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CASE SUMMARY

Atlanta Home Loan (AHL) was a mortgage lending and financing company based in
Atlanta, Georgia. Albert (Al) Fiorini founded the company in April 2002 with an initial
investment of about $40,000. He started operating the company from his home.
AHLs business grew rapidly in its first quarter of operation. By the summer of 2002,
eight loan officers, all of whom worked from their homes. Telecommuting was
convenient for the employees because Atlanta was a large city with heavy traffic.
Joe Anastasia was one of AHLs loan officers. Although Al had known him only about
two months, his initial judgements about Joe were quite favourable. In July 2002, Al
and Joe reached a verbal partnership agreement. Joe would invest $8,400 which
was used to rent an office and to purchase some office equipment and Joe and Al
would share AHLs profits equally. However, Joe showed a bad attitude to Al when
he didnt show up for the meeting with new landlord and could not find him for two
days. Al not comfortable with Joe so he made a deal to terminating their agreement
but since Al need to go to Los Angeles so he desperate to find someone to run the
company, Al give one chance to Joe. So Al and Joe reinstated the previous
agreement. However, Joe went to the office only four times after Al left and Joe took
a large batch of loan files home and did not return to the office for three days.
In September 2002, Al turned to Wilbur Washington whom Al had been introduced
by Joe several months earlier after made decision he could not trust Joe anymore.
Wilbur had considerable experience in mortgage banking and quite good at sales
also so Al signed a written partnership and licensing agreement with Wilbur. Wilbur
asked for authority to sign checks written against AHLs main bank account, but Al
refused because he gesture of good faith to Letitia Johnson (office manager) four
signed, blank checks written against the main account.
Later the month, when Joe found what happening he wanted his $8,400 investment
back but Al refused until he returned all of AHLs lead and loan files in his
possession. In late September, Wilbur hired a new processor but Al noticed him that
his processor to loan officer ratio was too high but Wilbur angry and want to do with
his own ways without Al. At the time Wilbur took over the operation of AHL.
Al decided not trust Wilbur and asked a friend to act as his agent to fire all the
employees in AHL but all them refused to go. Al called the police but Wilbur told the
police that he was the owner not Al, the police just left. On October 15, Wilbur
opened a new account at Citizens Bank & Trust (CBT) where he did his personal
business and where he knew personally. Wilbur wired the funds being held in AHLs
corporate name at the offices of the closing attorneys into this new bank account. Al
discovered the second bank account and called bank personnel and informed the
manager that Wilbur had opened a fraudulent account with CBT but CBT refused to
freeze the account or return the money. Then, Al called the FBI but they did not
interest with the case. Wilbur renegotiated a lease with the landlord and establishes
AHL as his own company. Al suspected that Wilbur had used all his means of
persuasion to mislead the employees in order to break their bonds with Al. At the
last, Al lost at least $15,000 in licensing fees lost his company. At the end, Al was
forced to sell his home.

Elements of Results Controls


Albert (Al) Fiorini should continue running his business of Atlanta Home Loan (AHL)
which is mortgage lending and financing company. He needs to fight to regain
control over AHL perhaps only about $25,000 worth of equipment left. In other to
get back his business Al can apply elements of results controls which require four
steps.
First, Al must define the dimensions. He must defining the right performance
dimensions although is critical because the goals that are set and the measurements
that are made shape employees views of what is important. In this case Al must
defined AHL dimensions on which results are desired such as for profitability,
customer satisfaction or product defects. This dimension will help company to
achieve the target.
Second elements of results control is measuring performance on these
dimensions. In this elements measurements, which involves the assignment of
numbers to objects, is a critical element of a results control system. Al will measure
his company performance after defined it in the first elements. It might many
different results measures can be linked to rewards. Al can measures of financial
such as net income, earnings per share and return on assets or in nonfinancial
measures such as market share, growth, customer satisfaction and the timely
accomplishment of certain tasks. Besides that, Al can use measurements involve
subjective judgements. For example evaluators may be asked to judge whether a
manager is being a team player or developing employees effectively and to record
their judgements on a crude, ordinal measurement scale.
Third elements are setting performance targets for employees to strive for.
Performance targets or standards are another important results control system
element. In a results control system, target should be specified for every
performance dimension that is measured. In this case Al can choose two basic ways
to affect behaviour. First, stimulate action by providing conscious goals for his
employees to strive for but most people prefer to be given a specific target to shoot
for. Or second Al can allow his employees to interpret their own performance. So Al
can run his business by setting the performance targets for employees to achieve it.
The last elements in results control are providing rewards to encourage the
behaviours that will lead to the desired results. Rewards included in incentives
contracts can be in the form of anything employees value, such as salary increases,
bonuses, promotions, job security, job assignments, training opportunities, freedom,
recognition and power. Al can rewards his employees by anything employees values
as to appreciate them with the effort that they give to the company. Punishments
are the opposite of rewards. They are things employees dislike, such as demotions,
supervisor disapproval, failure to get rewards earned by peers or at the extreme the
threat of dismissal. Sometimes, Al maybe needs to give punishment to his
employees to give them lesson as what mistaken that they have done.

Action Controls
Besides from results control, Al must take an action control as the most direct
form of management control because they involve taking steps to ensures that
employees act in the organizations best interest by making their actions themselves
the focus of control. Action controls take any of four basic forms.
First basic are behavioural constraints. It is negative form of action control.
They make it impossible or at least more difficult for employees to do things that
should not be done. In the case of AHL, constraints can be applied physically or
administratively. For example Al uses multiple forms of physical constraints,
including locks on desks, computer passwords and limits on access to areas where
valuable inventories and sensitive information are kept. So, not everyone can access
to areas where valuable without permission or knowledgeable from Al. For
administrative constraints can also be used to place limits on an employees abilities
to perform all or a portion of specific acts. By using this constraints Al can
restrictions of decision making authority to his employees so they cannot take any
action for their own benefits.
Next the pre-action reviews involving the scrutiny of the action plans of the
employees being controlled. Reviewers can approve or disapprove the proposed
actions, ask for modifications or ask for more carefully considered plan before
granting final approval. In AHL, Al can form of pre-action review during planning and
budgeting processes characterized by multiple levels of reviews of planned actions
and budgets at consecutively higher organizational levels.
Then, the basic form in action control is action accountability. It involves
holding employees accountable for the actions they take. The implementations of
action accountability controls requires defining what actions are acceptable or
unacceptable, communicating those definitions to employees, observing or otherwise
tracking what happens and rewarding good actions or punishing actions that deviate
from acceptable. Al can take action control to the employees by looks for the four
implementations. Al might need to communicate to his employees either
administratively or socially. Administrative modes of communication include the use
of work rules, policies and procedures, contract provisions and company codes of
conduct. The desired actions do not have to be communicated in written form but Al
can be communicated face to face in meetings or in private to his employees.
Employees action can be observed directly and nearly continuously as is done by
direct supervisors on production lines. Besides that, Al also can track by examining
evidence of actions taken such as activity reports or expenses documentation. Action
accountability is usually implemented with negative reinforcements. That is, Al might
be defined more often linked with punishments than with rewards to his employees.
The last one is redundancy which involves assigning more employees (or
machine) to a task than is strictly necessary at least having back up employees (or
machine) available also can be considered an action control because it increases the
probability that a task will be satisfactorily accomplished. In AHL Al can assign more
back up computer since his business running by using telemarketers because his
worked from their home using telecommuting systems.