Qualities of a Good Loans Manager - Article Example

Running header: Psychometrics Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Introduction An organization’s human resources are the most vital of all resources. They are the engines that drive all other sectors of the organization’s operations. Establishing the suitable/right strategy for recruitment and selection is essential as a means to create a defined opportunities and positive in-house culture and values (Cook and Beckman 2006). Therefore, while businesses should cultivate an organizational culture amongst existing staff in accordance with customer service goals and other long-term objectives, the same parameters should be used to inform future hiring: recruitment and staff (Searle, 2003). Without the right staff, an organization is likely to face a problem. Having failures in one line of job is likely to affect other areas too. Indeed, apparent poor recruitment strategies at ABC Bank brought in ineffective loan managers. Unfortunately, it is the nature of leadership to take fall for the mistakes of the juniors; the loss of money, which becomes the broader failure of the Bank, is the mistake of the loan managers. But it reflects poorly on the manager as well. There seems to be a number of other problems as well. One, the Bank does not seem to have a defined organizational culture, and as a result, the staff is not united in the direction of its long-term goals- if any. Two, there seems to be a problem about the criteria to use in hiring new loan managers. Although the Bank has an appraisal system, it lacks validity and cannot therefore be a reliable reflection of employee competency. And if there is no valid and reliable metric for employee competency, then basing future recruitments on that is already a poor recruitment strategy. Simply put, while Mr. Wilkinson hopes to escape a recurrence of the current problem, this strategy only helps such a recurrence. Most recruitment strategies today go beyond qualification and on-the-job experience. Organizations employ various recruitment strategies that attempt to predict future aptitudes and attitudes of potential employees, e.g. psychological contracting. All these are alternatives found within an assessment center. The efficacy of the assessment tool used depends on its validity and reliability (Searle, 2003). Validity basically refers to the extent to which a tool or method of assessment measures what it is actually designed to measure. It generally implies judging the results of the assessment against external criteria. Reliability simply refers to the consistency or uniformity of assessments (Cook and Beckman 2006). Therefore, it can be inferred that reliability is a precursor to validity. This paper will discuss the pros and cons of some of these. But mostly it will dwell on the psychometric assessment. Their validity and reliability, and the recommendations will be implicitly discussed under the major assessment tools discussed here. Discussion Qualities of a good Loans Manager Before a recruitment strategy can be decided on, it is important to know what makes a good loans manager. These characteristics will provide a primary basis for recruitment. The strategy then aims at the best way to discover and test these qualities in the candidates during recruitment and selection. Basically, loans manager should have both professional and personal qualities, famously known as KISS. These include: Knowledge- There are different types of loans in/on which a loans manager may specialize. But still, a loans manager should be a generalist; that is, have sufficient knowledge on all the other types of financing. This is especially important since not every financing program is fit for all. For example, Vieira (n.d.), Senior Vice President cum Sales and Loan Manager feels that it is perhaps advisable for one “with a sufficiently large downpayment, but who cannot get his funding fee waived not to use VA financing.” In order for a loans manager to be in a better position to advice loanees, he/she should therefore have all the underwriting guidelines for every loan program. Integrity- This refers to a loans manager’s ability to ‘discourage a client from getting a loan that is not in the client’s best interests’ (Vieira, n.d.). For example, in a case where a client lowers his payment for mortgage by re-financing, the loans manager must wonder if the client can recover the closing costs of the loan, or if the client has extended his loan term to mean that he is not saving money. A good loans manager should know that caring for the needs of their clients is to secure the Bank’s services for the future. The ability to get referrals is a key quality of a good loans manager. Structure- This refers to a loan manager’s ability to structure a Bank’s loan in a way that serves its needs (Cook and Beckman 2006). The structure should clearly define whether the Bank should put less down and pay debts; which debts to pay off first; borrow against other properties to increase down payment, etc. Skill- A loans manager should be able to communicate, e.g. convince a loan underwriter by providing and asking for the relevant documentation and advice appropriately on whether a loan should be approved or not. Al this depends on whether the loans manager is well informed on the current changes taking place in the lending industry. All these are vital features to ensure sound lending, not only for the clients, but for the Bank as well. Although they can be formally learnt, they are part of one’s personality as well. Recruitment strategy It is my assumption that the ABC Bank needs the very best loan managers that they can find. In order for this to happen, as Mr. Wilkinson has expressed, the process should be open for all who feel that they have what it takes to be good loan managers. In this light, despite likely temptations to give priority to those within the organization on the basis of experience, the recruitment should give equal opportunity even to candidates from without, or even jus graduated. Current workforce as criteria for recruitment Mr. Wilkinson wishes that recruitment is based on the current workforce. To do that would imply that the current workforce is satisfactory, that the staff exhibits all the suitable requirements for the success of the Bank’s short and long-term goals. However, the Bank is in a crisis, one that is attributable to a section of its human resources. It therefore means that this recruitment cannot be based on the characteristics of all the employees. Some would need to be left out, even released from the Bank. The question that follows then is: how do we know the employees who have the right attributes? Upon these attributes, we create a criterion for the recruitment at hand. Fortunately, for this, there is an appraisal system, conducted by the line manager. An appraisal system is a regular record of assessments carried out on employee performance, potential and needs for career development (Searle, 2003). In other words, appraisals- conducted periodically, consistently