Engstrom Auto Mirror Plant: Motivating in Good Times & Bad

Case Study

Engstrom Auto Mirror Plant: Motivating in good Times & Bad

Introduction

Organizational Issues

In Richmond Indiana, the privately owned company Engstrom Auto Mirror Plant has been in business since 1948 employing over 200 people. Engstrom is one of two companies to have a “Certified Status”. Having this status was highly important because it meant that all Engstrom Products could be used in auto-lines without having to go thru quality inspection (Beer & Collins, 2008). In its early years the company was successful, it had high profitability and high productivity levels. However, all good things must come to an end and so it did towards the end of the nineties.

In early 1990 the plant was being redesigned to incorporate new technology in the production line. The transition with the new technology was not smooth and created various issues such as, losing customers due to long delays, low employee morale and growing tension between management and employees. Ultimately the plant manager resigned due to lack of experience with the new technology and failing to find solutions to all the problems.

The new plant manager Ron Bent carefully evaluated the company along with the employees and noticed major organizational issues. Bent believed that strong incentives would get the employees to become more productive, efficient and improve the company culture. Bent proposed the Scanlon Plan which is the oldest organizational incentive plan. The Scanlon Plan consisted of employees receiving bonuses every month, monthly communication with upper management, and establishing a platform for employees to give suggestions. After some time, the plan had proven to be a highly-complicated compensation plan and issues from the past slowly started to arise again.

The three major organizational issues that will be addressed are as follows. Ineffective communication