Lev Hojda: Yeah.
Michael: Because you’re right.
Lev Hojda: Yeah.
Michael: It’s an ongoing wrestling match. I understand.
Lev Hojda: Well, there’s this tension between developing people and managing performance.
Lev Hojda: If you listen to any of the debates around performance management you’ll see polar extremes. You’ll see companies that go from, oh, we’ve stopped doing it, we just have conversations, to companies like ours on the other end, which are rating competencies.
I think there’s a lot of evolution going on. Part of my role is to look at best practices and evangelize those best practices if you will throughout the organization. That’s a big of a culture change. Not everyone is really open to that, but I believe that when the pain gets intense enough the folks will want to have a different way or have different conversations. I’ve been slowly but surely just trying to talk to people about best practices and better ways of doing performance management and defining it for our organization.
Michael: When you say talk to folks, you’re the Head of Learning and OD.
Lev Hojda: Yeah.
Michael: You’re an influencer in the C-suite. Are you working at that senior level to try and have those conversations, or is it like this needs to happen kind of a bit behind their backs in and trying to make stuff change?
Lev Hojda: Well, that’s where understanding our organization helps. We’re largely siloed because we’re a collection of businesses.
Lev Hojda: Things tend to happen in more of a distributed manner. I’m more of a grassroots effort. If someone in the C-suite will give me audience I’ll definitely talk to them and give them my opinion. I see it more of as an evolving conversation or changing conversation within the organization. I feel like if we get enough critical mass of folks thinking a certain way about performance management then I think they’ll be some change. Now, I had the advantage of having a staff of folks who can talk about it, too.
I think one of the large problems that we had from the beginning is we didn’t really have a performance management philosophy pretty well defined and talked about. It was more about just getting a process in place. I think if we started with more of the big why, like why are we doing this, and kind of had people embrace the understanding of that I think it might’ve been a little bit easier.
Lev Hojda: We’re trying to change a lot of things at once here. We’re still in process, as you can tell.
Michael: I can. You and everybody. Nobody got this sorted out yet. If they think they have they may not understand the scope of the challenge ahead of them. Do you feel that you’ve evolved a philosophy around the why of performance management? Why are you investing that time, that effort, the good, the bad, and the ugly of performance management?
Lev Hojda: Well, I think I’ve clarified it. Personally, if you look at all the research out there and all the white papers, I look at a lot of the work by Deloitte and anything that Josh Bersin says I try to pay attention to.
Michael: Yeah, he’s a smart guy.
Lev Hojda: When they talk about high-performing teams they identify … I get to do what I do best every day at work as something that motivates a high-performing team. The mission of the company inspires me.
If you try to inculcate those two ideas performance management can actually support that. If you do it on a regular enough basis you will actually be able to propagate the mission of the company and really get to understand people and kind of bring the two together to really create high-performing teams, which I think every company wants. They want high-performing teams and people.
Michael: Yeah. Yep.
Lev Hojda: If they just kind of had a more of a systemized understanding of that and how it all works together then I think it would further performance management. What it often boils down to is, oh, I need to do some ratings. This is going to help me with comp and I need to move onto my other stuff. The main thing is really you got to work with your people because those … You get results through people.
Lev Hojda: If we figure that out and get that bettered then the results will actually come from that. There’s a lot of pieces. They all play together. It’s at both ends.
Lev Hojda: It’s not either or.
Michael: This is what we’ve found in the Box of Crayons research, that … We’re talking mid-January when we’re recording this conversation. We’re launching this in about a month’s time. To your point, we found that there’s an almost unsolvable tension at the heart of performance management, which is is this about performance or is this about management?
Performance is how do I help people thrive and do their best work? To that sense of I’m getting a chance to do my best work and for the … In the service of a mission that I’m engaged with. The management is where are you on the bell curve? How much are we going to give you a bonus or increase your pay? Whatever it might be. Those collapse together, but they’re almost contrary in their goals that you’re actually having with them.
Lev, let me ask you this. I think there’s two parts to thinking about performance management. There’s the, well, what’s the system and what’s the process that we think will work best with our culture? I guess there’s three parts.
First all, what’s the system that we’d love, what we think works best with our culture? Secondly is what’s feasible, depending on the climate of the C-suite and the market and the other change initiatives that are happening? Can we do it all? Can we do some of it? What battles do we choose to fight?
