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Engstrom Auto Mirror Plant: Milestone 1

By:   •  March 11, 2018  •  Case Study  •  844 Words (4 Pages)  •  269 Views

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Case Study Analysis of Engstrom Auto Mirror Plant-Milestone 1

Micaela Thompson

OL 500 Human Behavior in Organizations

Dr. Dave Fountaine

2/26/2018

Case Study Analysis of Engstrom Auto Mirror Plant: Milestone 1

        A privately-owned company, Engstrom Auto Mirror Plant was opened in 1948 in Richmond, Indiana manufacturing mirrors for trucks and automobiles with 209 employees. There were multiple issues that arose over the years that led to a productivity crisis for the company. The plant operated smoothly throughout the 1990s with high profitability that began to decline towards the end of the decade. In 1998, the consequences of redesigning its production lines to incorporate new technology became apparent. The transition was not smooth and proved rather difficult resulting in alienating customers and leaving them angry (Collins & Beer, 2008).  The then plant manager lacked a sophistication need to find solutions to increase productivity, unable to handle the conflict anymore he resigned[a].

        Ron Bent was brought onboard in an attempt to turnaround the situation for Engstrom. Through his previous experience Bent knew an incentivized approach could improve productivity and motivate the workers. After evaluating the company for some time, he decided the Scanlon Plan was the most beneficial for the workers and began to put the plan in place. For seven years the incentivized plan paid bonuses to the workers and productivity increased 4 times over (Collins & Beer, 2008). As motivation began to diminish so did productivity and the bonuses. The company was unable to pay bonuses for 7 months, leading to Ron needing to find a solution to the company’s possible closure and employee dissatisfaction.

There are quite a bit of organizational issues that plagued Engstrom, leading to it’s possible downfall. Newstrom (2015), defines Organizational Behavior (OB) as the systematic study and careful application of knowledge about how people—as individuals and as groups—act within organizations (p.12). The three organizational issues that will be addressed in this analysis is downward communication, mistrust in the management leading to diminished motivation, and a false sense of security and dependence strictly on the Scanlon Plan to improve productivity.

Upon Ron Bent’s tenure and implementation of the Scanlon Plan, communication was a major key in its success among the employees they were excited to give feedback that management listened to and attempted to implement. Eventually however, complacency began to sink in with management and employees. Suggestions began to dwindle, especially when bonuses slowed down. With gaining frustration of not receiving bonuses for 7 months in a row, despite what management told employees about reductions, employees accused management of creating “moving carrots” (Collins & Beer, 2008). Underlying mistrust in management from years before began to show up again. While management had monthly meetings to communicate, the massage put out was not what was received, there was a disconnect., what management saw as explanations, employees saw as excuses. They were not on the same page.

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