Focusing On the Leadership Challenge

Outline of the paper

Introduction

This section introduces the research thesis which entails a discussion of wasted human and financial resources as a result of the manager promotion process as a solution. The paper identifies different alternatives to a more efficient promotion strategy and ways of implementing the new strategies, such as a case study of LoanDepot.com.

In dealing with this thesis, the paper utilizes public records regarding company growth, Ashford’s proquest library resources to research into standard managers’ methods or promote from within. In addition, a research on the cost of hiring and training new employees based on generalized costs throughout multiple industries will be conducted.

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Company Description

LoanDepot.com is ranked as the 3rd generation online lender of mortgage, headquartered at Irvine, California, but operates in about 46 states in the United States of America.
It was officially launched in January 2010, and at this time, the company has employed about 400 employees. This company employs “The ‘No Steering’ policy which allows them to match customers with the loan that best fits the customer.
Their products include fixed rate loans, adjustable rate mortgages, FHA loans, and interest only loans” (Ferreras 2011).
The main stakeholders of this company are Anthony Hisieh, who is a veteran service provider as well as a renowned entrepreneur in this industry; and Parthenon Capital Partners as well as Milestone Capital, which are considered to be the high class executives in launching and building start ups in this industry of online mortgage. For instance, they are the pioneers of NASDAQ: ETFC and NASDA: TREE which have been very successful. Additionally, other stakeholders include the customers, shareholders, employees of the firm and, more importantly, the investors who purchase the mortgages
The three stakeholders have invested more in technology, to ensure that they provide only stringent underwriting, unique services, along with mortgage processes that are very efficient and effective (Nationalmortgageprofessional.com 2010).
Loan Depot’s mission is “committed to delivering a better, faster, more efficient process and industry-leading rates while delivering the best service in the industry” (Nationalmortgageprofessional.com 2010).
Its vision statement ensures “responsible lending, with a clear focus on putting the customer first while offering industry-leading closing times” (Nationalmortgageprofessional.com 2010).
To increase their sales, the company looks forward to employing more sales representatives.
One of the incredible milestones this company has attained is $1 billion originations in mortgage loans for residential.

Description of Leadership Challenge Facing the Organization

LoanDepot.com has faced various leadership challenges. The correcting problem in the sales department at LoanDepot.com is the one of them.
T company has been wasting human and financial resources that pertained to their management promotion process. This waste is in the form of promoting top ranking sales reps based strictly on their sales figures, without taking into account their management abilities, or their lack.
When these newly promoted managers perform poorly in their new position, they typically leave the company.
This problem made the company, particularly the human resource department, incur lots of expenses in recruiting and training.
The company also lost lots of sales as the position ended up remaining vacant for a long period of time
There are some projects that such managers leave unaccomplished, and when the new manager comes in, he/she starts new projects.

Strategies for Overcoming the Challenge

There are two strategies which can be employed by LoanDepot.com in dealing with employee promotional issues, seniority and merit.
If the company can use a combination of the two, then it will solve the current leadership challenge it is facing. Combining the two strategies is the best option for the company because every method has its own strengths and weaknesses.
Merits strategy will be of a great help to the company because, as per its definition, it is based on the “knowledge, skill, talent, competence and capability as different from education, training, and past experience.” As a result, it will enable the company to use its resources at higher levels in an efficient and effective way. In addition, this strategy has the ability of handcuffing employee turnover concerns.
Seniority strategy is a simple mean and tool of measuring the service as well reviewing seniority. As a result, everyone will support or disapprove the facts that are tabled against the employee. This ensures that the aspects of nepotism, judgment and prejudice are eliminated. At the end, everyone will be certain with the ways of getting promoted.

Introduction

In organizations, leaders are expected to facilitate organization growth, sales as well as marketing strategies. They always have the responsibility to generate profits, reduce costs as well as mitigate risks (Ivancevich 2009). However, in fulfilling these roles, managers or leaders usually face lots of challenges, collectively called leadership challenges.

As a result, this research paper critically discusses wasted human and financial resources as a result of the manager promotion process. As a solution, the paper identifies different alternatives to a more efficient promotion strategy and ways of implementing the new strategies, such as a case study of LoanDepot.com.

