Contractors Are the Bedrock of Distressed Asset Workouts
The Advantages of Hiring a Contract Employee Over a Regular Employee
Loan workouts require a special skillset developed by certain commercial real estate professionals during times ofdistress in the markets. On average, workout opportunities come around for 2-3 years every 15-20 years and most CRE professionals will never have the opportunity to workout distressed loans. Many lenders choose to shift current staff toworkout roles, but that is not appropriate for many situations. In general, real estate professionals are not operating in an adversarial position. The sales, networking, and relationship building skills you value for your loan originators do not fit the bill when asked to take an adversarial position against former clients.
When it comes to periods of heavy distress, CRE Lenders often face the challenge of deciding between staffing withcontract employees or shifting existing staff to workout roles. While both options come with their own set of benefits and drawbacks, the flexibility, cost-effectiveness, and specialized skills that contract employees bring to thetable can be particularly advantageous. Let's explore why hiring a contract employee might be the right choice for your business.
Below are our top 5 reasons you may want to hire a contractor to solve your workout challenges.
1. Access to Specialized Skills
We believe that workout skills can be learned by talented CRE professionals. That said, there is alearning curve and most down cycles only last 1-3 years. Our cycle-tested workout professionalslearned the workout game on another companies dime. They made million dollar mistakes on anotherlenders assets… When you make a mistakelike that, you don’t make it again. Hiring experienced contractors from CREfresh allows your organization to learn from those expensive mistakes. Experienced professionals do not required a ramp up period and start solving problems immediately. And with loan workouts in particular, time is money.
2. Cost Savings
From a financial perspective, contract employees can lead to significant cost savings. Employers are not required to provide benefits such as health insurance, retirement plans, or paid leave to contract workers. This can drastically reduce overhead costs, making it an attractive option for companies looking to optimize their budget. Additionally, contractors typically handle their own taxes, alleviating some of the administrative burdens on your HR department.
3. No Long-Term Commitment
Hiring contract employees allows your company to address immediate needs without a long-term commitment. This is particularly useful for distressed loan workouts when you need to fill temporary gaps in your workforce. Once your loan book has improved, the contract naturally concludes, providing a clean and straightforward end to the employment relationship. And if our CREfresh contractor is a long-term fit for your organization, simply bring them on as a full-time employee.
4. Access to a Wide TalentPool
Hiring contract employees opens up opportunities to tap into a wider talent pool. With the rise of remote work, your company can engagewith top-tier professionals from all parts of the country, bringing diverseperspectives and innovative solutions to your projects. This reach can save you money (ie. Midwest cost for a New York firm) or find you experienced talent that might be harder to find in your local market (ie. nationwide talent pool for a small community bank).
5. Focus on Results
Contract employees are typically highly motivated to deliver results, as their future opportunities often depend on their performance. This results-oriented mindset can lead to higher productivity and a stronger focus on achieving goals. By hiring contractors, your company can benefit from their dedication to delivering high-quality work within the agreed-upon time frame.
In conclusion, while both contract employees and regular employees have their own set of advantages, the benefits of hiring contract employees are particularly compelling for loan workout roles that may not belong-term in nature. The access to unique skills, cost savings, and wide talent pool make contract employees ane excellent choice for solving your organizations unique distressed loan challenges. By leveraging the strengths of contract workers with CREfresh, your company can efficiently get to the finish-line for the distressed assets in your portfolio.