and objectively, provide a means by which to tell the direction of achievement of an organization’s goals and objectives. Appraisals show trends, and in a way, can help predict likely outcomes. Unfortunately, this appraisal system seems to have a problem. First, it is not a very effective from of appraisal system. This is so because it is merely based on the line manger’s interview with the employees. It shows why no employee is rated unsatisfactory. Predictably, no employee under-rates him/herself when interviewed by the line manager. The problem then is that the line manager actually seems to believe them. He/she does not follow up by other appraisal systems to check against the employee’s claims. It explains why the loan managers who have plunged this Bank into a financial crisis are also rated highly. Because of the deficiencies of this appraisal, it shows inconsistencies; it is ‘skewed’. That means that it is an invalid and unreliable source of data upon which to base employee-ratings. And since there seems to be no other employee-rating data, using the current workforce as a criteria for recruitment would merely be based on unfounded assumptions (Cook and Beckman 2006). Simply, this strategy can only be used in the future using a properly drawn appraisal. For now, it is simply unsound. Another problem with this idea is that it implies the organization wishes to give priority to its employees with better ratings in the appraisal system- if one is to believe this appraisal, as Mr. Wilkinson seemingly does. This would be against equal opportunity that Mr. Wilkinson talks about. And most notably, basing recruitment on the current workforce is to refuse new and unique talents. Exercising equal opportunity here opens a way to find the very best talents. Psychometric Test The failures of the ABC bank loan managers may be attributed to a number of things on their part: lack of the factors named above, inexperience, or even an irrational emotional attachment to the clients’ (borrowers) plight (Cook and Beckman 2006). The Psychometric test here is aimed at gaining relatively accurate understanding of a candidate’s personal or behavioral nature and cognitive abilities (Searle, 2010). This bimodal process complements and increases the validity and hence the reliability of the assessment process. Cognitive/Aptitude Test Cognitive abilities, which have to do with a person’s reasoning, are significant and necessary characteristics for appropriate skill application in many occupations. In this light, PT provides key insights into an applicant’s ability to communicate effectively, make logical decisions, weigh cause and effect, etc (Searle, 2010). In psychometric test, cognitive tests are based on six main types of cognitive aptitudes: Abstract/Conceptual reasoning- this test focuses on the level of a candidate’s fluid intelligence; the ability of a candidate to learn and complex information and apply it in problem solving (PsychePress, n.d.).. Verbal reasoning- this checks whether the candidate is able to focus on and understand, as well as verbally communicate business concepts (Searle 2010). The underlying objective here is to test whether a candidate can use written ideas effectively to draw accurate conclusions. Numerical reasoning- this checks if a candidate is able to understand and carry out accurate arithmetic, as well as present the right conclusions based on arithmetic data. These include analysis and interpretation of numerical data such as graphs, charts, etc (PsychePress, n.d.). Emotional Intelligence reasoning- this checks if a candidate is able to handle emotional aspects, like self (Searle, 2010). This is a very important component for those who usually deal directly with customers. It answers the question: can the candidate make the right decision in an emotional situation? Personality/Behavioral Test While the cognitive nature demands a candidate’s thorough preparation before an interview, personality tests require little or no preparation. Rather, they are aimed at measuring a person’s relatively steady behavioral preferences and tendencies within a job context. These tests are directed at complex and indirect personality natures. And unlike cognitive tests, behavioral tests do not cal for correct answers. These tests are based on a number of personality inventories: 15 factor questionnaire plus- this is based on Cattell’s 16-factor personality theory. It aims to conduct a fair age, culture and gender assessment of the occupational characteristics of a candidate (PsychePress, n.d.).. This test employs the five major factors of personality: neuroticism, extraversion, agreeableness, openness and conscientiousness. Hogan Personality Inventory- this method aims at enhancing talent recruitment and development of employees. Although it also derives from the five components of personality mentioned above, it goes much deeper to permit even a better insight into personality qualities fit for a given occupation (PsychePress, n.d.). Motives, Values & Preferences Inventory- this generally aims at understanding a candidate’s motives and values in an effort to find out what makes him/her ‘tick’. One of the best methods for studying this in the contemporary world is ‘psychological contract’; that is, a conscious awareness of the expectations of both the employee and employer in the occupational context, and assurance that such expectations will be met (Searle, 2003). What these components imply is that psychometric assessment does not employ a particular tool. Instead, it is an integrative process that aims at attaining a set recruitment goal. And because it is integrative, psychometric assessment is capable of providing views from different perspectives, which then provides for a possibility of a accurate judgment. Conclusion As a conclusion, there are two ways to recruitment: winning the best talent and meeting the expectations of employees (Searle, 2010). The former will guide open recruitment process. The latter will avert any job-related dissatisfaction on the part of an employee, or feelings of betrayal from one party. Each party should know what the other expects. Psychometric assessment provides the best platform for such knowledge. References Cook, DA & Beckman, TJ 2006, ‘Current concepts in validity and reliability for psychometric instruments: theory and application’, The American journal of Medicine, vol. 119, no. 2, pp. 7-18 Psychometric Testing Guide, n.d., psychpress,com http://www.psychpress.com.au/psychometric/images/psychometric_pagetitle.gif [Accessed 12 March, 2012] Searle, R 2003, Selection and Recruitment: A Critical text, London, Palgrave Macmillan Searle, R 2010, Recruitment and Selection. [in] G. Wood and D.C. Collins, (eds.) Human Resources Management: A Critical Introduction, London, Palgrave MacMillan Vieira, D n.d., Choosing the Right Loan Officer Essential to Achieve Your Financing Goals, http://www.hawaiiislandhomes.com/choosing-the-right-loan-officer- essential-to-achieve-your-financing-goals/ [Accessed 12 march, 2012]. Read More