Final Submission Engstrom Auto Mirror Plant and Work Analysis Case Study PDF

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Engstrom Auto Mirror Plant and Work Analysis Case Study Nakeia Banks Southern New Hampshire University

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Abstract Engstrom Auto Mirror Plant was faced with extremely low production levels and employee morale which was causing financial hardship for the company. The plant manager, Ron Bent, hoped to reverse the decline of workplace productivity and motivation. In Ron’s attempt to reverse these issues, he implemented an incentive program called the Scanlon Plan in which he had hoped would motivate employees to reach set goals and increase productivity and sales. Though the plan worked initially, it would prove to only be a temporary solution. When faced with varying organizational issues, the company began to face the same issues over again: lack of employee engagement, motivation and production. By reviewing and analyzing the impact of these issues, I will be able to apply human behavior theories and concepts to develop strategic action plans that will help revive the company from its downward turn. I will also be able to use my own personal work experience to apply these same theories and concepts to determine root causes and create improvement outcomes that are a direct remedy to the organizational issues.

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Introduction Engstrom Auto Mirror Plant experienced productivity issues with its employees that led to a decrease in sales over an extended period of time. In an attempt to reverse this downturn, a plan was introduced that would help motivate its employees to work as a whole organization and focus on one common goal in production and productivity which in turn would provide them significant pay bonuses. The Scanlon Plan was a way to incentivize the employees of the plant to work as one entire team for one common goal: the success of the company. The Scanlon Plan is a “systematic approach to enhancing organizational effectiveness through a formal participation program and a financial bonus” (White, 2017). By implementing the Scanlon Plan, it was the plant manager’s hope that the plant workers would be interested in new methods and new machinery when they are given the opportunity to be a part of the a company-wide program that allowed them to submit their own suggestions for improvements within the company. The logic behind this process was to empower employees. Empowerment is any process that provides greater autonomy to employees through the sharing of relevant information and the provision of control over factors affecting job performance (Newstrom, 2015). This would lead to both personal satisfaction for the employee that would lead to results that benefited the factory. The Scanlon Plan helped ease tension between employees as well as helped the company achieve higher production numbers, profit and quality standards. The plan also gave a significant financial reward to the employees. These financial rewards were included monthly with their standard paycheck. Though this plan seemed to be the best plan for the company and its employees at the moment, issues would soon arise that would cause this plan to be useful for only a temporary moment of time.

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One issue that arose after the plan was instituted was the employees trust in calculations of the bonuses. With the development of the base ratio, that many considered a very complex calculation, employees felt the numbers were being “played with.” Production prior to the implementation of the Scanlon Plan was measured by the total number of units produced. With the Scanlon plan, production was measured by a number of different factors, which made the employees feel like even their best numbers produced was not giving them the bonus they felt they deserved. The wage incentive that was once a motivational factor for the employees to be more productive was now causing uncertainty in the employees and the work they were performing. Newstrom notes that when utilizing wage incentives, disruptions in the social system may lead to feelings of inequity and dissatisfaction. This explains why many of the employees at Engstrom felt their bonus pay was not sufficient to the amount of work they put into the company. Another issue that arose was the employees thoughts on how supervisors did not deserve the same bonus that they received as employees as they felt the supervisors weren’t putting in the work that they were. They felt supervisors were not working as hard and thus deserved a smaller bonus. With these issues of distrust and doubts of fairness, employees no longer felt the Scanlon plan was in their best interest. This type of attitude caused employees to be less dedicated to the company thus less dedicated to the success of the company. Attitudes are the feelings and beliefs that largely determine how employees will perceive their environment, commit themselves to intended actions, and how they will behave (Newstrom, 2015). This comes back to relate to their overall job satisfaction regarding their work and how they felt regarding the hard work they put in as opposed to that of what they felt their supervisors contributed. If the workers are not

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satisfied with their job, they become less involved, less committed and overall less productive. This is turn affects the company as a whole. There are several ways to deal with the downturn of motivation and production within the company. The focus cannot be solely on the employees nor can it be solely on the company. There needs to be a plan in place that is in the best interest of the company as well as its employees. Some of the options to reverse the downturn include: 1. Re-evaluate the use of the Scanlon plan – has it proved to be beneficial or more harmful. Can it be manipulated in a way to better serve the company and its employees while continuing to incentivize the employees to work smarter? 2. Remove the Scanlon plan completely – come up with a new incentive plan that will better motivate the employees of the company. 3. Gain the trust back of the company employees – have team building events, institute an open door policy, incorporate communication strategies that allow employees to feel their voices and concerns are being heard. 4. Set employee goals – allow these goals to be the determining factor of if an employee will receive the bonuses that they feel they deserve. By re-evaluating the use of the Scanlon plan, the plant manager can make an executive decision on revising the plan to better suit the needs of the company. In order to re-evaluate the Scanlon Plan, he can send out a company-wide survey to all of the plant employees in which he can get anonymous feedback of what the employees think of the plan - whether they feel the plan is beneficial and if the plan has motivated them to be more committed to the company and more productive in the their job role. In reviewing the responses to the survey, Ron Bent will be able to manipulate the plan in a way that best fits the needs of his employees and the company. If he

