The Engstrom Auto Mirror Plant: Motivating Through Good Times and Bad

The Engstrom Auto Mirror Plant:  Motivating Through Good Times and Bad

Latrice Jones-Bey

OL 500 Human Behavior in Organizations

Instructor: Dr. Kevin Gibbons

July 29, 2018

Introduction

Engstrom Auto Mirror Plant began operating in 1948 as a privately owned manufacturer of truck and automobile mirrors out of Richmond, Virginia (Beer & Collins, 2008).  They experience 50 years of success, but in the late 1990’s became unprofitable due to low productivity leading to low employee morale.  In 1998, under new leadership, plant manager Ron Bent, the Scanlon Plan was introduced to reinforce teamwork, team motivation and workgroup cooperation while focusing on productivity and cost saving initiatives (Beer & Collins, 2008). In spite of this, in 2005 productivity decreased again, along with an increase in product quality issues and an increase in manufacturing cost causing deliveries to be late.

To understand the cause of Engstrom Mirror Plan’s repeated decrease in productivity we must understand the dynamic of the people and the organization. Understanding organizational behavior helps to identify ways that people can act more efficiently (Newstrom, 2014).  The Engstrom Auto Mirror Plant’s major organizational issue and the factor that kept them from achieving the success that they previously had was inconsistent and inefficient communication from management and the employees.  Unresolved organizational issues can negatively change the culture of an organization (Pirraglia, 2018).  

Effective and ineffective communication has been the key factor in the rise and fall of Engstrom Auto Mirror Plant which in turn caused and increase and decrease in productivity.   Communication is the transfer of information and understanding from one person to another with the goal of understanding the intended message and acting on it.  However, if there are obstacles that prevent the receiver from decoding the message, the entire two-way communication process gets broken down and the communication is ineffective (Newstrom, 2014).  During the late 1990’s productivity was low and to increase productivity new technology was incorporated into the production lines.  However, management lacked the knowledge needed to find solutions they faced with this technology which caused long production delays.  The plant manager could not or would not communicate the financial grievances to the union, causing customers to become frustrated and the employees moral decreased.   The plant manager’s personal barrier, primarily emotionally, kept him for communicating the company’s issues with the union.  His perception of the union was not a positive one, he believed that the union was “laying in wait” for him to make mistakes and “wanted to hurt management financially on grievances” (Beer & Collins, 2008).

During the early stages of the Scanlon Plan, management was effectively communicating with the employees through monthly meetings where they were completely transparent about the direction the company was headed.  This transparency allowed the employees to feel valued ad engaged which increased their commitment, satisfaction and overall motivation.  These characteristics lead to an increase in productivity.  Another example is that employees were encouraged to submit suggestions for improvement which were often implemented. This sense of power and belonging satisfied the employee’s secondary needs, which are social and psychological (Newstrom, 2014).  This type of communication was an example of upward communication, were both parties are able to receive, accept and give feedback to information with it flowing from the lower levels to the upper levels. This allowed the company to be successful and productive because employees were able to express their ideas, feeling and requirements and for management, it is a source of information for business decisions and alerts them about changes in the organization (Weinclaw, 2013).

  However, in 2005 when productivity decreased, communication changed between management and the employees.  The employees were no longer making suggestions, as their rate of submission went from 305 suggestions to only 50 and management was not clearly stating the cause of the discontinuation of the bonuses.  This ineffective communication was also evident in that fact that the employees did not completely understand the interpretation of the calculations for the bonuses. What was unclear to them was the cause for reductions and there was no clearly defined expectation of the employees (Insert a Theory).