Nicole Ferrin
October 13, 2008
BUSA 305
Case Analysis
Engstrom Auto Mirror Plant:
Motivating in Good Times and Bad
Engstrom Auto Mirror Plant is facing the problem of not being able to keep their employees motivated in both good and bad times. Before the problem occurred, Ron Bent, the plant manager, had adopted the Scanlon Plan. The Scanlon Plan was an incentive plan used to motivate employees and to drive changes in their behavior and attitudes. The plan consisted of monthly bonuses for employee productivity, communication meetings, a committee to encourage and evaluate employee’s suggestions, and overall improved working conditions. Employees were satisfied with their jobs and motivated to be productive. Over time,
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When the plan no longer was enough to motivate the employees, Bent knew the plan needed to be revised. He had said, “A Scanlon program won’t perpetuate itself. You have to give it a shot in the arm every so often—whenever the work force needs it” (Beer and Collins, p. 6). To revise the plan, Bent needed to listen to the employee’s complaints. Part of the Scanlon plan was to listen to suggestions of the employees, so the complaints should have been just as important to listen to and evaluate. The employee complaints were about the distrust of bonus calculations and questions of fairness. Bent and his management team should have seen the complaints as a suggestion for improving the bonus plan. Another alternative would be to change the organizational factors of the company. Bent could do this by using the Job Characteristics Model. Due to the Scanlon Plan, the company had already met the fifth characteristic of feedback, but Bent could also look at ways to improve the autonomy, task significance, task identity, and skill variety of his company. By improving those characteristics, it could help the Scanlon Plan to further motivate employees. Lastly, Bent could
Motivation is a key aspect in the organization or workplace, and it is imperative to know the basic theory application and methods dealing with any problems that usually unavoidable for the employee and will come up in any work environment. This is a mandatory skills for a leader or future manager to know how important on how to motivate his or her employee to work more efficient. Motivating employees is a big dilemma for managers. To produce a higher level of performance and productivity, manager’s today are obliged to pay more attention on this matter. Every employee needs different types of motivation. In this paper will elaborate three motivational methods that a
Our task for the Engstrom Auto Mirror Plant case analysis was to identify the main problems of the company as well as it’s managers’ decisions and to find reasonable solutions by taking into account roots from where they have been appearing. This case is extremely relevant because it looks at organizational behavior everyday problems and analyses issues of building relationships with employees. All our assumption will be based on Organizational Behavior theoretical background in order to find solutions and alternatives for the particular company’s case. The main aim was to figure out how to increase company’s productivity, employees’ motivation and management strategy.
Motivation is a main point in which I am interested and in order to understand more about the topic I have based my review in 2 different sources: Forbes article “Motivation Mystery: How to Keep Employees Productive” and Daniel Pink Ted Talk “The Puzzle of Motivation”.
In May 2007, the Engstrom Auto Mirrors plant was facing the crisis. The business was doing badly and the sales had started to decline in 2005. Thus, there was a steep reduction in plant productivity and employee morale was all time low. The company used Scanlon Plan as an incentive for staff. The core element or foundation of the plan was concept of participative management, where management and staff together will decide the bonuses based on revenues for that year.
Many employees felt they were doing all of the work and should get the bonuses, not management. This plan led to the employees feeling as though they were not treated fairly because of the many rate changes. The employees did not have input into the plan and felt management was playing games with the formula.
The Scanlon Plan can be used as a major catalyst to turnaround the plant by emphasizing more on productivity. The more they work the faster they roll towards their bonuses; this magical spell is a win-win situation for both the employees and the management. The management can cruise steadily over the wave of bonus motivated productivity and the employees can reap the benefits from the high production rate in terms of bonuses. The plan can be redrawn and a slight change can be made by making the entire plan revolve around the concept of productivity. When productivity assumes a prime position in the plan, employees will strive hard
Engstrom should provide a space in which workforce can communicate by having managers listen to them and asking them questions. People generally know the right answers if they have the opportunity to produce them. For Engstrom creating teams and committees with members from each production department to management is important. A committee can help improve the line workers morale with ideas such as improvement for production, and meeting delivery deadlines. A committee of managers from each department within the plant who will work with plant line workers to make suggestions and improvements for employee morale and improvement. The teams formed should be from all functions and staffed with members whose talents match team tasks. Committees are
I believe that one of Engstrom’s strengths would be the fact they were able to identify the low morale by the employees and correlate it with the low productivity. I actually commend Bent for doing research and finding a program that has proven to work in many other companies. The Scanlon Plan is the oldest organization-wide incentive plan with proven success still in use in the United States. The first Scanlon Plan was developed in the 1930’s by Joseph Scanlon. Scanlon was a cost accountant by training and a steelworkers’ union official at a steel mi facing bankruptcy. (Beer & Collins 2008). The Scanlon Plan reinforced teamwork and cooperation across work groups while they focus attention on cost savings and motivating employees to “work smarter, not harder”. (Beer & Collins 2008). A problem and weakness in the program came when the employees distrusted the bonus calculations. Some employees felt the company was “playing with” numbers when they changed the
One of the valued but demanding customer, who had considered Engstrom as a certified supplier, was requesting a large order but Engstrom was unable to deliver on time due to the low productivity problem. The plant manager along with his assistant were already dealing with the troubling numbers when this happened. While the task was a tough bone and not easy to tackle, and there were a lot of factors needed to be taken in to consideration. The leadership started to analyze and break down the main causations other than the overall economic trend that dragged the company into the turmoil, as it turned out, it was the low, frustrated employee morale and diminished work satisfaction.
