Introduction: issues with what they are being

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begin my analysis of the case study, “Engstrom Auto Mirror Plant: Motivating in Good Times and Bad”
there are many factors that affect their organization. Some of the issues that
were discussed in the case study where, low morale amongst employees,
unmotivated workers and low production. The case study begins with discussing
the issues the plant is having with low productivity rates and unhappy employees
and customers. As the case continues to build, Collins and Beer discuss the
Scanlon Plan. When workers first heard of the Scanlon Plan they were very
excited about the news of being able to receive bonuses based on higher work
quality and efficiency.  After being
under the Scanlon Plan for years, bonuses begin to deteriorate and things at
the auto plant begin to turn back to how they were before the plan was put into
effect. Management placed a lot of their focus on the Scanlon Plan improving
their productivity through an incentive program for employees.  They wanted employees to buy into the
incentive program to improve their productivity and save themselves (company)
money in the long run. Based on how management went about trying to improve their
productivity demonstrates the role of a custodial leadership style. The
custodial leadership is described as “an order to show emphasis on material
rewards, security, and organizational dependence” (Newstrom, 2015, p.38) Although
there are many organizational issues within the “Engstrom Auto Mirror Plant”
the root cause consist of lack of trust, poor communication and fear of losing
ones’ job.




Root Cause Analysis:

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Lack of trust is a major issue at the
Mirror Plant before and after the Scanlon Plan was put into place. Management
can have effective communication skills and convey all information to coworkers
regarding the state of the business and upcoming information, employees can
still have issues with what they are being told. “Although all employees
recived a detailed explanation of the process and could easily access the bonus
calculations, some employees thought that the company might be “playing with”
the numbers.” (Beer 5) Trust is commonly defined as “the willingness of a party
to be vulnerable to the actions of another party based on the expectations that
the other will perform a particular action important to the trustor, irrespective
of the ability to monitor or control that other party” (Mayer, Davis, & Schoorman,
1995, p.712). The lack of trust was created when employee wages and bonuses were
being changed which brought about the idea that they were being shortened.
However, the issues with wages would have been an issue whether the Scanlon
Plan was put into effect or not.

Newstrom (2015) gives a great explanation
of mutual trust, “joint faith in the responsibility and actions of the parties
involved” (279). The employees at the Mirror Plant don’t have the faith in the
management which causes the business to suffer the way that it does. In the
beginning of the study Beer and Collins stated that “Bent knew that Haley, in
just four months at the plant, had developed good relationships with several workers
and could pick up useful information about the mood” (Beer 1) Haley was about
to receive information that workers were not satisfied with the Scanlon Plan.
Lost of trust as discussed in Newstrom’s works displays that employees can’t
depend on their job to take care of their needs. Employees are working hard to
meet production and increase performance but are not being rewarded for their
hard work. For the plan to fix the trust issue, management and employees would
have to devise a plan together that will be enforced with rules and regulations
that both parties would abide by.

Another root cause within the
organization is the fear of job loss. Job loss started after the Scanlon Plan
was put into place and the plant was forced to lay off due to turn in the
economy in 2006. “The layoffs, when they finally occurred in mid-2006, shook
the confidence of even the most fervent Scanlon proponents among the workforce”
(Beer 6). Between the layoffs and the poor benefits of the Scanlon Plan,
employees began to become concerned regarding their jobs and security. When one
is mainly concerned about whether they will have a job tomorrow, it takes a
toll on their performance. Their performance is effected because they don’t feel
the sense of security nor they know what the next step is if things were to
turn for the worst. Many individuals work a job depending on that one source of
income to provide for them and their families.

Between not receiving
their bonuses and being laid off is showing other employees negative
reinforcement. Negative reinforcement “is not the same as punishment, which
normally adds something unfavorable” (Newstrom 127). Seeing others laid off
can be seen as punishment depending on which side of the fence you are looking.
One could take being laid off as a sign that if you don’t do what’s asked then
you have the possibility of losing your jobs as well. For some seeing other
co-workers laid off means their room to move around, maybe move up a position of
more money to given out. Layoff is important when it comes to discussing the morale
and production factors of the company, and fearful workers will have a hard
time getting their work done or upholding the guidelines of performance and
production when their concerned about their job.

was one the things that were implanted when the Scanlon Plan came into the
picture. Management held a meeting to discuss the terms and conditions of the
Scanlon Plan and made sure all employees were fully aware of how the program
works and that the incentive plan was based off production and how payouts were
made. However, lack of communication is still viewed as a root cause when it
comes to Engstrom. “Some workers accused management of creating a ‘moving
carrot,’ despite their explanations for the reductions” (Beer 6). 
Communication as stated by Newstrom is, “what the receiver understands, not
what the sender says” (Newstrom, 2015, p.54). Even with the detailed information
given from management there was still a misunderstanding of the Scanlon Plan. The
employees didn’t understand the Scanlon Plan as whole, they only knew that it
was a incentive plan which means more money if I get production up. As we here
in America say, the fine print wasn’t clear. Communication was an important factor
for the plan because employees wasn’t understanding why their bonuses were
being reduced and why they haven’t received payment.


            The struggles that Engstrom faced
stemmed from the lack of trust, lack of motivation and poor communication that
was displayed between employee and management. Building a relationship of trust
between employee and management goes hand and hand. Without one the other doesn’t
exist. Having a lack of motivation, being that the Scanlon Plan was ineffective
plays a negative impact on the role of production and performance. According to
Maslow’s Hierarchy of Needs, “Employees are more enthusiastically motivated by what
they are currently seeking than by receiving more of what they already have”
(Newstrom, 2015, p.122). Employees are already receiving payment for their work
or thinking process. Implementing another incentive plan wouldn’t change the performance
or production levels of the plant being that the Scanlon Plan has failed them
once. Maslow’s Hierarchy of Needs models the variety of needs that employees
have they can be met. Money is not always the number answer when it comes to
solving issues within the work place.



























Newstrom, J.
(2015). Organizational behavior: Human behavior at work (14th ed.). New York, NY:

R.C. Mayer, J.H. Davis, F.D. Schoorman
An integrative model of organizational trust

of Management Review, 20 (3) (1995), pp. 709-734.


Michael, and Elizabeth Collins. “Engstrom Auto Mirror
Plant: Motivating in Good Times and Bad.” Harvard Business
School Brief Case pp. 1-8, April 2008.



Categories: Case Study


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