To attain this objective, the paper utilizes public records regarding company growth, Ashford’s proquest library resources to research into standard managers’ methods or promotion from within. In addition, a study on the cost of hiring and training new employees based on generalized costs throughout multiple industries will be conducted with the help of the internet sources.

LoanDepot.com Company

LoanDepot.com is ranked as the 3rd generation online lender of mortgage, headquartered at Irvine, California, but operates in about 46 states in the United States of America. LoanDepot.com Company was officially launched in January 2010, and at this time, the company has employed about 400 employees.

This company employs “The ‘No Steering’ policy which allows them to match customers with the loan that best fits the customer. Their products include fixed rate loans, adjustable rate mortgages, FHA loans, and interest only loans” (Ferreras 2011).

The main stakeholders of this company are Anthony Hisieh, who is a veteran service provider as well as a renowned entrepreneur in this industry, and Parthenon Capital Partners as well as Milestone Capital, which are considered to be the high class executives in launching and building start ups in the industry of online mortgage.

For instance, they are the pioneers of NASDAQ: ETFC and NASDA: TREE which have been very successful. The three stakeholders have invested more in technology, to ensure that they provide only stringent underwriting, unique services, along with mortgage processes that are very efficient and effective (Nationalmortgageprofessional.com 2010).

Other important stakeholders are the company employees. They are the ones who keep the firm running since they are responsible for executing the day to day tasks and duties to ensure that customers are satisfied. The local community is also an important constituent of the primary stakeholders.

They are capable of providing the population pool where employees can be drawn, support or reject the firm’s activities. They also expect some sort of social corporate responsibility from the firm. More importantly, investors who buy the mortgages are another group of primary stakeholders. Indeed, without them, there is no business for the firm.

Loan Depot ’s mission is “committed to delivering a better, faster, more efficient process and industry-leading rates while delivering the best service in the industry” (Nationalmortgageprofessional.com 2010). On the other hand, its vision statement is ensuring “responsible lending, with a clear focus on putting the customer first while offering industry-leading closing times” (Nationalmortgageprofessional.com 2010).

By looking at the past records of these stakeholders, it is clear that they have the ability of creating lots of job opportunities within a very short period of time. For instance, it was proved that they created around 1000 job opportunities in two years. With this kind of capability, the company will have the ability of creating over 1000 job opportunities by the year 2013.

This large staff will ensure that their vision and mission statement are attained. For example, they will be in a position to provide lending services nationwide in a manner that is responsible and far much strategic. Since the company aims at lending a large scale, there are chance that these prices and services will be incredible to their clients.

To increase their incomes, the company is looking forward to employ more sales representatives having little experience; they will also consider these individuals with no experience.

For sales professionals, they should have a minimum of 3 years experience in sales position. However, individuals having “mortgage loan handling experience are expected to undertake Enforcement of Mortgage Licensing (S.A.F.E)’, and Nationwide Mortgage Licensing System to culminate a state licensing test” (Nationalmortgageprofessional.com 2010).

Nonetheless, the company also considers inexperienced individuals in their sales team. However, this group is given junior sales responsibilities or considered in the position of customer care where they stay for about six months while undergoing some training practices.

Being an online lender that provides services in the entire country, the company tries as much as it can to ensure that its sales representatives are licensed as it is required by law of different states. This requirement is also stated in the company’s code of ethics.

One of the incredible milestones this company has attained is $1 billion originations in mortgage loans for residential. Apart from being attained in a very short period after its formation (only after 20 month), this milestone was also attained in the mortgage markets that were very challenging as compared to any other time in history.

This achievement was attributed to dedication as well as the hard work of its professional mortgage employees, who were providing the best mortgage skills and experience to ensure that their clients got the best service ever. There are higher chances that this kind of originations will result in a sum of loan funding of about $750,000,000 (Ferreras 2011).

