Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Engstrom Auto Mirror plant, a privately-owned business that mass-produced mirrors for trucks and automobiles in Richmond, Indiana since 1948, had seen its fair shares of ups and downs through its time in the manufacturing industry. But now with over 200 employees, almost 20% of which manager, Ron Bent had been forced to lay off following the 2005 downturn that hit the commerce, employee satisfaction and engagement is practically nonexistent, and this is causing the company’s sales and productivity to suffer considerably. When Bent commenced working for Engstrom in 1998, his attempt at a turnaround all hinged on one strategy that had in fact worked for countless companies before, a Scanlon Plan. This approach is a gain-sharing program that pursues the involvement of employees in an organization’s decision-making process because any savings in the production costs, is then split between the workers and the corporation. The company saves money and not only do employees earn bonuses, they feel valued because management is listening and then implementing their suggestions; it’s a win-win for everyone. While this had seemed like the perfect idea for Engstrom, and it in fact was for a good seven-year period, things eventually took a turn for the worse as employees started expecting the bonuses and would react in anger when they were not received. Employee involvement shrank as the number of suggestions to management to better the factory, dropped from hundreds year to a measly 50. Overall, employee satisfaction and enthusiasm faded. Through the whole catastrophe, two steady issues were heard in the complaints from Engstrom’s workers:

• They did not believe their bonus calculations to be accurate. Although employees received a thorough account of their wages, some felt the numbers were being manipulated and others perceived the verbiage that was wrapped into the intricate calculation as being suspicious.

• Some labors felt that supervisors should have received a proportionate bonus because they were “not working as hard as we are.”

Essentially, what one of the route issues, mistrusting of bonuses, boils down to is a total breakdown of communication between management and employees. In the beginning, employees were receiving performance feedback through their bonuses; the more efficient they were in their work, the larger their monetary reward. Unfortunately, the longer this trend continued, the more the employees felt entitled to the bonus, almost as if had permanently incorporated itself into their base pay. When workers