FAS L1 Engstrom Case

Engstrom Auto Mirror Plant:

Motivating in Good Times and Bad
Engstrom is a privately-owned business that manufactures mirrors for trucks and
automobiles. Ron Bent is the plant manager at Engstrom. On joining the company, Bent had
introduced the Scanlon Plan – An organisation-wide plan that stimulated teamwork and
cooperation, along with focusing on cost savings and motivating employees to work smarter.
However, for the past few months, the plan’s objectives were not being met.

a) Identification of issue/ objective/problem

The following problems were observed by Ron Bent and Joe Haley
 Rising costs due to slow pace of productivity.
 Product-quality issues were arising.
 Dissatisfaction among employees regarding the Scanlon Plan, as they did not receive
bonuses during the economic downturn.
 Suggestion rates of employees reduced over time.
 Workers started to distrust bonus calculations and felt that the supervisors should
receive a lower bonus.

b) Identification of external and internal factors which affect the problem

 Internal factors
 Poor work environment/events - Two consistent worker complaints of distrust and
unfairness, targeted at the management, caused the employee engagement to
deteriorate drastically. No bonuses, coupled with the complaints which were not
addressed, caused their engagement to decrease in an already slow market, thus,
making the situation at the plant worse.
 Ethical issues – There was evidence of stealing of inventory
 Lack of understanding of technical jargons that caused the employees to distrust
bonus calculations.
 Unhealthy plant dynamics created negative perception in the mind of workers
which was directly reflected in the work.
 Over the years, the plant used the same Scanlon Plan without any modifications
which caused the organizational commitment of the workers to fall, which
resulted in the suggestion rates dropping form 100s to 50 every year.

 External factors
 Economic downturn, that led to employee layoffs and shook their confidence
of retaining their jobs.
 Grievances unaddressed (Employee complaints about non-payment of
bonuses).

FAS L1 Engstrom Case

FAS L1 Engstrom Case

c) Using concepts to reach at the solution or decision in the case

 Goal setting theory (proposed by Edwin Locke) can be used in the organisation. Setting
specific and difficult goals that are accepted by the employees will create an internal
stimulus within workers to complete their tasks more efficiently.
 Cognitive evaluation theory states that allocating extrinsic rewards (bonuses) for
previously intrinsically rewarding behaviour will reduce motivation if the rewards are
controlling. Thus, rather than making monthly bonus payments on pay checks, the
management can make bonus payments on a quarterly basis. This will reduce the
extrinsic rewards provided, while not eliminating the Scanlon Plan.
 The employees giving more meaningful suggestions could be proposed a position in
the screening committee, provided he can understand the technical jargons in the
bonus plan (this relates to the drive to comprehend).
 Giving the employee the power of voice would create a sense of self-esteem and
responsibility in that worker and thus fulfil McClelland’s theory of needs – Needs for
achievement, need for power and need for affiliation. Moreover, this will lead to job
satisfaction as described by the two-factor theory.
 According to the two-factor theory, the company needs to improve its hygiene factors,
such as job security (reducing layoffs), and supervisor-employee relationship (so that
workers understand the hard work done by the supervisors, thus reducing their
complaints regarding supervisors’ bonuses).
 Scanlon plan paid bonuses to workers for increased productivity. Bent always
perceived it to be a catalyst for Engstrom’s turnaround. Although due to economic
turndown, bonuses were not paid on time which created a perception among workers
that something which belonged to them was taken away and hence created anger and
dissatisfaction. Bent took a defensive approach to resolve this situation by presenting
the formal statement of plan. This did not inform workers about the actual scenario.
Instead a transparent communication regarding the current situation of the
organization should have been used for tackling the present situation.
 Affective events theory very clearly relates job performance/satisfaction as a result of
work environment and events at work.
 Emotional Contagion was causing the work environment to deteriorate.
 Bent should know the audience (here, worker) whom he is communicating to. He is
more open to transparency, but he was not aware that the workers were unable to
understand the complexity of calculations. He should have made the bonus calculation
in such a way that even a layman can get a meaning from it.

The above reasons will motivate workers to excel, not just to perform less poorly.

d) Action plan recommended to implement the solution/decision

FAS L1 Engstrom Case

FAS L1 Engstrom Case

 In the monthly meetings, workers should be informed about the financial situations
of the organizations and how the productivity and quality of their products was going
down. Passing on of this information and feedback of downfall would have created a
sense of belonging and empathy among workers.
 To understand the internal reason for low motivation levels and poor performance,
the management should roll out an Emotional Intelligence Questionnaire.
 Identifying the stress management & self-control scores of the workers and
accordingly providing the workers with the right motivation for the same.
 Understanding empathy levels of workers towards management’s stance and bridging
the gap by either training the employees and fine tuning the communication.
 The management should focus on supporting employee development, making
employees to be a part in the change process, and to make them achieve the
organization’s goals.

e) Exhaustive list of possible options with justification to why they should or should not be
adopted

 Identifying workers who have scored high on self-regulation, self-control and

emotionality. Low on impulsiveness. These workers can then be trained to be good
leaders and spokespersons to keep the Emotional Contagion under better control.
This way the workers will have a set of individuals amongst them, constantly
motivating and preserving the cooperative culture of Scanlon.
 Management must segregate employees based on the different Motivation Drives
that they carry. Based on these drives, the employees can be accordingly trained or
clustered to work together as complements.
 Identify The Big Five personality traits of workers and cluster them as complementing
each other. Train them in areas that can contribute to the organizational climate.

FAS L1 Engstrom Case