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realizes after reviewing the survey responses that the plan is only hindering the production and motivation of his employees, he can also make the decision to remove the plan completely and work on a way to better incentivize his employees. He can choose non-monetary incentives such as individual and team recognition and praise. For many disengaged workers, non-monetary motivations such as words of praise mean more to an employee than small bonuses (Smith, 2018). The plan manager could also reward employees with company swag such as coffee mugs or water bottles or even invest in the employees training or development by offering courses that will improve engagement, leadership skills, etc. These investments, though beneficial to the company will also be beneficial to the employee as he will be able to further his career with new skills learned through these courses. If Ron Bent would like to gain the trust back of his employees who have questioned the accuracy of these bonuses and how they are calculated, he could offer one-on-one time with management to go over their concerns and discuss these calculations and any changes that may occur in more detail to help them better understand the numbers. This time could also be used to discuss the employees’ long-term and short-term goals and how management can help them reach their full potential. When managers utilize an open-door policy it encourages the employees to come speak to the manager or leader directly about issues or concerns. The manager himself could take it a step further by walking through his own door to come speak directly to the employees individually which reinforces the open-door policy (Newstrom, 2015). This type of communication will help rebuild the employees’ trust towards their leaders and the company and allow them to feel like they have a voice and are actually cared about as employees. Root Cause Case Study Analysis

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Engstrom Auto Mirror Plant experienced productivity issues with its employees that led to a decrease in sales over an extended period of time. The Scanlon Plan was a way to incentivize and motivate the employees of the plant to work as one entire team for one common goal which was the success of the company. Though the Scanlon Plan worked initially and resulted in an increase of production, it soon was no longer a motivational factor for its employees which led to a downturn in the company and its production. By examining the root cause of the issues the plant faced, we can learn more about what caused this decline in productivity and motivation. When these issues have been determined, we can then focus on solutions that will help reverse said affects and prevent the same issues from arising again. Two root causes of known organizational issues that played a role in the decrease in motivation and production were lack of trust as well as the employees’ attitudes in regard to the Scanlon Plan. The Scanlon Plan, as mentioned, was an attempt to help incentivize the employees to increase overall productivity within the company. The plant manager hoped for a functional effect with the introduction of this plan which would help the employees be more interested in incorporating new methods and new machinery for a more successful business. Newstrom notes within the text that in order for employees to show functional behaviors, they need to receive clear explanations and promises of rewards and the company also needs to receive a commitment from the employees. The Scanlon Plan attempted this by rewarding its employees with bonuses should they meet their productivity rates. These bonuses were based on the company’s base rate which was determined to be a ratio of payroll cost to sales volume of production. The calculations soon began to be questioned by the plant workers as they stated that the calculations were too complex to understand which led them to believe they were simply unfair.

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Another aspect of the employees distrust within the Scanlon Plan was that the base ratio would change several times over the course of 5 years. Employees began to believe they were chasing a moving target with no end in sight. The lack of trust from the employees towards the Scanlon Plan eventually lead to the lack of trust towards the managers – the behavioral integrity of their managers came into question. Employees view their managers’ behavioral integrity as them keeping promises and truthfully representing themselves and their values in communications (Kannan-Narasimhan & Lawrence, 2012). The plant manager became focused solely on productions numbers which blinded him to what the employees needed from him as a plant manager. When production goals were not being met, he ended up letting go of several of his employees. This act began to worry the employees and they no longer felt a sense of job security and felt they were no longer an asset to the company, but merely an unnecessary cost that needed to be cut. His employees were what made the company successful and if they were not happy, then their commit and motivation would decline, which ended up being the result. Maslow’s hierarchy of needs theory suggests that there are 5 levels of human needs: physical, safety and security, belonging and social, esteem and status, and self-actualization and fulfillment needs (Newstrom, 2015). As the plant manager, Ron Bent needed to ensure these needs were met for his employees in order to encourage more engagement from them in regard to production. Employee attitudes were another root cause of organizational issues that led to the downturn and lack of motivation within the company. Attitudes are “feelings and beliefs that determine how employees will perceive the environment, commit themselves to intended actions, and ultimately behave” (Newstrom, 2015). Many employees had begun to feel used to the bonuses they were receiving as a result of the Scanlon Plan instead of viewing it as a reward

