Reality HR Interview with Brenda Hardesty and Andy Pollock of First Franklin on Creating a Culture That Supports Innovation and Discipline

To access the archived interview, please click here.

To access a schedule of upcoming Reality HR interviews, please click here.

HR.com:Today I am very pleased to welcome Brenda Hardesty, SPHR, EVP of HR and Andy Pollock, President & CEO of First Franklin Financial Corporation. 

Ms. Hardesty is responsible for First Franklin's Human Resources, Recruiting, Corporate Training, and the National Sales Group departments, working to align employees and core business initiatives. With over 16 years' human resources experience, Ms. Hardesty focuses primarily on organizational development, design and implementation of recruiting and retention strategies, orientation, compensation structure, training, career planning, and employee communications. She develops and executes new programs and practices to drive high performance and retain top talent through skill building, performance management and recognition programs. In addition to her HR and OD background, Ms. Hardesty has held operational roles including managing a 24/7 worldwide technical support, services and training organization with direct P&L responsibility. She holds a B.S.B.A. degree and a Senior Professional in Human Resources designation. 

Andrew Pollock currently serves as President and Chief Executive Officer of First Franklin. His primary responsibility is to oversee all facets of day-to-day company operations. Mr. Pollock has a long history with First Franklin commencing in 1986 through 1996, as the senior executive in charge of all loan administration operations. General duties included the merger and acquisition of several mortgage portfolios, coordinating the daily operations of the loan administration division, and the merger/acquisition of the First Franklin/Franklin Mortgage servicing platforms and portfolios. At its high point, the mortgage-servicing portfolio reached almost $10 billion in size. Prior to his current assignment, Mr. Pollock performed as the Chief Operations Officer of DV Capital, Inc., a venture capital firm specializing in financial services and real estate development. Mr. Pollock received his B.S. degree in Business Administration from the California State University Chico. 

Brenda and Andy, could you begin by telling us about First Franklin and your roles there?

AP: First Franklin is a mortgage banking firm. We grant loans to homebuyers and homeowners nationwide. We originate, purchase, sell and securitize non-prime first and second mortgages. Our corporate office is located in San Jose, California. We have approximately 2,600 employees nationwide. In 2002 we did 10 billion originations, in 2003 we did 20 billion originations and in 2004 we did 30 billion originations. It has been a pretty strong growth trajectory within the space.

We focus on wholesale originations. Our customer is typically a mortgage broker, but we do a little bit of retail work direct with the borrower. We have 35 branches nationwide, originating these products, working with over 30,000 brokers through the wholesale channel.

As the President and CEO my role is looking at long-term strategy, intermediate tactical decisions and day-to-day fires that pop-up just about every hour on the hour. I also handle coordination through our parent company, National City Corporation. National City is the ninth largest bank in the nation and that interaction is a priority for me, in addition to the relationships that we have in the capital markets.

BH: I joined First Franklin in 2003 and my areas of responsibility include Human Resources, recruiting, training and also the national sales group. Prior to joining First Franklin I worked primarily in technology companies, most specifically software development and broadband data communications.

HR.com:  The culture at First Franklin supports innovation and discipline. What would you describe as the essential elements of your culture that support these elements?

BH: Having been with First Franklin for over three years it is by far the most unique blend of innovation and discipline that I have ever personally experienced. I have spent a lot of time trying to drill down and find what is creating that.

In the area of innovation, we certainly focus on product innovation. First Franklin was a pioneer in successfully using credit scores for loan decision. Today it seems that everyone is using these scores for these types of decisions. We were also early to market innovative products such as interest only.  If you are familiar with the industry at all, there has been a lot of press about the risk of these types of loans. That is really where our disciplined environment comes into play. We have a stellar reputation on Wall Street for originating high-quality loans and that is very much validated in the day-to-day performance of the loans that we do.

On a high-level, the key points include starting with a meaningful strategy and creating that alignment around the strategy. It is about fostering an environment of finding and keeping the right people in the right roles and keeping them engaged and productive to achieve results.