Thirdly, there’s the change management process, which is, okay, if you’ve got the idea of … If you’ve decided what you’re going to try and introduce, how do you introduce it to an audience that is typically a little bit tired and a little bit skeptical about yet another change process coming at them, particularly in inverted commas, an ‘HR change process’?
What’s interesting about Freedom Mortgage Corporation, as you say, it’s distributed. There’s a bunch of different businesses under that umbrella. I’m curious when you think about change are you like, “Okay, I’m picking these two because they’re buddies of mine or they’re particularly desperate, or they’re particularly open to it?” Is it more of a kind of just looking for opportunities across the whole spectrum of the businesses under the brand umbrella?
Lev Hojda: Well, I tend to work by relationship, so I’ve spent a lot of time building relationships with different people in the organization. I think it’s a both end sort of thing. If I have senior leaders who I have access to I’ll go talk to them about stuff. To me, I think any change management initiative needs to start with a real broad understanding of why are you doing this? Then, what are you actually doing? Then, the how of it.
I feel like sometimes we start change management initiatives with just a how. We hit a lot of detail and most times folks don’t understand, or at least I’ve seen, they don’t understand the context or why that’s coming along or what’s even going on. There’s a lot of confusion, so I think there needs to be a little more front end work, especially with a performance management initiative. If you don’t have performance management you really need to do the front end work, especially if you don’t have a lot of buy in from the top. Buying from the top is great. If they’re directing it, it’s great, but if they’re not then it really relies upon your influence throughout the organization.
Michael: For sure.
Lev Hojda: It makes it harder, quite frankly, and it makes it longer and more drawn out. It’s not impossible, but it is hard.
Michael: Yeah. It feels that the big change for you has been that shift from paper to technology, so that’s same basic process but now done in a way that’s sped up and a little less bureaucratic like that. Remind me, what is your basic process? Is it like an annual rating thing? Is it a biannual thing? Yeah.
Lev Hojda: Well, we do it twice a year, so I guess that … Is that semi-annual? Twice a year.
Michael: Yeah. Yep, semi-annual, bi-annual. Yep.
Lev Hojda: Yeah.
Michael: Oh, maybe not. Bi-annual’s once every two … It doesn’t matter. Twice a year. We get that.
Lev Hojda: Twice a year. I actually looked it up before our podcast.
Michael: Oh, there we go.
Lev Hojda: I wanted to make sure I had that right.
Lev Hojda: Because I get that confused. The first one occurs May-June time-frame and it’s linked to comp. It’s right before the comp-management process.
Then we have a second one at the end of the year. What usually happens is our system sends out a review for the employees to do on themselves, so they do a self-evaluation. That goes back to the manager. The manager will then do a review. The system pretty much determines how that works.
Lev Hojda: Our system is based on competencies. We have six competencies for all employees, and then managers get an additional four.
Lev Hojda: Everyone is evaluated on these on a scales of one to five. System averages it and there’s place for comment. Then, when the managers finish their process their manager will actually look at it to see if the rating falls in within a certain distribution.
Then once all that is said and done then the managers will go out and have their one on ones with their employees. Once that’s finalized then it’s finalized within the system. It’s an involved process. I think it could be simpler, or should be simpler. I’m working towards that end to kind of make it a little more of an easier process because what’s happening is as people are starting to dread it and they’re starting to feel like kind of, really… It’s just a lot of overhead.
A lot of meetings. In fact, Deloitte, when they did their research I think they said they were spending two million hours a year, or some crazy number. I thought, “Gosh, we’re…”
Michael: That’s an enormous number.
Lev Hojda: …Yeah, enormous. I thought, “Oh, what kind of value are we getting for this?” It has to show or prove value to the business, so that’s still to be determined.
Michael: Got it. That’s the kind of May-June time. And that kind of sets up that compensation piece. The one at the kind of the next midyear point, that’s more just on performance so far. It’s kind of like an update on how you’re doing.
Lev Hojda: Yes. It’s supposed to be more developmentally-focused. It’s a little less tense because it’s not assumed or conflated to be connected to the compensation piece.
Michael: There’s not money riding on it.
Lev Hojda: Yeah, there’s not money. I have a saying, when it comes to money people get funny, so all kinds of funny things happen when it comes to money.
Michael: That’s right.
