How to Avoid Staffing Challenges in a Dynamic Federal Reserve Environment

Real Estate and Title companies can automate processes with AI to avoid staffing challenges.

World events have increased volatility in markets and industries. As the latest example, a recent spike in inflation triggered the U.S. Federal Reserve to start raising interest rates. This adjustment is now impacting the Real Estate industry. As rates go up, the number of qualified buyers declines. Any change in business volume impacts staffing levels as firms seek to maintain operating margins and profitability. Intelligent Process Automation can help avoid staffing challenges by enabling companies to quickly adapt while maintaining the highest level of customer satisfaction.

Feast or Famine in the Real Estate Industry

Business expansion or contraction cycles are difficult to predict in Real Estate, Title Insurance, and other related industries. As the economy expands or contracts, economic forces can have a significant impact on how these industries operate. Business risk increases as business leaders try to best navigate through these dynamic conditions.

  • When the Federal Reserve increases interest rates to try and cool the economy and ease inflation, the volume of real estate transactions slows down. Higher interest rates increase the cost of a mortgage payment. Compounding the issue further, in an environment of high inflation, other costs are also increasing. A domino effect occurs whereby families are caught trying to cut other costs so they may need to defer or cancel a home purchase. In periods of sustained contraction, a spike in foreclosures adds further pressure on the industry.
  • When the Federal Reserve reduces interest rates to stimulate growth, sudden spikes in loan applications occur. This effect is further amplified if there is a perception that interest rate declines are temporary. Over an extended period when interest rates decline, new rounds of refinancing drive additional unpredictable spikes in business activity.

Each of the above scenarios has a dramatic impact on not only margins and profitability, but also on staffing levels. This is especially the case for companies that rely on paper-based, manual, or labor-intensive processes.

Learn more by reading this article, The Federal Reserve Interest Rates and How They Affect You.

Technology to Avoid Staffing Challenges

The good news is that new technologies can smooth staffing level disruption. These advances provide a better way to accommodate sudden spikes in business activity. With a more scalable business model, it is possible to minimize operating margin and profitability swings to help reduce business risk.

Traditionally, companies operating in the real estate industry had only two staffing strategy options:

  1. Commit to current staffing levels – this option may impact profitability but will ensure sufficient staffing capacity to perform every process at any level of activity while maximizing business continuity.
  2. Adjust staffing levels to best match current business conditions – this option offers the highest potential profitability, however, there is considerable risk when business conditions return. It is difficult to know when it is the right time to change staffing levels. Hiring new employees is time-consuming and costly. Customer satisfaction is impacted, potentially hurting a firm’s ability to take advantage of new opportunities.

Technology advances have unlocked a new third option – automate the processes most impacted by sudden changes in business activity. Implement new systems that can provide the necessary scale to accommodate high or low volume business conditions as needed. Under this scenario, it is possible to achieve a “best-of-both-worlds” approach.

Intelligent Process Automation

Automated processes with embedded intelligence can perform very well across a wide volume of business activity – during periods of economic expansion or contraction. Alternatively, managed services with variable billing structures can be quickly added to better align business activity with the associated cost. The intelligence that drives these processes comes from AI and machine learning. By implementing a system that can “learn” your business as it operates, the performance of this system will increase over time.

There is a considerable business advantage if you can avoid staffing challenges. Under this scenario, a business can scale performance to increase or decrease as market conditions change. Profitability is maximized without adding risk. This advantage can be applied to short-term disruptions (hours or days) or long-term trends associated with prolonged Federal Reserve focus on increasing or decreasing interest rates (weeks, months, or years).

Most importantly, when intelligent IT systems absorb the additional labor resource requirements traditionally associated with business expansion or contraction, greater stability can be achieved within a company’s workforce. Tribal knowledge is better captured and sustained. Customer and partner relationships are strengthened. Overall customer satisfaction increases.

Interested to learn more? Here are 5 Reasons to Invest in Intelligent Process Automation.

Kyle Duffy