Case Atlanta Home Loan
Case Atlanta Home loan A. Control and and Effects Controls implemented by AI before he went back to school Result controls: * Telemarketers – – their salaries consist of hourly wage and performance bonus based on leads produced. The performance salary has a motivational effect on amount of leads. * Loan officer – – Company Company paid the loan officers 40% of total loan revenue on they originated and 60% on loans Loan officer originated. The explicit allocation encourages loan officer to increase their revenue. * Processors – – AI have not electronic links to monitor the process of applications, but only track the number of credit inquires. The control may be ineffective because the number of credit inquires is not a good indicator of processor processors’ s’ work. work. Action controls: controls: * AI granted Wilbur to manage company according to the licensing agreement and enabled Wilbur fail to sign check against company main bank account without permission of AI. The control is right, but fail to implement properly. Since AI left the blanket checks to an office manager and just required verbally the manager not to use checks without AI’s agreement, which fail to restrict the administrative authority of Wilbur. On the other hands, the restriction doesn’t give Wilbur enough autonomy as a partner to manage company. * Telemarketer developed leads and gave the list of leads’ name to AI, AI distribute to names to loan officers. People controls: AI selected Joe and Wilbur as new partner to operate company successively.
Controls implemented by AI after he went back to school Result controls: * Track employee head count, the numbers of leads produced, loan applications funded, office expenses and band activity. By the means, AI monitors whether the employee act in a desirable way. * AI had all of corporate mail forward to him. Action controls: * Talk with employees by phone 3-4 hours per day. * Ask a friend and police to fire all corporate employees. The control was invalid since Wilbur was on the spot and argued with police. * Monitor bank account activity and called bank to stop payment on the checks B. Issues and Recommendations * Result controls: First of all, AHL lacks a clear direction as an organization and enough communication with its employees. This is also one of the reasons why most controls are right, but don’t work. Because the first step for controls is to define the desirable results or behaviors for organization. But AHL doesn’t express this result explicitly. Second, performance measurement is incomplete. Although a compensation bonus on telemarketers and a proportional revenue allocation on loan officer, the measurement just focus on the financial aspect. The measurement also should include the non-financial aspects. Finally, AHL ignores rewards to employees for the accomplishment of the desired results. Recommendation: AHL should set up organizational direction and culture, codes of conducts and behavior, moral value. Additionally, AI should communicate with its employee and understood them the goal and culture. AI also selects key factors to measure the effectiveness of employees’ and management’s works, both financially and non-financially. Still, AI should encourage employee to act as organizational goal by incentives explicitly.
* Action Controls: For behavior constraints, AI took physical and administrative constraints. But the Wilbur’s administrative control, preventing him to sign checks, failed because AI didn’t give the Wilbur equivalent authority and autonomy as a management. So I advice AI should consider award the top management in a long-run way. Such as instead of giving cash compensation, stock-based compensation may drive management to think in a long run. A proper supervision and effective administrative constraint to top management also should be paid more attention. * People Controls: AHL is absence of people controls. AI should develop people control and form a positive cultural in company. A positive, honest and hard-working environment benefits the work.
