Loan officers could live comfortably closing three

This preview shows page 5 - 7 out of 11 pages.

Loan officers could live comfortably closing three loans a week at $4000-$7000 commission per loan closed (Hellriegel and Slocum, 2009, page 532). When interest rates crept up in 2004 business started to taper off, and by 2006, the industry had dropped to about $240 million in funded mortgages (Hellriegel and Slocum, 2009, page 532). Their loan officers were still closing loans, but not enough to keep the company afloat at their current rates and a change had to be implemented. Walsh and Mangels sat down all their employees (after trying a different strategy of hiring salaried workers and leaving the loan officers’ pay alone) and told everyone that they were switching all members over to salary-based pay at a flat $36,000 per year with commission of $100 per loan closed (Hellriegel and Slocum, 2009, page 533). With this change came loss of employees. They fired five loan officers and three salaried workers. Most of the commissioned staff left the company. Losing their monetary compensation killed their motivation and enticed them to seek work elsewhere for better pay. Employees had no incentive to stay and no longer felt stimulated to go above and beyond for their company. The change to all-employee salary- based pay was stimulated by workplace stress.
Image of page 5

Subscribe to view the full document.

When Scout started considering changing the pay of their commissioned loan officers, they originally tried a different strategy first. The problem they faced had an easy solution: hire on salaried workers and get rid of their commissioned staff to cut down on costs. However, Mangels and Walsh recognized that firing their top officers could hurt customer service and possibly lose large amounts of closed loans, hurting the business even further. There was also the issue of interpersonal relations at hand. Many of the employees felt like family and friends. Firing them or cutting their salaries could very well bring harm to those relationships, something that Steve and John didn’t want to happen. Instead, they decided to hire a handful of salaried workers, starting at $40,000 per year, and left the existing staff’s commission-based salaries alone. This seemed like a great fix but the new hires faced the issue of role conflict, feeling as though they weren’t being fairly compensated because of the differences in pay grades. This caused many to ask to be switched to a commission-based salary. According to Mangels, “There was whispering, ‘Why are you guys working for $4000 per month when you could be making $12,000?” (Hellriegel and Slocum, 2009, page 533). This caused tension for the new hires and the owners knew they couldn’t keep their employees wages at different levels. The workplace stress caused other problems for Scout’s owners. For Mangels and Walsh, this decision caused them both great intrapersonal conflict. The intrapersonal conflict they struggled with falls under the approach-avoidance category, meaning, “an individual must decide whether to do something that is expected to have both positive and negative outcomes” (Hellriegel and Slocum, 2009). The positive outcomes of their decision would be saving money on payroll and being able to pass those savings on to the customers.
Image of page 6
Image of page 7
  • Fall '12
  • Andre
  • Salary, Hellriegel, Steve Walsh, loan officers, John Mangels

{[ snackBarMessage ]}

Get FREE access by uploading your study materials

Upload your study materials now and get free access to over 25 million documents.

Upload now for FREE access Or pay now for instant access
Christopher Reinemann
"Before using Course Hero my grade was at 78%. By the end of the semester my grade was at 90%. I could not have done it without all the class material I found."
— Christopher R., University of Rhode Island '15, Course Hero Intern

Ask a question for free

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern