Scout Mortgage Marketing and Management Assignment, Essay Example

Introduction

The ongoing real estate crisis so called sub prime mortgage crisis was as result of a dramatic increase in mortgage foreclosures and delinquencies in the U.S. The crisis began in years ending the 20th century but came to be apparent in 2007 (Mantell R.2009). The crisis was triggered by the outburst of the housing bubble in the United States which reached the peak between 2005 and 2006.Thereafter high default rates on both mortgages whose rates can be adjusted as well as the sub prime mortgage started to rise. A rise in loan incentives like the easy credit conditions had encouraged borrowers to take difficult mortgages because they believed that refinancing would be easy and at more favorable terms .This was not true because between 2006and 2007 housing prices began to decreases with increasing interest making refinancing difficult. The low interest rates in the U.S together with the inflow of moneys led to easy credit conditions and hence the credit and housing bubbles (Mantell R. 2009).. This crisis is what affected the scout mortgage industry forcing Walsh and Mangels to make the changes to enable the business to stay healthy

The Nature of Change in the Work Environment of the 21st Century

The work environment has been faced by very rapid changes and developments in the 21^st Century. The changes have spanned all spheres of business practice ranging from marketing strategy to budgetary planning. In the recent past the mortgage industry paid its employees huge commissions and that was the in-thing then. The twenty first century has changed all that and the mortgage industry has been duly affected as well and hence they need to respond to the changes. The changes in the mortgage industry have been spurred on by the advancement in technology as the ability to reach prospective clients has also increased tremendously. The technology did not only make it easy to reach prospective mortgage buyers but also record their financial details and keep track of developments. The business has also been hugely affected by the insurgence of underwriting software which can take client input and do as much as give a printout of a loan refusal form. These changes have made the 21^st century a very challenging period for business as well as making the human resource management aspect quite challenging since the employees have gained audacity in the way they handle their responsibility. The underlying factor in all these changes is technological advancement. Technological changes have brought a completely new way to do business (BPP 2009).

The Typical Reaction of Employees to Change

The typical response to changes at the work places is resistance. Among the many factors that are cited as reasons why employees resist change include loss of job security, loss control in management as well as loss of or decreased income for some employees (Business performance.com). The scout mortgage case was no different since the employees were worried of losing their hefty commissions and this led to their resistance (Denilson 2007). It was hard to convince people who are used to high perks to take cuts on their commissions.

The most challenging decision for the company was how to disengage their most hard working employees and how to break the news to them. This was also a major issue considering that they could not get a better way to resolve this dilemma. Worse still the staff has been together for long enough to develop relationships that have made them a close knit family. Dropping any of the staffers meant affecting their social life as well since the two are closely intertwined.  The longest serving employees could not be easily dropped. Firing both the commissioned and the support staff was the hardest decision to make as they felt that the staff was part and parcel of the company set up. This decision posed a major challenge to the company since the morale of the other remaining members of staff would get demoralized.

Decision-Making Model Used by Walsh and Mangels to Dismiss Employees and Make the Other Changes

Walsh and Mangels used the rational model of decision making which involves problem identification, generation of alternative solutions, choosing a solution and then implementing it (Brooks & Michael P. 2002). The Rational Decision Making Model assumes that there exists one best solution to the problem that will produce the best outcome possible. It assumes that human beings cannot have the perfect knowledge of the alternatives available. Hence the decision maker uses the best knowledge though not perfect to make the decision. The person making the decision is assumed to select a solution however not a perfect one but good enough solution depending on the limited ability of the person to deal with the complex and ambiguous situation (Brooks & Michael P. 2002).

In their case Walsh and Mangels identified the problem as edging of interests which slowed down the business while on the other hand  big amount of money was being used to pay the employees .They sat down and generated alternative solutions which included hiring new salaried  employees, changing the system of paying the already existing employees from commission to salaries or dismissing them .After evaluating their alternative solutions they chose the solution they thought was best  to (dismiss some  employees) though not perfect as they thought it would affect customer relations since these employees had a lot of experience and also the social status as they had already established family friendships .

The Approach to Change as Illustrated in the Case

Walsh and Mangels used the rational model single approach of solving problems. This approach involves evaluating the alternative solutions intended to achieve the preferred goal systematically and selecting the correct means of realizing that goal. The intended goal in this case was to reduce cost .Once the intended goal was selected they assumed that the correct means  of achieving would be by dismissing the highly paid employees and replacing them with salaried ones who in that case would earn less which they did (Brooks & Michael P. 2002).

Conclusion

The chosen model was complimented by the humane approach that they decided to take as this involved meeting the employees separately and informing them of the new developments. The two could also be construed to have used the grapevine channels of communication effectively since they had dropped hints to the employees of the impeding changes. Overall change is the most difficult undertaking in management and the manner in which it is undertaken can make or break an organization.

References

BPP Learning Media. (2009). Performance Management. London: BPP publishers.

Brooks & Michael P. (2002). Planning Theory for Practitioners. Chicago:American Planning Association.

Business Performance.com. Employee Resistance to Change. Retrieved on 20 May 2009.Available: http://www.businessperform.com/html/resistance_to_change.html

Denilson P. (2007). Could Scout Kill Commission? Boston: Goldhirsh group

Mantell R. “Home prices off record 18% in past year, Case-Shiller says”. Www.marketwatch.com. Retrieved 29 April 2009. Availabe http://www.marketwatch.com/News/Story/Story.aspx?guid={A0BC3037-386D-4810-86C7-066AF28F6017}.