Engstrom Auto Mirror Plant Case Study: Motivating in Good Times and Bad Times

Engstrom Auto Mirror Plant Case Study: Motivating In Good Times and Bad Times

Symptoms

The following indications show that Engstrom Auto Mirror Plant has several issues that need close attention:

• Employees complaining and griping for months and their talk becoming hostile regarding the Scanlon Plan
• Complaints about having a bonus plan and not being paid for months
• Employees outside of the UAW(United Auto Workers) complaining
• Slow pace of productivity and product quality issues leading to late deliveries
• Workers complaint about bonus calculations leading to distrust and accusing management of “playing with the numbers” and the calculations being “full of bean-counter jargon” (Enstrom Auto Mirror Plant: Motivating in Good Times and Bad Article)
• Employees questioning the fairness of the plan due to supervisors being paid equal but “not working as hard”(Enstrom Auto Mirror Plant: Motivating in Good Times and Bad Article)
• Employees suspicious about the management team changing the ratios
• Low employee morale and trust issues with management

PROBLEM IDENTIFICATION

The problem for Engstrom Auto Mirror Plant is that they placed too much emphasis on extrinsic factors such as this Scanlon incentive plan as a part of the total rewards system to cultivate motivation of the employees and they failed to foster employees’ perceptions of organizational justice.  Studies show that managers are motivated to foster employees’ perceptions of justice because they wish to ensure compliance, maintain a positive identity, and establish fairness at work (Essentials of Organizational Behavior p. 111). However, there were clearly some disengagement issues between management and the strategies used to enhance productivity, performance, and motivation of their employees. Management’s scheme was to motivate their employees by coercing them to buy-in the Scanlon Incentive Plan so that there would be an increase in productivity, decrease in product-quality issues, and to save themselves money. The employees would now be rewarded strictly on a ratio-production per labor hour where the ratio varied between 30.5% to 68.2 % (Enstrom Auto Mirror Plant: Motivating in Good Times and Bad Article). Then after, employees began to displayed signs of inequities in procedural and distributive justice where the employees felt the Scanlon plan was implemented unfairly. Individuals arrive at a sense of organizational inequity through the comparison of ratio inputs (contributions) and outputs (rewards) to other workers within the organization (Adams, 1965).  Equity theory suggests individuals who perceive their ratio of inputs to be lower than the outputs received will feel guilty. In contrast, workers who perceive their ratios of inputs to be higher than the outputs received will feel angry (Thorn, 2010). In this case, the employees felt their work performance and contributions were being not remunerated with their pay. When the employees felt unfairly compensated, it resulted in the employees feeling hostile towards the organization which lead to underperformance of the group. Although Bent strived to create a turnaround, he put too much emphasis on extrinsic rewards to validate employee appraisal verses instilling and identifying a culture that fosters it. Based on the symptoms in this case, organizational justice perceptions influence job satisfaction and the Scanlon Incentive plan became the result of unmotivated employees at Engstrom Auto Mirror Plant.