Case Study Of Engstrom Auto Mirror Plant

Engstrom Auto Mirror Plant has been experiencing a severe decrease in productivity, product quality, and employee motivation in several recent quarters. The company was initially able to improve performance by instituting the use of the Scanlon plan, but the improvements were temporary and the company has continued to decline since. There are a couple of root causes which have contributed to the decline in production, motivation, and quality; communication, and trust seem to be at the top of those issues. The success and morale for any organization relies on clear and concise communication. When Engstrom first implemented the Scanlon Plan there was many employees who voiced a distrust for how the bonuses were calculated and also the fact …show more content…
To begin this process a company meeting and potentially even a newsletter for all employees should go out. During the meeting discuss the current state of affairs and explain how the bonus system has obviously become broken. Instead of relying on the complex explanations that obviously failed to alleviate concerns before; explain the bonus computations in a simplified method making it easier to understand. To repair the issue of the bonus becoming an expected monthly entitlement in an employee’s wages it might be beneficial to change the bonus to pay out quarterly, bi-annually, or annually based on a percentage of the profit in that period. As the current bonus payout stands it appears many employees have likened the bonus to an increase in income, which according to the marginal propensity to consume, the more income an individual has the more they spend versus save (Stone, 1938). Since the bonuses were being paid out regularly monthly for so long it was likely tied into the employee’s personal budgets, so when the pay stopped it created a difficulty in their budgets. As a result, many would feel their needs not being met according to Maslow’s hierarchy of needs (Newstrom,