Case Study 2 Leading the team through difficult times

Mary Chen had been the manager of thesubprimemortgage department of alargebank for several years.Although her departmentwas small,she andtop-level management thought that their mission wasimportant. As Chenexplains it, "We make itpossible for people with less than prime credit ratingsto become homeowners. We create mortgagesfor honest,hardworkingpeoplewhofor many reasons donot have excellent creditrecords.Soourgroupis doing somegoodin thisworld,despiteafewforeclosures hereandthere."

As interest rates climbed onadjustablerate mortgages(ARMs), the number oflatepayers tripled, andthenumberof foreclosures doubled. Every day themedia pounded thesubprimelenders, blamingthemfor a potential recession and asharpdeclineinthestock market.Supervising the peoplein her department becameincreasingly more difficult. As Chensaid,"As the subprimemessprogressed, Isaw fewersmiles in mydepartment. Workerswere calling in sick more frequently. One-half the people in the department requesteda transfer to the mortgage department thatprovided mortgages to customers with first-rate creditrecords. Even my bestworkers looked stressed out."

Malcolm Flynn, a mortgagespecialistwithfour years'experience, described theworkingconditionsin the subprime departmentinthesewords:"Thisisbad.We feel wearelooked upon likewearedrugdealers. Peoplethink weare rotten becausewelentmoney to people who didn't have the means topaybacktheloan. "Most ofus won't admit the kind ofwork weare inwhentalking to people outside the bank.We come toworkeverydayhoping theworkwillbe more fun,but itneveris."

When Chen discussedthemorale problemsshe was facingwithinherteam, hermanager advised Chen to be a "betterleader."Her manageralsosaid thata true leadercan guideagroupthrough difficult times.Chenthought to herself,"This advice looks good on paper, butIdon't knowwhatto do next."

In your own words and based on the materials discussed in this unit, answer the following questions:

1. How would you describe the situation with staff morale and emotions in the department? Outline the consequences of it on the performance of individual employees, the team, and the organisation.
2. As a leader, does Mary Chen have a high emotional intelligence? Why is emotional intelligence important for leaders in times of crisis? Justify your answer.

To promptly improve the workplace climate in the department, should Mary Chen rely on fear-based or love-based motivation? Justify your answer and provide three (3) specific recommendations for Mary to motivate her team