Engstrom Motivation Case

Case name:

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

The case facts (brief summary; 2-4 sentences of what’s happening and who’s involved):

Manager Ron Bent encounters a crisis as he realizes the low quantity and quality output of his factory in face of an important deadline with Toyota. Bent had previously employed the Scanlon Plan to encourage workers’ productivity. But after the 2005 downturn in the industry, a significant lay off in the following year, and stop to the bonuses, Bent also lost company morale.

The issues/potential main problem (main issues in OB terms related to the module):

-EXPECTANCY THEORY/ EPO MODEL: Employees don’t feel that the effort they put into their performance is promising the desired outcome (bonuses).

-MASLOW’S HIERARCHY, HYGIENE FACTOR: The bonuses had become regular compensation, just like salary, to the employees. They see them as a hygiene factor, something basic and comparable to the physiological needs that shouldn’t be taken away.

-JOB CHARACTERISTIC: Over the years, workers don’t feel responsible for the wellbeing of the company as the once new technology, product, and manufacturing line have become old and repetitive. There isn’t a channel to foster creativity in the environment and challenge the status quo of the company for better.

-PURPOSE: Lack of intrinsic motivation for the employees to work hard. To them, there is no intrinsic satisfaction in producing automobile mirrors.

-GOAL UNDERMINING INTRINSIC MOTIVATION: Engstrom’s Scanlon plan was focused on cost saving and producing more per hour of labor spent. To make more units in the hour, employees might sacrifice quality of production to meet this goal.

-EQUITY: Employees feel that supervisors shouldn’t receive as much bonus since they’re not working as hard.

Three questions or comments I want to make in class:

1. What other focuses of the Scanlon Plan are there? Are there more examples of successes and failures?
2. Do the company shares of the reserve go to all the management? Or are they kept in the company for future investments/reserve?
3. How could the company explained the bonus calculations better to prevent distrust?

Additional information/Relevant theories & concepts that may apply:

-COMMUNICATION: Over the years, the monthly meeting with employees stopped being effective. Bent had to rely on Joe Haley, his assistant, to get to know what his employees were really thinking. If communication between employer and employee was proper, Bent could have prevented or at least foreseen the problems he’s facing now.  

-Calculation for Scanlon was not explained enough to the employees, making them distrust their supervisors and accusing supervisors for playing with the numbers.

-Bent didn’t recognize the downturn of the industry in a positive way. He used the closing of the plant as a passive aggressive threat to exhort workers to work productively in the most difficult time. Like Lincoln Electrics, he could have warned his employees to save their bonuses in the previous year wisely and created a department for employees to come up with new product ideas in the time when sales orders dropped.