Changes at Scout Mortgage

Karen Williamson

Strayer University
Professor Kahilita D. Miller
BUS 520 Leadership and Organization

December 7, 2009

Abstract
John Mangels and Steve Walsh had built Scout Mortgage in Scottsdale, Arizona. Scout Mortgage industry has been booming with the best loan officers with great commission. As the industry kept growing there has been a major change had to occur with their loan officer. Scout Mortgage loan officers had to change from commission to salary staff. Scout Mortgage doesn’t have commissioned loan officers any more in the industry. In the mortgage industry, a high majority of loan officers are commissioned. Some of these commissioned loan officers earn a percentage of the loan amount so they will make more money if you sign with a higher interest rate or commission. At Scout Mortgage, they only have salaried loan officers who are dedicated to getting you the best possible rate. Scout Mortgage guarantee that they will find you the lowest rates and lowest costs. The nature of Scout Mortgage includes technology, global market and social network. Scout Mortgage employees tend to typically react to change negatively especially when it requires a decrease in their salary and the lost of commission which directly affects their employees life style. Scout Mortgage focus on having a low rate to gain market share to profitable the best decision. In the process of Walsh and Mangels making the changes in their company they implement the best model to remain fair to all their employees. In addition these changes will allow the company to remain profitable and competitive in the mortgage lending business. Scout Mortgage had to make the adjustment to accommodate the recent changes in the real estate market.

The nature of changes at Scout Mortgage in the work environment were paying their loan officers salaries rate instead of commissions. John Mangels and Steve Walsh construct Scout Mortgage by paying their loan officers on commission standard form of compensation in the industry. In today’s mortgages industry the majority of loan officers works on commission. Scout Mortgage offers the best combination of low rates and costs. Scout Mortgage broker research for best rates and costs to the best possible deal on a loan. (Robb, 2007)

The nature of Scout Mortgage includes technology, global market and social network. A bank can only offer you their best deal, which is likely not the best deal out there for everyone. Scout Mortgage loan officer will continue to work for everyone even after the client loan closes by monitoring interest rates. Organizations today face global competition on an unprecedented scale. Scout Mortgage firms create pressures on their loan commission to internationalize and redesign their operations by going with salaried staff. Depending on productivity and volume of business which fluctuates with interest rates the firm kept business as usual in order to remain competitive.

Scout Mortgage organizational development approach focuses on the development of employee’s interpersonal competencies. John Mangels, Steve Walsh and employees had to become emotionally involved with the organization, and be committed to its values and goals. Technology at Scout Mortgage has had a profound impact on individual employees, teams and organization. Scout Mortgage employee’s share has double up by payroll taxes, benefits and marketing costs. Scout Mortgage increased employee’s value of invisible assets, such as knowledge, competencies and tips. The process of approving a loan became easily for a loan officer at Scout Mortgage by increases the flexibility of work by allowing more employees to work at home. Scout Mortgage loan officer began to use automated underwriting software. Scout’s team of loan officers began to work like a highly paid telemarketing.

The internet has also changed social networking at Scout Mortgage. Walsh and Mangels assume the industry is approaching a day when customers will be able to shop for mortgages online. Scout Mortgage started to use campaign of direct mail, Google ads, TV, radio spots, and billboards. Walsh and Mangels must understand these forms of social networking in order to be effective. Social networking work on problems identified as hindering business, such as managing people from different generations and the bureaucracy associated with hiring new employees.

Scout Mortgage employees tend to typically react to change negatively especially when it requires a decrease in their salary and the lost of commission which directly affects their life style. In addition, the employees had become accustomed to receiving large commissions for their ability to sell houses in a profitable market and to lose that source of additional income did not set well with them. The employees reacted angrily to the owners’ decision to eliminate sales commission and switch to a salary staff. Scout Mortgage loan officers became very emotional with painful which they have developed a business relationship with fiends. The ethical and intensity of the changes made by Walsh and Mangles were right for the survival of their business in a changing market. Their decision to eliminate sales commission to a salary staff demonstrated their ability to be fair to all of their employees. Through their decisions, Walsh and Mangles demonstrated their commitment to keep jobs available for those employees who decides to remain within the company. (Curry, 2005) The decision making model that Walsh and Mangels used to dismiss employees was the figure model which describes the Determinants of Ethical Intensity. The six factors of ethical intensity are influenced by the employee’s characteristics of the decision issue itself. Ethical intensity rises with increases in one or more of its factors and declines with reductions in one or more of these factors. The six factors of ethical intensity were use at Scout Mortgage included the follows as: magnitude of consequences, probability of effect, social consensus, temporal immediacy, proximity and concentration of effect. Scout Mortgage rate the ethical intensity of the same decision differently than other employees, because they place different values on the principles and rules of ethics in decision making. (Hellriegel, 2009) Walsh and Mangles took the approach of saving the company and keeping it profitable during this slow period in the market. Walsh and Mangle wanted to keep the industry healthy without having a high turnover rate. Scout Mortgage goals and mission was to hope for higher volume will outweigh lower the limitations in the industry. Scout Mortgage focus on having a low rate to gain market share to profitable the best decision.

Reference 1. Curry, M. “Ethics In The Workplace." Ethics In The Workplace EzineArticles.com. http://ezinearticles.com/?Ethics-In-The-Workplace&id=12475 2. Hellriegel, D. Leadership and Organizational Behavior

3. Robb, S., & Judges, T. (2007). Principle of organization Behavior. 12th editions copyright.

4. Scout Mortgage Why. http://www.scoutmortgage.com/about/why