ATLANTA HOME LOAN I. Devices that Al used to control his business Before he went back to school a. Result control: – Al paid each telemarketer a combination of an hourly wage plus a performance bonus ($10. 00) for each lead produced. – Al paid the loan officers 40% of the total loan revenue on loans that AHL originated and 60% on loans they originated. b. Action controls: – Al bought leads from list brokers, then telemarketers called people on the lists to assess their interest in refinancing, gave Al the potential clients’ names to Al, Al then distributed the names to AHL’s loan officers.
– Al monitored the activities of his loan officers by tracking the number of credit inquiries each requested. – Al also monitored the loan application/lead ratios and their trends. c. Personnel/ cultural controls: – Al hired four (4) telemarketers and eight (8) loan officers to work for his firm. – Al decided that all the employees would work from their homes due to heavy traffic of Atlanta. After he went back to school: a. Result control: – Al agreed to pay Joe 100% of the fees earned on loans that Joe closed to end their partnership.
– Al made commission payments to Wilbur at 100% on all loans closed less than a monthly licensing fee of $5,000 or 10% of all revenue, whichever was greater. b. Action controls: – Al tracked the employee head count, the number of leads produced, credit inquiries requested, loan application funded, office expenses, and bank activity. – Al contacted his employees, especially loan officers, 3-4 hours daily. – Al had all of AHL’s corporate mail forwarded to his California address, and this action helped him when Wilbur signed his checks against uncleared funds and the checks bounced.
– Al gave his four blank, signed checks to Letitia but still keep the authority to sign checks against the main account. c. Personnel controls: – Al selected Joe and Wilbur to be his partners. II. What went wrong? Things went wrong when Al decided to go back to school but his company was not well prepared before he left for California. Without his presence in Georgia, everything steered out of his reach and became uncontrollable, even when Al tried to monitor daily operations, he did not implement it in a suitable method.
Al simply monitored daily operation and the results only, he did not set any goals, standards, targets, etc… on which his employees can rely while working without his direction. In fact, Al should establish a complete control system to monitor his employees thoroughly with periodic reports about work progress. Al also should clearly exhibit the company policy such as goals, standards, requirements, compliment, etc… to employees. Al did not select the right person to be his partner. He had a hasty decision to select Joe/ Wilbur as partner.
Al should learn more about Joe/Wilbur’s background and characteristics before come up with the decision. Al was a little bit unlucky when Letitia betrayed him, similarly with the bank and the police. III. What should Al do now? Firstly, Al should delay his MBA program to a more suitable time to come back to his business. Secondly, Al must legally fight to regain control over his business. Most importantly, Al should set up and implement a suitable control system for his business. For action controls, Al should set goals, standards, performance measurements for each employee, each division.
This would be control devices as well as motivation for his employees to improve productivity. For result controls, Al should build a more specific, productivity-based payroll. For personnel controls, Al should hire an accountant and another office manager to replace Letitia. Al also should think about selecting another partner or CEO to replace him to run the company in case he leaves for California. Al must be more careful when selecting his colleagues/ partners as they play important roles in the operation and development of the company.