Engstrom Auto Mirror Plant Case Study

2.2 Engstrom Auto Mirror Plant Case Study-Motivating in Good Times and Bad Times-Milestone 1

Introduction

In 2007, Engstrom Auto Mirror plant, a privately-owned business based in Richmond, Indiana that manufactures mirrors for trucks and automobiles is facing a crisis. They have several issues that need attention.

Symptoms

• Decrease in sales in 2005 resulted in layoff of 46 people

• 2nd year of downturn (2007) productivity had fallen to all-time low and product quality issues had started leading to late deliveries.

• The decrease in productivity lead to higher costs, more lower quality issues and dissatisfied customers and a decrease in sales and profits.

• Employees formed a distrust of management over bonus calculations. Accusing management of playing with the numbers, “moving the carrot” and the calculations having too much jargon that they didn’t understand.

• Implementing the Scanlon Plan but not fully explaining the execution of it. The bonus was a reward for their productivity and reliability and not part of their regular paycheck which the employees thought it would part of weekly check.

• Complaints that the bonus plan hadn’t been paid in months.

• The Scanlon plan is influenced by many factors such as length of month, sales, overtime and product returns which the employees failed to understand. (Beer, Collins, 2008).

• Any new technology or equipment shouldn’t be started until the employees understand what effect that it can have on their bonus’s due to the time it can take to implement them.

• Employees complaining for months and becoming hostile regarding the Scanlon Plan.

• Employees outside of the union complaining.

• Employees complaining about the fairness of the plan saying that supervisors should have a reduced bonus because they were “not working as hard as we are”. (Beer, Collins, 2008).

• Low employee morale

Problem Identification

The problem for Engstrom Auto Mirror Plant is that they put