Engstrom Auto Mirror Plant: Motivating in Good Times and Bad
1) Begin by identifying the key problems/issues for Engstrom, and then identify key theoretical contributions that a Scanlon plan should bring to a company. Is Scanlon a good solution for Engstrom’s challenges? Include theoretical concepts covered in the textbook that are relevant to the case in your discussion.
Engstrom Auto Mirror Plant was facing several problems and issues. The main problem that the company faced was the motivational breakdown of the employees during a downturn in the Auto Mirror Industry. During that downturn, the company was unable to ...view middle of the document...
The implementation of this plan for any company would help increase productivity, motivate employees, and overall improve working conditions. In Engstrom case, the Scanlon Plan was working to perfection. Employees were satisfied and motivated and productivity was a pick, but with the crisis changes were needed to be made to the plan to keep the employees satisfied. The lack of planning by management during the crisis led to the issues that I mention earlier in the previous paragraph. The Scanlon Plan was a good plan for Engstrom, but managers should have been monitoring the plan closely in case of sudden changes in the industry. With the challenges faced by Engstrom, managers (Bent) should start looking at a different plan and get rid of the Scanlon Plan due to all the issues that came up with the employees.
2) What organizational factors at Engstrom impacted how well Scanlon performed at the plant? Generalize to other organizations: how are pay-for-performance systems influenced positively or negatively by other organizational factors?
Before the crisis, the Scanlon Plan was very effective at all levels of the organization. The downturn in the industry was the external factor that made the Scanlon plan questionable in the organization. Many organizational factors have impacted the way the Scanlon Plan performed at the plant during the crisis. A factor that impacted the Scanlon plan is the variable-pay program “bonus”. The bonus developed by Engstrom was a good performance base incentive for the workers, but the calculations for the bonus wasn’t clearly define and stable. Managers were constantly altering the calculation for the bonuses. During the industrial downturn the employees lost trust in their management due to the instability of the bonus calculation method. Bonuses were lowered due the crisis, but the employees saw it as management “playing with” the numbers. Another organizational factor that impacted the Scanlon was the employees’ motivation. Even when productivity was at its highest the company didn’t reach full employee motivation, but with the crisis it had gotten worst. Like mentioned in the previous answer, the question of fairness had a big impact on motivation. When you compare the Job design of Engstrom with the Job Characteristic Model (JCM), you can see a mismatch because certain parts of the JCM were missing.
Pay-for-performance systems can perform really well in good and bad times in an organization if implemented thoroughly. They can also fail horribly if necessary changes are not made in time of crisis. Organizational factors can have great influences on pay-for-performance systems. Employees can view the system as unfair and that will decrease motivation and impact productivity. In the case of sales environment the system can build a competitive relationship between sales representatives therefore increase sales for the company if the competition is properly managed.