However this just led to tension as the new employees

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$40,000 while keeping the current loan officers on commission. However, this just led to tension as the new employees saw how well the commissioned workers were paid and asked to have their salaries switched over to commission-based work. Due to incidents like this, Mangels and Walsh decided to scrap everything and go back to square one, completely cutting commissions and switching over to only salary pay. They also fired five loan officers and three salaried staff members. With the new pay system, loan officers would make a flat salary of $36,000 plus $100 commission per loan closed, making their new
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earnings roughly $60,000 to $120,000/year. By cutting costs with their staff, Scout was able to pass savings onto customers. In Walsh’s eyes, “If we can offer absolutely the lowest rate possible, will we gain market share? It has to be a yes” (Hellriegel & Slocum, 2009, page 533). They have hope for the future but only time will tell how their changes will work out. The Facts In this case, there are a few different competencies that come up: self, ethics, communication, and change. Scout’s loan officers demonstrate the “self” competency. As the mortgage industry changed, so did their company. Because of this, they had to engage in new learning – mainly, their attitude on salary and the new direction Scout was heading in. As loan officers they also had to make work-related goals (i.e. trying to close X number of mortgages per month) and interpreting the needs of their customers accurately. The “ethics” and “communication” competencies were demonstrated with the change to all-salary pay. Walsh and Mangels were having difficulty with their salaried employees feeling that their wages were unfair being that they were on salary and wanted to be paid on commission like the loan officers. This led to the company-wide change of all employees being paid a flat salary, with lower commissions on the close of a mortgage ($100/close, down from previously $4000-$7000/close) (Hellriegel and Slocum, 2009, page 532). The last competency, “change”, was also demonstrated by the restructure of Scout’s payment method for its employees. Originally, they paid all officers on commission. As the market cooled, interest rates started rising and, technology started changing, however, the company wasn’t doing as well as it had previously. Steve Walsh stated, “We were working for tips as owners of the company” (Hellriegel and Slocum, 2009, page 532). Due to these changes in Scout’s business environment the company
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had to change its strategy. The change in pay grade was a huge motivational blow for Scout’s employees. To motivate employees, a company needs to be able to attract them to join the organization and encourage them to stay, allow employees to perform the tasks they were hired for, and stimulate them to go beyond their usual performance and be innovative and creative (Hellriegel and Slocum, 2009). At the beginning of the case, Scout does a very good job of motivating their loan officers with monetary pay. When Scout Mortgage was founded in 2000 the mortgage business was booming, therefore generating a lot of revenue.
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