Case Atlanta Home Loan

Case Atlanta Home loan

A. Control 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 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 processors work.
Action 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 AIs
agreement, which fail to restrict the administrative authority of Wilbur. On
the other hands, the restriction doesnt 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 dont work. Because the first step
for controls is to define the desirable results or behaviors for organization.
But AHL doesnt 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
managements 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 Wilburs administrative control,
preventing him to sign checks, failed because AI didnt 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.