Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Case Study Analysis Final Project:

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

MarTika White

Human Behavior Organizations

Southern New Hampshire University

Abstract

        It has been rough for the Engstrom Auto Mirror plant in Richmond, Indiana. They were a relatively small business that manufactured mirrors for trucks and automobiles. Employed at the plant were 209 people. Ron Bent was the plant manager at the plant and along side with him was his assistant Joe Haley. They kept the employees up to date every Fridays during their Friday meetings, but on May 14, 2007 it was different. The two men had faced a crisis. The crisis was that the employees wanted to do away with the Scanolon Plan, employees  productivity was declining, concerns of product quality, and key customer business relationships were at risk.

        Once, Ron Bent thought to himself about everything he thought back to 1998 when he faced a similar crisis. This is when the Scanolon Plan even came about which was an employee incentive program. This plan was the actual turnaround to get things back to how they should be since the employees had no morale at that time either.

        With business being good over a seven year period sales had quadrupled. In 2005, a downturn hit the industry. In June 2006, Ron Bent was forced to lay off 46 of his 255 employees, in which; the remained employees hadn’t received a Scanlon bonus in seven months. Which brings him to if he should do away with the Scanlon plan, change the plan, or look elsewhere for solutions to sustaining productivity and ensuring quality until the downturn ended.

Organizational Issues

        With Engstrom Auto Mirror Plant being successful for nearly 50 years the success starting going down hill in the late 1990s. During this time, the plant became very unprofitable and was try their best to stay in business but was struggling. The production lines began to incorporate new technology, increasing production time which made frustrated customers and even resulted into losing some. In 1998, the plant manager at that time resigned. He didn't understand nor have the experience of the new technology, in which; he needed in order to quickly solve problems. With the plant changing he just wasn't willing to adapt to it. This resulted in low employee morale and productivity. Ron Bent hired as the new plant manager was assigned to turnaround Engstrom Auto Mirror Plant, and of course to save the company. This is when Ron Bent implemented the Scanlon Plan. This is an organization wide incentive program. This plan was was the main focus for the turnaround in which it did turnaround the employees morale, productivity, profitability, and the success.

        Now to May 2007, Ron Bent is starting to face basically the same company crisis again. The numbers are declining. Sales are dropping and there are product quality issues. There is even a risk at losing the business clients one being Sam Martinez. He is one the plant’s top clients and the manager of the assembly line at the Toyota plant. Plus, Joe Haley has heard the employees complaining and getting more upset about the Scanlon Plan. With everything happening Ron Bent needed to think of a plan to save the company once again.

        He started looking back through the years trying to find the cause of everything. He focused more so on the Scanlon Plan because it worked great four seven years, but now its not anymore. He felt as if maybe thats why they’re acting out because in seven months they haven seen a bonus. Ron Bent then gives himself three options: get rid of the Scanlon Plan, change the plan, or to look elsewhere for better solutions.

Analysis

        The Scanolon Plan does have a major impact on the plant, but if they continue to use the plan that doesn’t mean it would save the company.  If Ron Bent get rid of the Scanlon Plan, change the plan, or look elsewhere for better solutions it would still be money going out that they may can’t afford. With the employees showing their anger about the plan of course if it continues on the track it was at the time it would influence them to do their job better. The key thing is that it want solve the employee morale. “There is only one key to profitability and stability during either a boom or bust economy: employee morale (Sirota & Klein;2013).”