In analyzing the brief case study Engstrom Auto Mirror Plant: Motivating in the Good times and Bad”, it was brought to light that the root of the organizational issues was that of productivity, motivation and employer dissatisfaction following the decline of the Scanlon Plan. The Scanlon Plan was an incentive system that provided bonuses to employees for their increased productivity within the plant. In the early 2000’s employee satisfaction, morale and productivity rapidly declined following the layoff of nearly 50 employees and the employees who remained were then expecting the bonuses that were incorporated into the plan without doing the
To answer these questions, the recommendation is the Ron and management team work with employees to comprehend the underlying issues behind their dwindled productivity, identify likely solutions to the issues and make changes to the Scanlon Plan to enable the incentive plan effectively motivate the employees. It is important that employees are involved throughout the entire process and that any adjustments, no matter how small are presented honestly to the employees.
Although about 81% of employees voted yes on the implementation of the Scanlon Plan at Engstrom, communication problem and lack of understanding how this Scanlon plan works dragged the employees to develop a non-interest in the company, causing employees to lose interest in participation of the Scanlon plan. Employees became suspicious to bonus calculation adjustments over time and questioned fairness. This is considered as nonverbal negative feedback for a message that may have been highly affected by noise. Employees want to feel like their boss is siding with them in a compassionate manner. Effective communication and thorough understanding of the policies of the organization would motivate the employees. However, even though the Scanlon plan was allowing fair strategic planning among coworkers, it overloaded the employees with more information that they could assimilate. According to Myers & Myers (1982), overload is the vast amount of information transmitted to an employee which surpasses an acceptable level of handling, causing confusion and stressful employee environments. This lack of communication added to the downfall of the Scanlon
Engstrom Auto Mirror plant, as a privately owned business, it manufactured mirrors for trucks and automobiles. The managers aimed to increase productivity for sustainable development of the company. Back in 1998, to pursue highly productivity, the plant was redesigning its production lines to incorporate new technology, however, the transition was not smooth, some problems had emerged, such as the staffs' moral and efficiency declining and the internal contradictions being intensified between the managers and employees. As the result of it, the previous manger resigned in 1998. After that, the new manager, Ron Bent believed in the power of worker incentive programs and wanted to establish one at Engstrom. Eventually, the plant adopted the
Engstrom Auto Mirror plant is a privately owned business in Richmond, Indiana. Engstrom began operations in 1948 as a manufacturer of mirrors for trucks and automobiles, employing 209 people. The management team consists of plant manager, Ron Bent, and his assistant, Joe Haley. Ron Bent came to Engstrom in 1998 during a period of unprofitability and transition. Mr. Bent believed in the power of worker incentive programs, and with support, a Scanlon plan was voted on by the employees with 81% support. Between 2000 and 2005, Engstrom returned to profitability as sales quadrupled, productivity increased, and product quality and employee satisfaction was high (Beer, 2008).
Issues: Though the Scanlon plan was effective when it was implemented, there are now several potential issues existing in Engstrom. The employees are no longer seeing the benefits of the incentive plan that originally showed them bounty. They do not trust the system of bonuses, or the methods by which they are calculated, and by extension are beginning to distrust management entirely. They are starting to observe a lack of fairness in payment, valuing relative over concrete compensation. Ultimately, employees as a whole are beginning to be more individually minded as opposed to having a group mentality. This is the main cause of Engstrom’s problems. The Scanlon plan is