Description of Leadership Challenge Facing the Organization

In the recent past, LoanDepot.com faced various leadership challenges. The correcting problem in the sales department at LoanDepot.com is the one among them. It has been observed that the company has been wasting human and financial resources that pertained to their management promotion process. This waste is in the form of promoting top ranking sales reps based strictly on their sales figures, without taking into account their management abilities, or their lack.

When these newly promoted managers perform poorly in their new position, they typically leave the company. Now, LoanDepot.com does not only have to replace the manager, but also looses out on the sales this individual previously generated. After losing the manger, the company is again forced to recruit another employee; such a situation is termed to be “the toughest part of the job in terms of meeting new regulation is licensing” (Ferreras 2011).

This problem made the company, particularly the human resource department, incur lots of expenses. This is because the department has to start organizing for another recruitment process. In case the interview panel and other managers have to take part in the interview process, the costs might explode further. The department also maintained the costs of training new employees, supervisory costs and fill-in costs.

Since replacement did not occur immediately, the company also lost lots of sales as the position ended up remaining vacant for a long period of time. This is another loss the company has incurred. In addition, there are some projects that such managers leave unaccomplished, and when the new manager comes in, he/she starts a new projects. When these unaccomplished projects are summed up, they end up contributing to a very big loss to the company.

The company has also been experiencing termination and exist expenses which, when added together, are far much above their salaries annually. Last but not least, the company has incurred “Loss of intellectual property and contracts. Consider the cost of customers following an ex-employee and costs of retaining customers. The loss of intellectual property accompanying executive resignations cannot be undervalued” (Ivancevich 2009). All these problems arise as a result of poor employee promotion strategy.

Strategies for Overcoming the Challenge

There are two strategies which can be employed by LoanDepot.com in dealing with employee promotional issues; seniority and merit, and if the company can use a combination of the two, then it will solve the current leadership challenge it is facing. Combining the two strategies is the best option for the company because every strategy has its own strengths and weaknesses. So, the two will complement each other.

Merits strategy will be of a great help to the company because, as per its definition, it is based on the “knowledge, skill, talent, competence and capability as different from education, training, and past experience” (Businessihub.com 2011). As a result, it will enable the company to use its resources at higher levels in an efficient and effective way. In addition, this strategy has the ability of handcuffing employee turnover concerns.

This is based on the fact that the strategy motivates capable employees to ensure that they perform well at their level, hence adding effectiveness and efficiency in the company. Efficiency and effectiveness arise because “merit strategy encourages the employees to obtain new knowledge as well as skills for all-round development” (Lowe 2011). As a result, these who will be selected for promotion will not only have past records in sales, but also good management skills.

However, just like other strategies, this one has its own weaknesses. For instances, many people doubt this strategy particularly on the issue of management integrity when it comes to merit evaluation.

Critiques like Shockley-Zalabak (2011) have emphasized that merit evaluation procedures were very complicated, and most of them were prejudiced. Now, since merit concentrates more on what the employee accomplished in the past, but it does not consider potential attainments. Due to this disadvantage, the purpose of promotion might not be attained.

To attain this objective of promotion that is not catered for in the merits strategy, the method of seniority plays a very significant role. This strategy is based on the fact that if one works in a company for a long period of time, such a person gains enough talent along with knowledge. So, its convention is that the first priority of promotion is given to these who have worked in the organization for a longer time. In selecting amongst those who have served for long, merit strategy is applied.

Seniority strategy has been viewed by many scholars as having simple means and tools of measuring the service as well reviewing seniority. As a result, everyone will support or disapprove the facts that are tabled against the employee. This ensures that the aspects of nepotism, judgment and prejudice are eliminated. At the end, everyone will be certain with the ways of getting promoted.

This strategy also motivates senior employees as they are contended with the promotion process, hence reducing complains and disagreements. In general, this strategy increases senior employees’ esteem as their efficiency and effectiveness have no disputes (Shockley-Zalabak 2011).

Just like the merit strategy, this method has disadvantages. For instance, it assumes that employees get to know more when they have longer service life. This assumption is wrong because employees learn only to a certain age after which they lack creativity and innovations.

