Scout Mortgage Inc. Implementing Change Essay

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Change in the Work Environment of the 21st Century

Work environments have changed over time. As we enter the 21st century, various changes can are witnessed. These changes suggest that the working environment for this century will be different from conventional work environments. Technology change is the greatest motivation toward changes in the working environment. Internet and networking technology have made the distribution of the workplace to be possible. It has also supported outsourcing services. From these changes, workers can work from distributed workstations with little or no supervision. Businesses do not have to have all the expertise but can outsource some services from a third party (Koller, G., 2005, p77). Fixed contracts for workers are reducing while temporal negotiable contracts are being preferred.

Due to economic changes, there is a necessity to cut costs. Businesses are taking up employees only when they need them. In consequence, there is an increase in temporary and part-time employees. Unlike in a conventional work environment, workers in the 21st century are working for more than one company. Royalty to a company has been replaced by royalty to a profession where employees associate with their profession more than they do to companies. To be able to work for many companies, employees are demanding a flexible work environment. Economic challenges being experienced by most companies have led to changes in the work environment. To cut operating costs, most companies have embarked on a move to reduce the number of employees and in reducing remunerations.

Typical Reaction of Employees to Change

Changes in the working environment have invoked various reactions from an employee. Increases uses of technology in the workplace have brought new demand for workers. Workers who are technologically challenged are challenged while their roles are being taken by young workers. This has brought resistance to the use of new technologies in the workplace where employees see technology as a threat to their employment. Short-term contract, temporal and part-time work has reduced workers’ royalty to a company (Ferrell, L. & Fraedrich, J., 2000, p91). Since employees are not guaranteed permanent employment, royalty to companies has been replaced by royalty to the profession. In consequence, workers are moving from one employer to another looking for better payment and working environment. To remain viable in the work market, employees are taking up courses that would increase their competitiveness. Globalization, internet technology, and outsourcing have allowed employees to work for different companies from distributed points. In consequence, workers have been gaining self-management and work for different companies. Reduction in remunerations due to the global recession has led to reduced workers’ morale and productivity. In addition, workers are demanding better working conditions with flexibility and work/life balance.

Ethical Intensity of the Changes Made By Walsh and Mangels

The ethical issue raised in Scout Mortgage was how the remuneration could change from commissions to salaries. Remuneration through commission had led to ethical issues where the company’s workers were persuading customers to accept high interest for loans. Workers to the company were the main reason for the company’s success. However, due to economic changes and competition from other companies in the same field, Walsh and Mangels found it necessary to cut operating costs and avoid ethical consequences. The company’s workers were formerly paid commissions on the value of loans sold. A commission of 1% is offered amount to a large amount of money in a month. The first ethical issue encountered by Walsh and Mangels was the rationale that they would use to convince the workers of the need for such a change. Ethically, the workers deserved to be informed and explained on the eminent changes and the need for those changes. The first attempt to solve the problem raised another ethical issue.

Mangels and Walsh decided to move gradually from commission to salaries. The move adopted involved hiring salaries workers that would earn a fixed salary regardless of loans closed. From this structure, salaried workers earned less than half of the commissioned workers. This structure seems unethical due to disparity in earnings (Ferrell, L. & Fraedrich, J., 2000, p67). The other ethical issues come when Mangels and Walsh decide to overhaul the whole system to replace it with a salaried structure of remuneration. From this decision, it becomes necessary to terminate the employment of commissioned workers.

Decision-Making Model

Walsh and Mangels used the rational decision-making model (Koller, G., 2005, p54). Walsh and Mangels identified the problems facing their company, evaluated the problem, and came up with a solution. Scout Mortgage encountered competition from other mortgage companies. Economic and technological changes had led to increased competition in the field. In addition, economic changes had affected the mortgage industry negatively leading to reduced profitability. On the other hand, technology advancement had come up with software that automates loam processing. Because of these changes, Scout mortgage workers seemed to be overpaid as compared to other workers in the same field.

After considerations, Walsh and Mangels identified the solution to the problem as changing the mode of remuneration from commission-based to salaries. However, making the transition seemed to be a challenge to them (Koller, G., 2005, p67). After discussion, they decided to hire a new salaried worker that would work together with commissioned workers before they could adopt a full salaries structure. However, this transition led to tension in the company due to disparity earnings between the workers. Again, Walsh and Mangels identified the problem in this mode as bad blood between the workers and decided to come up with a solution. The solution adopted involves overhauling the former structure to salaried workers with fixed commission per loan closed.

Approach to Change

Approach to implementing change is very important to success in implementing a business change. Walsh and Mangels used a transitional approach to change in implementing changes in the company (Amando, G. & Ambrose, A., 2001, p56). The transition approach to change involves using a transitional stage to implementing the change. Walsh and Mangels understood the ethical and economic consequences of their commission-based remuneration. Walsh and Mangel rationalize the issues, came up with the conclusion that change was necessary for the company, and decided to implements it. In their approach to implement the change, they decide to use a transition step that would link from commission to salaries (Amando, G. & Ambrose, A., 2001, p54). This step allowed them to evaluate and react to behavioral resistance to change. After the transition step, Walsh and Mangel decided to implement the new structure in full. Before implementing the change, they communicated to workers to inform them about the changes. After implementing the changes, Scout mortgage communicated to the customers and the public about the new structure of its business.

Reference

Amando, G. & Ambrose, A. (2001).The transitional approach to change. New York: Karnac Books.

Ferrell, L. & Fraedrich, J. (2000).Business ethics: ethical decision-making and cases. New York: Houghton Mifflin.

Koller, G. (2005).Risk assessment and decision making in business and industry: a practical guide. New York: CRC Press.

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