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for work that went above and beyond what was expected of them. The Scanlon Plan was something the employees had grown accustomed to, so they no longer felt motivated by what it had to offer. Employees are more motivated by what they are seeking than by what they already have (Newstrom, 2015). Since his plant workers had grown accustomed to receiving the bonuses, they were no longer motivated by what was once considered a “reward” for meeting production goals. They began to show less and less productivity, but still believed they deserved the bonuses the Scanlon Plan had promised them. When employees stopped receiving these bonuses, their motivation continued to decline and thus led to even less production. Employees also felt that supervisors were receiving bonuses they had not earned. They believed the supervisors had not worked as hard as they had to meet production base ratios thus they did not deserve the same bonus they would receive. Employees within the plant began to show less work ethic and were less dedicated to the overall success of the company. The employees’ job satisfaction due to these types of attitudes began to decline as well. Job satisfaction has a high level influence on employees’ job performance so when an employee has a positive attitude in the workplace the higher the level of job satisfaction will be (TĂNĂSESCU & Leon, 2019). The lack of job satisfaction among the plant workers also added to the lack of production and motivation for the company’s employees. When employees feel they cannot trust their employers, they become less loyal and committed to the company and its success. Fard et al. noted that trust in management is driven mainly by how employees perceive fairness and the management of change within an organization (Komodromo et al., 2019). The plant workers didn’t understand the complexity of the calculations of the base ratio established for the Scanlon Plan which made them feel they were being “ripped off” and instead the company was gaining the most benefit from the Scanlon

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Plan. This caused them to lose their motivation which in turn caused a decrease in productivity and sales. When discussing the employees’ attitudes we must make note that the Scanlon Plan rewarded the employees based on a collective effort from all employees, not individually. As mentioned earlier, the plant workers often complained about the bonuses the supervisors received believing they did not work as hard as them so they should not be rewarded as well. This aspect often changed the work moods of the employees. Work moods are known to range from negative to positive and from weak to strong and intense (Newstrom, 2015). The work moods of the Engstrom employees went from positive to negative due to the Scanlon Plan as the employees continued to feel that the supervisors were receiving bonuses they had not worked for thus affecting employee engagement and leading to physical withdrawal. By drawing from J. Stacy Adam’s equity theory, the employees felt a sense of unfairness in regard to bonuses the supervisors received. They looked at their input as employees and felt the outcome did not show fairness based on the amount of labor they put in compared to the supervisors. Solutions Development The Scanlon Plan was a way to help increase production and sales for Engstrom Auto Mirror Company by incentivizing the plant workers. The attempt was to reward the employees as a team which in turn would lead to more teamwork and quicker production of products. Though this plan worked initially, without proper motivation and leadership, the company began to see a downturn which lead to lower productivity, less involvement from the employees, and an overall lower quality in the products that were being produced. In order to reverse this downturn, we must develop solutions that will help improve the overall outcome of the organization in regard to motivation, leadership and participation.

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Motivation is the most influential and dominating factor in regard to employee satisfaction (Cooper, 2002). Motivation as defined by Newstrom is “a set of internal and external forces that cause an employee to choose an appropriate course of action and engage in certain behaviors” (Newstrom, 2015, p. 116). When we look at the Scanlon Plan, we are able to conclude that its main goal was to motivate the employees of the plant to work together as a team by providing bonuses to employees as a whole when goals were met. This proved to be beneficial for both the employees and the company in its beginning stages however, after time, workers began to become accustomed to the additional pay and looked at it as their standard pay instead of a bonus. In order to continue to motivate employees more effectively, employees should also receive individual incentives. Though these can be monetary, they can also include nonmonetary incentives such as experiences and gifts to help promote individual motivation which in turn can lead to an increase in production. One example of a nonmonetary incentive is rewarding individuals with prizes such as a trips, additional paid time off, tickets to events, etc. Recognition awards are also a way to motivate employees to work to their fullest potential. By allowing different types of incentives and providing them to individuals as opposed to the group, it encourages employees to be more in tune with their own individual tasks and goals which will also help reinforce the quality of work they are performing. By providing individual rewards as opposed to group rewards, an employee will feel more valued and appreciated as they will feel as though their individual work made a difference in some type of way. Rewards that are linked with performance encourages employees to continue the behavior that resulted in that reward which aligns with the organizational goal (Bayraktar et al, n.d.).

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Leadership can also make or break this company. Leadership has three important factors which are influence/support, voluntary effort and goal achievement (Newstrom, 2015). Bent wanted to make his employees understand that he cared about their concerns and their opinions. Though he held monthly communication meetings for all employees and welcomed their feedback and suggestions, employees slowly stopped trusting the process of the Scanlon Plan and questioned the truthfulness of the plan and how it was calculated. A way to ensure that employees continued to trust the process of the plan would be to communicate in a better format the way the bonus was calculated. Many of the employees felt the detailed explanation of the calculation was too complex and hard for them to understand. He could provide options for employees to come speak with him directly should they have any additional questions that may not have been covered in the document they received and had access to. He could accomplish this by putting into place an open-door policy which will slowly allow him to gain the trust back of the employees which will in turn make them more committed to the overall mission of the organization. When individuals have positive outcomes from utilizing the open-door policy, they are most like to feel a sense of fairness and have an overall highe...