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CASE STUDY ANALYSISCase Study Analysis:Engstrom Auto Mirror Plant: Motivating in Good Times and BadScott DennisSouthern New Hampshire University
CASE STUDY ANALYSISCase Study Analysis IntroductionEngstrom Auto Mirror Plant: Motivating in Good Times and Bad, Milestone OneExplanationOriginally founded in 1948, the Engstrom Auto Mirror plant in Richmond, Indiana was a privately owned business employing just of 200 people. Morale and productivity at the plant hadbeen mostly good before an industry downturn in 2005 brought down sales figures and with them employee morale. By May of 2007, layoffs and decreases in overall compensation further exacerbated the situation. Productivity was down, and quality issues were endangering important customer relationships. The company-wide incentive program, referred to as the Scanlon Plan was no longer functioning and paying bonuses. An explanation of the organizational challenges faced at Engstrom include:1.Scanlon Plan no longer being effective - The heart of the Scanlon plan is company-wide participative management at all levels and involves three main components; employees suggest improvements and are evaluated by committees and rejected or implemented and then finally the sharing of monthly bonuses tied to increased productivity. When first implemented in 1999, the plan worked as designed. For several preceding years, Engstrom workers received regular Scanlon pay bonuses. However, the bonuses had stopped in 2006. Management must decide whether to scrap the bonus plan, how to fix itand/or how to mitigate other organizational factors that are making the plan ineffective.2.Lack of employee morale and trust in management - One of the main causes of the decrease in productivity was a loss of trust in management, mostly due to the breakdown of the Scanlon Plan. When the plan was implemented involvement by employees gave them a sense of ownership and meaningful participation. Over time the bonus
CASE STUDY ANALYSIScalculations, which were complicated to begin with, were changed several times and many employees began having doubts about equity and fairness. Lack of transparency onthe part of management increased these concerns.3.Lack of employee productivity – Previously when the plan was functioning as designed, workers felt valued by Engstrom and like they were listened to. When the bonuses stopped employees lost “work motivation” as described by Newstrom (2015). Employees were asked to increase work production to make up for laid off coworkers while at the same time decreased profits meant less incentive for them to be productive. This created a dysfunctional system with workers losing sight of what they were working for.DirectionFor this case study I have studied and identified the key challenges faced by Engstrom management and employees. This includes a careful study of the company’s history and strengths and weaknesses. I will closely study the specific steps and remedies management applied to try to address the problems and challenges identified.