Motivation: Engstrom Auto Mirror Plant

Case Study Memo  #1

From:                Cindy Cendana

Discussion:        14751

Re:                Case Memo #1 Motivation: Engstrom Auto Mirror Plant

Engstrom Auto Mirror Plant is a privately owned business manufacturing mirrors for trucks and automobiles. For the last years, problems regarding the declining of productivity and quality have been attacking this firm. The sales are declining, workers are starting to be dissatisfied by the lack of bonus, there are concerns about job security, and there is also the problem of unfairness and equity among the workers. This particular company has been using Scanlon Plan as an incentive for the employer. Scanlon Plan has been used by Engstrom and it was proven to be effective. Firstly, Scanlon plan increases the collaboration and cooperation between workers. It also capitalizes on employees’ intrinsic motivation and it encourages workers to work smarter and not just merely harder. In order for Scalon to perform well at the plant, communication is highly needed, workers are encouraged to commit to plant vote, and effective supervisors and managers are also one of the crucial elements.

However, Scanlon plan may not be working for the long term in this company. Bonuses are not being earned, plan relies too much on bonuses, and it is definitely too complex for the workers to understand. It needs regular updating and it does not guarantee that every worker’s behavior will change. The central issue of this company focuses more on the declining quality of the mirror and the diminishing amount of production. The issues are mainly interrelated. The downturn in the industry causes revenue to go down, providing less money to be given out as bonus for the employer. This leads to the dissatisfaction and unfairness among the workers. If this is to be continued, the brand image of Engstrom will definitely go down and future losses might emerge.

Alternatives should be considered by Ron Bent get the plant back on track. The first alternative will be the use of Improshare plan, which is a form of gain sharing plan where a % of savings is shared with employees when the actual productivity is greater than the baseline. The second alternative will be to use individual-based incentives. The other alternative will be to take Herzberg’s theory of two dimensions of employee satisfaction into an account. The manager should deal with the hygiene issues (company policies, supervision, salary, interpersonal relations, working conditions) to avoid dissatisfaction, and focus on the motivators factors achievement, recognition, responsibility, advancement, work itself) to improve workers’ satisfaction.