This is based on the fact that at a certain phase, learning skills retreat. In addition, the inquisitiveness of building up is de-motivated in case this strategy is employed solely. This is due to the fact that employees tend to believe that promotion will come with or without merits. However, in case the strategy is used together with merit strategy, the side effect will be dealt with.

Another disadvantage is that young and hardworking employees will be de-motivated, and such a situation will result in high rates of young employees’ turnover. Moreover, the procedures employed in the process of assessing seniority can be very complicate as well. This is based on the fact that “tabulations like job seniority, company seniority, earlier experience, among other factors, pose different considerations” (Matteson and Ivancevich 2006).

At the end, if LoanDepot.com employs seniority strategy solely, then it will incur reduced efficiency and effectiveness. As a result, if the company employs the two strategies simultaneously, it will deal with the problem discussed in the previous section.

However, when implementing this combined strategy, Matteson and Ivancevich (2006) recommend the following steps that can be of a great help:

Encouraging professional development in the company. Since most employees are ever ambitious, very dynamic and hard working, they will never be satisfied with the status quo. So, the company should provide proper guidance in their career development.
Creating a plan. This will aim at aligning employees’ goals with their interests, strengths as well as experiences and skills. This plan acts as a guide towards attainment of required skills and experience in the next position. These skills and experience will be of great help in dealing with leadership obstacles after promotion.
Pairing employees with mentors. After establishing their goals and interests, give them a person who has more experience and skills in their respective fields to act as a mentor. This will enable the company to transfer the current talents and experience to the other. At the end, all of them will benefit from the relationship.
Identifying different opportunities with the aim of expanding their professionalism. This will lead to a solid professional networking, which will provide information, help, advice as well as inspiration after promotion.
Challenging employees to get out of their comfort positions. There is no way an employee can grow if he/she does not aspire to get out of routine activities. The management should give its employees assignments that are very challenging to ensure that they break from routine activities. In addition, the management can help them to prepare a saver environment for them to learn from their day-to-day mistakes.
Hiring a coach. For these employees who the company wishes to promote in different career paths, the outside coach can be of a great help. This will provide a free environment under which employees will feel free to discus opportunities and threats facing them. This will help them particularly in developing their individual plans.
Promotion. After undertaking the above six steps, the company will then evaluate its employees and select the best person to promote.

Conclusion

In conclusion, this research paper discussed the problem of wasted human and financial resources as a result of the manager promotion process. It also identified different alternatives to a more efficient promotion strategy and ways of implementing the new methods in LoanDepot.com Company, which is an online lending company.

The paper found that this problem made the company lose managers apart from incurring lots of losses. In dealing with this problem, the paper suggests that LoanDepot.com Company should use merit and seniority strategies simultaneously when promoting its managers.

The paper proposes seven steps which can be followed to ensure efficient promotion strategy. They include encouraging employees, creating a plan, pairing employees with mentors, expanding professional network, challenging them, hiring a coach, and then promoting them.

References

Businessihub.com. (2011). Basis of Employee Promotion: Advantages and Disadvantages. Retrieved on 18 November 2011 from http://www.businessihub.com/basis-of-employee-promotionadvantages-and-disadvantages/.

Ferreras, A. (2011). LoanDepot.com Originates $1 Billion in New Mortgage Loans in August 2011. Retrieved on 18 November 2011 from http://www.loansafe.org/loandepot-com-originates-1-billion-in-new-mortgage-loans-in-august-2011.

Ivancevich, J. (2009). Human Resource Management. New York, NY: McGraw-Hill.

Lowe, E. (2011). Managing the Employee Promotions Process. Retrieved on 18 November 2011 from: http://www.edwardlowe.org/index.elf?page=sserc&storyid=0200&function=send.

Matteson, T. & Ivancevich, J. (2006).Organizational Change, Ashford University. London: Pearson Prentice Hall.

Nationalmortgageprofessional.com . (2010). Anthony Hsieh launches loanDepot.com. Retrieved on 18 November 2011 from http://nationalmortgageprofessional.com/news15390/anthony-hsieh-launches-loandepotcom.

Shockley-Zalabak, S. (2011). Fundamentals of Organizational Communication. (8th Ed). Boston: Allyn & Bacon.