Change_in_Finance_Industry

* BA 472 * Change During Crisis * * Every company across industries has had to make changes in the past few years. In some industries the changes are substantial and some they are not, but change is the one constant in most cases. With the economy being so volatile and technology moving at such a fast pace, companies have to have leaders and employees that can adapt and collaborate to achieve continued growth and success. Making Sense of Change Management by Esther Cameron and Mike Green, goes into great detail on how these changes are implemented and the effects they have on employees. I have only been in the work force for six years and have worked for three different businesses in two completely different industries. The company that I think that has the best examples of change is the mortgage company that I worked for. With the financial crash in 2007-2008 and technology rapidly changing this company had many hurdles to jump in order to maintain and stay afloat, when many companies shut down. * Company Background and Culture * The mortgage company that I have three years experience working for is located in Eureka. This company was founded in 2005, and it started with just 2 employees, the founders and still current owners. They started up their company at the right time, when house prices were skyrocketing and credit was easily attained. Too easily attained as the next few years showed us very clearly. After the crisis at the end of 2007, things changed dramatically. Between when they started and then, they had gained another employee to process their loans. After the crash things were slow and new regulations were coming in on a daily basis. The entire way a loan was processed from start to finish was different. Some companies couldn’t handle the change and rather than work through the psychoanalytical stages (denial, anger, bargaining, depression, acceptance) they shut their doors entirely. The owners of the company I worked for were not those types of leaders. Rather, they are extremely optimistic and hard working, which enabled them to be adaptable to change. By the time I started at the company it was 2010 and they were back down to just the two of them. Even though this was a couple years after the crash things were not loosening up and changes were still coming in on a regular basis causing us to have to be ready to switch things up completely and with no notice. I was a loan processor and the two owners were loan officers. We would have regular meetings where we would talk about updates and exchange ideas. The culture was that of a close group of friends. A source states, “They [corporate cultures] evolve as companies cope with recurring stresses in their competitive environments (Steiner & Steiner, 2012).” The environment that we had to work in caused us to become tight knit in order to overcome the daily stresses (changing regulations). The two owners were very positive people that would help each other and me out in all circumstances. Our relationships were built on trust and communication. * External Forces * Many external factors affect how a mortgage company runs. The economy is extremely crucial for many reasons. If the economy is on the up usually more real estate is selling and that increases the demand for mortgages. On the flip side, if the economy is in recession then people are much less likely to buy a home, especially if the prices of homes are in decline, there is less of an incentive because they will immediately be losing equity in the house. From a technological side, many changes have happened recently and some of them are mandatory for mortgage firms to follow. Many things have to be disclosed and submitted via email and this is a fairly new idea in this industry relative to the industry as a whole. Some companies have even moved to electronic document signing which deletes the face-to-face interaction at the close of the loan. Personally, I would like my mortgage advisor to explain each page to me face to face, but some people might not get that opportunity and it could reflect negatively on the loan officer. Political- legal might have been the biggest external factor affecting the mortgage industry since the crash. Now, there are many more disclosures that have to be drawn up and signed prior to the loan process. Credit analysis is EXTREMELY stringent and documentation for borrower’s funds and income is not just required, but it is scrutinized down to the penny. * Action Taken and Change Management Concepts * The actions that were taken to deal with these forces were not necessarily strategic, but they had to be system wide. Meaning, they were never long term plans because the changes were so frequent. “Strategic management emphasizes long-term performance. Many companies can manage short-term bursts of high performance, but only a few can sustain it over a longer period of time (Wheelen & Hunger, 2012).” They did however affect tactical operational day-to-day decisions. Many of the changes affected the entire daily routine, not just in one or two areas. This organization dealt with these changes by having counsel type meetings set up to create a sense of clarity for everyone in the office. In order to ensure that everyone understood the changes we had to be in constant communication. The changes in the economy were dealt with by switching up marketing strategies. Now, instead of having home purchases be the bread and butter, refinances to help the people who were in terrible situations, were going to be a main source of income. * The Psychodynamic Approach can be seen throughout the finance industry. According to the text, a person going through change might go through five general stages: denial, anger, bargaining, depression, and finally acceptance (Cameron & Green, 2012). Though I did not work in the industry prior to the market crash almost everyone I have worked with were working before the crash. I have watched documentaries and seen first hand the struggle that people have gone through because of the many changes that took place very abruptly in the industry. In the documentary, “The Flaw” it depicts many fanciers, investors, and lenders along with their not so unique stories (sington, 2011). It shows the aftermath of how these people dealt with the crash and what the effects were on them. All of the people interviewed seemed like the change altered or impacted their life in a very negative way, but I am unsure if many of them will get to the acceptance stage that is depicted in the text book. An action taken by my boss was to set up the whole office as a Parallel Team. There are numerous types of teams that can be very effective in different situations. In the company that I worked for we often worked as parallel teams (Cameron & Green, 2012). The dynamics in the office of a mortgage company are constantly changing. Because of the many new laws and regulations there are updates and policy changes almost every week, many of which are not minor but actually change the daily operations substantially. The Parallel team worked to keep us all on the same page. Updates came about, and were a large interruption to the flow of things. It was not easy for all team members to read and comprehend each update as it came along. We would have team meetings, which involved the entire office. After the meetings the formal update notifications would be posted on the office announcement board until the next meeting at which time the update would be put in to a universally accessible binder in the office. Also, during these meetings we would brainstorm ways to implement the news regulations of operating procedures that we thought would be effective and agreed upon by everyone. Though the owners attended these meetings, they generally were not more authoritative than any one employee. As the book states for a parallel team, the focus of the team was to communicate the new rules and how they were going to affect daily operations and what the possible compliance issues were that could arise if the new standards were not to be followed. Conclusion My bosses dealt with change with a great sense of confidence and adaptability. They understood what it would take to overcome the obstacles and they made sure that any employees that they had also understood. Through their transformational leadership style they were able to inspire each other and me in order to accomplish our goals. Works Cited Bateman , T., & Snell , S. (2013). Management: Leading & collaborating in a competitive world. (10th ed.). New York, New York : McGraw-Hill/Irwin. Cameron , E., & Green , M. (2012). Making Sense of Change Management . (3rd ed.). London, United Kingdom: Kogan Page Limited. Hunger, D., & Wheelen , T. (2012). Strategic management and business policy. (13th ed.). Upper Saddle River, New Jersey : Prentice Hall. Sington, D. (Director) (2011). The flaw [DVD]. Steiner , J., & Steiner , G. (2012). Business, government, and society. (13th ed.). New York, New York : McGraw-Hill/Irwin.