Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Engstrom Case Study Analysis

Milestone 1: Introduction

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Jeff Bishop

Southern New Hampshire University

        Engstrom Auto Mirror, a mirror manufacturing plant has had recent success with their Scanlon employee incentive plan. The goal of the Scanlon plan was to “reinforce teamwork and cooperation across work groups while they focus attention on cost savings and motivating employees to ‘work smarter, not harder’” (Beer & Collins, 2008, p. 536). A bonus would be given out monthly if the production plant met certain requirements. “Plants like Engstrom were focused on cost savings, which means producing more per hour of labor spent (Beer & Collins, 2008, p. 536). If the plant produced more per hour of labor spent then a monthly bonus would be given out. This gives incentive to the production employees to increase productivity in order to receive a bonus.

        Although this incentive plan worked at first it was not sustainable practice. The increase in productivity has come to a halt and many lay offs occurred due to the failing profit margins. There are three distinct organizational issues that need to be addressed.

1. A significant decrease in employee suggestions. “Over time, however, enthusiasm waned and dissatisfaction grew with certain aspects of Scanlon. Suggestion rates dropped precipitously, down from hundreds to 50 a year “(Beer & Collins, 2008, p. 540). Employees lost their desire to invest in continuous improvement. With a lack of suggestions this leads to the belief of a deeper underlying issue.
2. Distrust of bonus calculations. There was a disconnect between management and production employees and felt “suspicion whenever the management team changed the ratio, which occurred four times between 2000 and 2005 (the final reduction was to 32.6%)” (Beer & Collins, 2008, p.541). Because of the changing ratios to lower the amount of their bonuses, the production employees felt that the management team was not looking out for their best interest. Although the management team attempted to be transparent in their communication (Newstrom, 2015, p. 55) the production employees did not understand what the sender said which by definition according to Newstrom (2015) is not effective communication.
3. Question of fairness. According to Beer & Collins (2008) “Some employees felt that supervisors should have received a reduced bonus because they were ‘not working as hard as we are.’” I believe this is the biggest cause for concern at the Engstrom Auto Mirror plant. The incentive to innovate and do better, and perhaps provide employees suggestions diminishes over time because active employees are during the work while passive employees are reaping the benefits. This is significant breakdown in organizational structure. This is a huge cause for lower employee morale; people will not thrive in the socialistic approach to production.  

Throughout the rest of the case study, root causes will be found and expounded on for the three identified organizational issues specific to Engstrom Auto Mirror. Topics such as communication, motivation and organizational structure will be investigated as to how they relate to the aforementioned issues. Issues such as a decrease in employee suggestions, distrust, and questioning of the fairness of management, although are major issues, are often the symptom of a deeper issue. Treatment of the symptom can be beneficial but finding the root cause may eliminate the symptoms and keep any further symptoms from coming to the surface.