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Changes at Scout Mortgage

By becoming one of the lowest priced companies this

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By becoming one of the lowest priced companies, this has helped them generate more business and create even more revenue. John and Steve were acting on a Utilitarian Principle. They saw that the positive effects of their decision would outweigh the negative and, therefore, went forward with implementing the final decision. It could also be said that they were thinking about what is best in the eyes of their customers, using the Golden Rule Principle. As a customer, we all want the lowest price possible. Scout recognized that to do that they must cut costs (i.e. commission-based pay employees) and pass the savings onto their customers. Due to the ethical intensity of this decision, they had to carefully think about this using a decision-making model. The model that best fits with this case is the rational model. The rational decision- making model “involves a process for choosing among alternatives to maximize benefits to an organization” (Hellriegel and Slocum, 2009, page 403). The Xerox Business Research Group created a six-step process for this model known as “Xerox’s Rational Decision-Making Process” (Hellriegel and Slocum, 2009, page 403): 1) Identify and select the problem . Scout Mortgage’s problem is the changing mortgage market and their dwindling revenue but high salaried employees. 2) Analyze the problem . Based on the changing business environment surrounding the company, Scout had to change their company structure or they wouldn’t make it. This meant that they needed to change the way that they paid their loan officers to help benefit the company more than the employees.
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3) Generate possible solutions . Walsh and Mangels had three realistic options: (1) – do nothing and watch the company they had built go under, (2) - fire their commissioned loan officers and hire all new salary-based employees, or (3) - hire on some salary-based while leaving the current staff’s salaries alone. 4) Select and plan the solution . They originally chose option (3) but it backfired on them when the new hires realized how much less they were making and wanted to switch to commissions. When that strategy failed, they resorted to option (2). 5) Implement the solution . After implementing and failing with option (3), they implemented option (2) – fire current loan officers and switch to an entirely salary-based pay company structure. 6) Evaluate the solution . This solution caused them to lose their current loan officers but they saved themselves those employees’ salaries. This helped them offer lower prices to customers and gain market share, generating more revenue and putting the company in better financial standing. By making the decision to layoff their employees to help save money, this shows what kind of approach to change Scout Mortgage uses.
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