Engstrom Case

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The main issue with the Engstrom Auto Mirror Plant was how to improve quality and performance of its assembly line workers. The plant manager determined the best way to do this was to implement the Scanlon plan, which focuses on employee participation to identify ways to increase productivity. When the plan was proposed, it was widely accepted by employees (81% voted for it.) In the beginning, employees had many suggestions to improve productivity (305) and management accepted almost all of them (276) despite the fact that only a few had a meaningful impact on productivity. Employeesloved that communication between themselves and managers was so strong, as evidenced from the statements from Jim Lutz and Dori Andrews. Eventually, the employees became less satisfied with the way the Scanlon plan was working. At the same time, an industry downturn was leading to decreased sales, which began to really affect the bonuses paid out to employees. Things deteriorated so much that the plant manager was forced to lay off 46 employees and no bonuses had been paid in seven months. Management now needs to adjust the variables in the Scanlon plan in order to get employees motivation and performance to a similar level from when it was first implemented.

There are a variety of reasons the Engstrom Auto Mirror Plant finds itself in this current predicament. 1. Failure to continuously adjust the Scanlon plan over time to maintain employee motivation 2. Failure to respond to employee complaints in a timely fashion 3. An industrial recession which has resulted in decreased motivation and lower sales 4. Inability to pay out monthly bonuses

5. Layoffs made employees question job security and lead to further dissatisfaction. I think the current problem started because management was content to let the Scanlon plan go along with making any adjustments other than changing the payroll-to-sales ratio (which marked the line where bonuses start.)...
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