AP: From my perspective, when I talk about our culture of innovation and discipline, I take a step back and talk about our "secret sauce." It is not that much of a secret because I tell anyone and everyone I meet about it. It is really about coming together with the value proposition for the customer. It is the right price, an innovative product, a seamless process, knowledgeable consultative sales and then competent people. Competency at the point of contact is critical. I also look at management encapsulating all of that to bring together this "secret sauce."

However you want to stack these attributes of a mortgage banking institution, it is execution that is the difference. That is why I am okay with telling everyone our secret. It is the execution on the strategies that makes it worth anything. It is the people that bring it together. We reward, recognize and celebrate successes within all of the components of our "secret sauce." It is that discipline of execution, layered on top of innovation that is our success factor. 

HR.com: You have described your culture as one that is "questioning and challenging." Can you explain what you mean by this? 

AP: We have an open concept in our culture where people can ask anything and everything. My phone rings off the hook all day. I pick up my phone. It isn´t filtered through a receptionist or admin. I take all my calls. It comes down to the fact that you have an engaged workforce. They have ownership in this process. They have ownership in this company. With the market constantly moving, management and the employees have a responsibility to question whether or not we are on the right track. We must question and challenge our strategies and validate them on a continual basis because the market has moved and is continuing to move. If we are not doing that validation process we could miss the mark.

In the period of 1994-1995 the mortgage industry went through a huge change in its evolution. Interest rates picked up dramatically and all of a sudden everyone´s mortgage pipelines were dissipating. People couldn´t lay-off staff fast enough. We sat down and questioned our strategy and said, "We´re in the wrong space. The space we are in now is highly competitive and the margin compression is going to be toxic." We made the decision to get out of the prime A paper space and move into the non-prime credit arena. If we had not done that we probably wouldn´t be in business today.

HR.com:  The fact that ongoing open dialogue is encouraged must contribute to the tight alignment with business strategy at First Franklin.   Can you tell me more about how business strategy is linked with organizational culture? 

BH: We spend a great deal of time as a senior management team on the overall strategic planning process. We look realistically internally and externally, present as well as future. We outline our strategic thrusts and we have a communication plan that is mapped to the launch of the annual plan. It is really a cascading effect. What is the company doing? What do the departments and individuals need to do to contribute to that success?

We also have some fun with the launch. It has served us well with our employees in terms of connecting with them and creating a spirit of camaraderie. We do an executive spoof video, and although it is quite embarrassing at times, we take the opportunity to poke fun at ourselves and be real in that regard.

We do move onto a more serious note when we confirm our vision, mission and core values. We look at that every year through the strategic planning process. It obviously doesn´t change every year but we do revalidate that. Then, we get down to our specific key thrusts, which is really what we are going to accomplish that year. Each manager then takes that information and works with their department to outline their objectives.  Objectives are then integrated into our performance reviews, which have an impact on our compensation. We still have work to do in this area but we do get better at it each and every year.

HR.com: The orientation process plays a large part in encouraging top performance and alignment.  What is your policy re: the orientation and what impacts have you noticed as a result of this policy?  

AP: We follow an employee lifecycle process. We call it our "foundation for success." As a company we have a promise to our staff and to potential employees. It is the recruiting process and the mutual selection. My job is to paint a picture of what First Franklin is and what it will be and the role for an individual in that landscape and what role they can play in the future. That way that employee gets a perspective of the company and through their resume and the interview we get an outline of what their picture looks like.

Who we are, how things work and how a person fits into it need to be part of the job description. People need to know what they are going to be held accountable for and what their deliverables will be. Next we take what we need from individuals and it really comes down to goal setting. Performance plans are tangible and real and are not subjective in nature. Once that is completed, we talk about how that individual will grow and contribute in the short-term and long-term. Of course, how we evaluate that person through a performance evaluation goes hand-in-hand with a pay review. That then leads to the fact that each individual has a career plan that addresses where they go from here.

We do performance evaluations on an annual basis. In addition to that, for management positions, we have a 360-feedback evaluation that rounds out their skill sets. As far as career paths and the timelines there, I like to think that a person´s career path can develop at the speed of himself or herself.

