Misleading or confusing information is a common cause of inefficiency and errors. The same is true for professional slang — lingo that’s understood by one group but not by others. Take “disruptive” for example. A disruptive tech product is currently a good thing, yet disruptive employees are not.
Most instructional designers have examples of how they uncovered errors caused by professional slang. My own favorite focused on use of “1.2” to describe a certain aspect of lending policy. The situation and solutions are covered in the samples document attached below. I’ll use this article to add a bit more information.
Why it Often Takes an Outsider to Find the Core Issues
This particular core issue was simple: one group (commercial lending officers) was using a phrase that seemed so straightforward the other group (sales, service, and processing reps) thought they understood it — or should understand it.
A typical exchange went like this: Sales rep asks, “What’s our policy if the borrower’s credit score is below threshold?” Lender asks, “Is this on an investment property?” Rep says yes, it is. Lender then says, “We debt-service the property at 1.2. Minimum NOI is 1.2.”
Sounds simple, right? But when reps debt-serviced using that percentage they were wrong — way, way wrong. Most stopped asking for help because they didn’t want to look dumb and got tired of repeatedly asking the same question. Most lenders were happy to try to clarify things the first few times, but referred reps to the policy manual the fifth or sixth time. Eventually, lenders believed the sales reps just weren’t paying attention. Sales reps eventually hoped most of their customers would not be hit with the mysterious “1.2” policy and used their sales skills to get the rest off the phone and off their back.
All of the above is typical but not entirely bad. No workplace is perfect. Employees learn to live with the situation, working around it when possible. But this healthy adaptation creates a legacy (mis)communication and the cause of problems remains hidden. Employees who push at the issue more than others would likely be labeled…you guessed it…disruptive.
Outsiders are treated differently. Instructional designers, consultants, and very new employees who just happen to have the issue come up are more free to ask questions. The subject matter expert — a lender in this case — often explains things more simply and completely.
“1.2” Also Meant “120%”
When this outsider dug into the issue, I was referred to the policy document. Its online version was agonizingly slow to load so I focused on the paper version. As usual, the information was buried in many pages of legaleze. Between the manual and pestering the lenders for explanations I discovered the following:
- Lenders and the manual skipped over explaining how NOI was calculated. Lenders saw this as so basic that anyone with lending background would know it. That may be true, but since most of the call center reps came from consumer mortgage lending they did not (but kept quiet because they felt they should).
- There were two ways to complete the debt-service calculation. One method involved dividing the potential new debt into the property’s net operating income. The result would usually be a decimal such as 0.8 or 1.3. The other method was used far more often because lenders could scan the property’s income and expenses to see if it met the guideline, and look deeper as needed. This more common method multiplied the potential new debt by 120%.
- Neither calculation method was shown in the manual with an example.
Here’s the most important thing uncovered: The lenders always applied the second method (multiply new debt by 120%) but used “1.2” to describe the policy to the reps. Why? Because that’s how it was described when they joined the department. They learned the lingo as they adapted to their work environment, and eventually forgot how confusing it would be to others.
A Small Thing Can Generate Many Problems
Here’s where things stood: Most sales reps thought there was some sort of debt-service calculation and policy involving 1.2 percent. They sold on that basis, pretty much pulling loan amounts out of the air, which would be way too high or way too low once the application hit the lender’s desk. Sales reps also explained counter-offers and declinations on that basis, which made no sense to the customers.
There were many errors. Lenders were annoyed with reps. Reps were annoyed with lenders. Customers were annoyed with the bank. All from using one tiny bit of lingo.
Don’t Try to Push the River
There were enough errors to affect working relationships between lenders and reps, but not so many that drastic changes would have been tolerated. By “drastic,” I mean force lenders to change their language. Even though miscommunication from lenders affected sales, it was up to sales and service reps to change their ways.
That, too, is common. Those lower on the ladder are usually the ones who have to adapt. The solution is to translate the higher ups’ slang so others can speak their language. When translation involves something like lending policy the lingo and translation should also be codified. (Otherwise, the translation can morph and create its own problems.)
Show the Math
The written policy document did not cover how to calculate Net Operating Income, but it did describe both methods for applying the debt-service guideline. However, using narrative such as “divide potential new debt into acceptable property income less property expenses as detailed in section 136.24 updated May, 2015” does not sink in very well.
Even bullet points won’t fix that problem. When math is involved, show the math in simple examples.
Policy and procedure documentation should show the math, as well. If this client’s policy had included math examples the reps would have figured things out on their own and errors would have been prevented.
This document summarizes the key points and shows two design samples: one for teaching reps, one to capture lending policy. You’re welcome to use it as a guide for creating your own resources or references…or to contact me to discuss how I may do that for you.