Changes at Scout Mortgage

Mangels and walsh tried another strategy first hoping

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Mangels and Walsh tried another strategy first, hoping for effective results, but hiring the new salaried workers proved only to create a further problem. Also, the pay-change decision will more than likely bring harm to the employees losing their jobs and those taking a major cut. The social consensus among employees will more than likely be that it is a bad decision, mainly
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because they want to keep their current salaries or, in the case of the salaried employees, want to be switched to a commission-based salary. The temporal immediacy was short. They fired five loan officers and three salaried workers right away and others left soon after due to their lack of pay. John and Steve’s proximity to their subordinates was quite close. They were considered friends and family. Lastly, the concentration of effect was low. Firing/losing their employees allowed Scout Mortgage to save more money, thereby passing the savings onto their customers. 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)
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Mangels and Walsh tried another strategy first hoping for...

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