Lev Hojda: Yeah. The whole idea behind it is that it’s more developmental and it’s more for talking about what’s going on, which is good. I like that. I like the fact that we have that and it’s kind of a review of the year.
Michael: Looking ahead, Lev, what are you thinking? I can hear you going, “Look, I’m kind of doing a bit under the radar. I’m working through relationships.” It doesn’t sound like this is a … The evolution of performance management is a burning priority at the C-level for you guys, but you’re like, “I know how much this is costing us literally in hours taken,” but kind of beyond that as well. What are you hoping to change? What are you going to focus on for the next 18 months, two years sort of area?
Lev Hojda: Well, one thing I think needs to happen is the HRIS systems need to evolve to allow more flexibility with performance management. Even Josh Bersin says this, that they’re starting to change and they’re starting to be a more robust engagement and development platform. I think that needs to change. Unfortunately we’re locking into our HRIS at this point.
I also feel like a trend that’s coming, and it’s here, is the millennials that are entering the workforce are going to drive some of this change because they … Rightly so. I felt this way when … I’m not a millennial, but I certainly have this mindset, is that people need to have regular check-ins. And not just twice a year. I think as millennials get into the workforce, more and more of them, and they become the majority, to retain that we’re going to have to change. That’s going to drive that largely. Our workforce is actually changing in that regard, so that will definitely drive that.
I’m always working to improve the efficiency of our processes and help the organization do better. That’s kind of my goal.
Lev Hojda: Regardless of what I have to work with, I have to make sure it’s doing the best it can for the business. I’m trying to make it a little more rational. I like to separate the comp piece from the development piece, so that’ll be something I’m working on. We’re trying to clarify definitions of competencies.
Just make the process a little more straightforward that there isn’t a lot of debate. The system actually just kind of helps you through it, so that way it’s more natural and it actually provides more value. Those are the types of things I’m going to be focused on. And trying to bring improvements where I can.
Michael: What I’ve really appreciated about this conversation is I think where you’re at and where Freedom Mortgage Corporation is at is kind of indicative of where a lot of organizations are, which is you’re seeing the changes. You’re seeing the drawbacks to the current process, but you’re also going, “We’ve got to change this in a manager that fits with our culture and at a timescale that fits with our culture.”
So it’s not a, okay, we’ve blown everything up and it’s all changed. It’s more of a this is one of those ongoing, almost a Kaizen project, which is like how do we improve this step by step, bit by bit, so that it evolves over time to become a stronger process?
Lev Hojda: Yes, exactly. At the end of the day you can go to the polar extremes. You could say, “Well, we’re getting rid of numbers. We’re going to just have check ins,” but that doesn’t work for all organizations.
Lev Hojda: We do need numbers. We do need to figure out how to apply comp and manage the organization and encourage performance. Doing incremental changes is helpful I think for our culture. Some cultures maybe they could eject one thing and bring in another thing, but change projects are hard. They’re fraught with peril. If you don’t do them right you could end up being in a worse spot. I certainly don’t want to be there.
Michael: Lev, this has been terrific. Thank you. Any final comments or reflections on performance management before we head off?
Lev Hojda: Sure. Thanks for the opportunity, Michael.
Lev Hojda: I appreciate it. I feel very passionate about it. If you’re listening to this and you’re thinking about implementing it or changing it, I’m sure the one thing is to do research. There’s no one size fits all. I really encourage folks to decide on a performance management philosophy first and then build the process that fits the philosophy, and then your strategy and requirements will come from that. Not just going out and buying a system and saying, “Well, the system will guide it,” because you might find that the system really doesn’t fit your culture.
Michael: Right, the technology’s never the answer. It’s only part of a solution.
Lev Hojda: Yeah. If you get some thought around that and get some consistency around it, and everyone kind of understands it, then it’ll make the back end a whole lot easier and then the implementation of the system and people embracing it will be easier because they’ll understand the philosophy.
I’ve actually been to presentations in companies that had done that. It seems to be working for them and it’s a make sense kind of thing. It fits their culture, it fits their philosophy, it does what they want it to do. They’re tweaking it like everyone else is, but you really have to do that front end work.
Michael: Lev, this has been fantastic. Lev Hojda, Head of Learning and OD at Freedom Mortgage Corporation. Thanks so much for your time.
Lev Hojda: You’re welcome, Michael. Thank you.