HR.com: Brenda, can you speak to how the performance management process reinforces the elements of innovation and discipline? 

BH: From an overall perspective, we start with our strategic thrusts and then we go through our goal setting process. The first and most important step in this process is making sure we find the right strategic thrusts. That is really what is driving the organization. We do look at it through the lenses of strongly reinforcing innovation and discipline.

We have a strategic thrust today that says, "We want to make sure that we are the leader in innovative products and pricing, risk management and commitment to quality." We map that in the performance review to two key areas. The first key area is our performance drivers. One of them is customer focus and these don´t change year-to-year. What does change is our strategic thrusts, so if the driver is customer focus one of our thrusts for 2005 is innovative products and pricing. We link the long-term perspective of where the company is going with the specifics of what we need to get accomplished in this year. That gets tied to the individual´s performance.

HR.com: What are the processes that you use to support those drivers? 

BH: There are a variety of tools we use. Today, our performance management system is largely a manual process. We do have some things that are automated in terms of 360-assessments, which are online. What we do is focus on getting the process working really effectively. The methodology comes first and then we will start to add tools as the enablers. I do feel confident that with the leadership framework, which speaks to competencies and the performance drivers, that speak to where the company is going we have a solid foundation now and we will start to add other tools.

We do great training in this area and I am very proud of the training team that takes the information and then institutionalizes it throughout the organization to help people understand what they need to do and when.

HR.com: Opportunities for learning and development along with career advancement play a key role in employee satisfaction and retention.  How is career planning accomplished at First Franklin? 

AP: We have a rich history of promotions and our internal career paths have been a great story to tell. It is fun in my role, to deal with this long history. I can tell stories like, "Way back when I remember when so-and-so was hired as a receptionist and now has a huge role in the company." I´d like to tell you that for each individual that we hire, we hammer out a well-defined incremental plan year-over-year that we can use to pre-designate successors. That isn´t always the truth in every single position but we have made a lot of progress on that. Our culture feeds on that. We need to hire from within wherever we can and the main reason I like to do that is because I trust these people. If you have been with us for a long time, I believe that it is my responsibility to bring that together. There is a trust that surrounds that.

We have made huge progress with learning and development, with sales training and job skill enhancement but we have more to do. I believe that we should have a plan for every single employee. Again, it goes back to that mutual responsibility.

HR.com: What role do recognition, reward and compensation play? 

BH: When driving alignment and fostering this innovative and disciplined culture it really is important. Of all the research and information out there about recognition, the most effective thing to do is simply ask what makes someone feel recognized and then do your best to do it. 

From the perspective of awards, we have various contests and awards. We have a President´s Award that is specifically designed to reward entrepreneurial spirit. What helps seed the innovation is the culture. We also have the TOPS Award, which stands for Totally Outrageous Personal Service. The service is either internally or externally and that also helps with discipline.

On the topic of compensation, it is a very important key, but in some respects it is more of a hygiene factor. It must be competitive, it must be balanced and I would never underplay the importance, but rarely is it ever the one true key driver. We pay attention to compensation but we take more of a total rewards view overall.

HR.com: In closing, remaining innovative is such an important challenge for all organizations today.  Can you provide any closing words of advice?

AP: You have to look at challenging times and look at them as opportunities for the quantum leap. I would tell anyone in any industry to consider, when things get very, very difficult that is the time to make a decision. The reality that things will get better isn´t necessarily so. Things have gotten bad in a particular industry because the market has changed and you need to change with it.

Look at the future, not today. Look at the landscape and make decisions for tomorrow´s marketplace. That doesn´t mean that history won´t repeat itself, you have to learn from that, but realize that the market you are in today won´t stay the same.

BH: There are some compelling things to consider, like drawing the line of sight to each individual, compelling strategy, workplace planning, making sure all the systems work in tandem and encouraging a healthy spirit of competition. Most importantly, is staying ahead of the customers´ needs.

We all need to keep in mind that it is very much a journey. We are certainly not perfect. We are making progress and from my perspective that means we are moving in the right direction.