sinbad
CASE STUDY
Engstrom Auto Mirror plant
The Engstrom Auto Mirror plant employs over 200 people at its Indiana location. Since 1999, workers at the plant have received bonuses based on the Scanlon Bonus Plan, which paid a percentage of all labor savings each month. Workers were motivated by the bonuses to increase their productivity, thus saving the plant from its unprofitable state during the 1990s. However, in 2007, the plant once again faced issues of unproductivity and low profits. The plant manager, Ron Bent, had to lay off 46 employees in 2006, and employees had not received a bonus in seven months. Employees had become dissatisfied with the Scanlon Plan.
In May 2007, the Engstrom Auto Mirrors plant, a relatively small supplier based in Indiana, faces a crisis. The business was in the second year of a downturn. Sales had started to decline in 2005; a year later, plant manager Ron Bent had been forced to lay off more than 20 percent of the work force. Plant productivity was dropping, employee morale was low, and product-quality issues had begun to surface. Relationships with key customers were at risk. Downturns were not new at Engstrom. When the plant had reached a similar crisis point years earlier, the institution of a Scanlon Plan, a company-wide employee incentive program, had proven critical in building morale, increasing productivity and product quality, and leading Engstrom into a turnaround. For several subsequent years, Engstrom workers had received regular Scanlon pay bonuses. But the bonuses had stopped in 2006, and now Ron Bent must determine how to get the plant back on track. Should he revise the Scanlon setup? Remove Scanlon and try another plan? Identify and change other organizational factors that may be sabotaging Scanlon?
Due to the low productivity and profitability of the Indiana plant, the Engstrom family was threatening to close the plant altogether. Bent described the issue at the plant as “a vicious cycle. We’re paying a
Engstrom Auto Mirror plant
The Engstrom Auto Mirror plant employs over 200 people at its Indiana location. Since 1999, workers at the plant have received bonuses based on the Scanlon Bonus Plan, which paid a percentage of all labor savings each month. Workers were motivated by the bonuses to increase their productivity, thus saving the plant from its unprofitable state during the 1990s. However, in 2007, the plant once again faced issues of unproductivity and low profits. The plant manager, Ron Bent, had to lay off 46 employees in 2006, and employees had not received a bonus in seven months. Employees had become dissatisfied with the Scanlon Plan.
In May 2007, the Engstrom Auto Mirrors plant, a relatively small supplier based in Indiana, faces a crisis. The business was in the second year of a downturn. Sales had started to decline in 2005; a year later, plant manager Ron Bent had been forced to lay off more than 20 percent of the work force. Plant productivity was dropping, employee morale was low, and product-quality issues had begun to surface. Relationships with key customers were at risk. Downturns were not new at Engstrom. When the plant had reached a similar crisis point years earlier, the institution of a Scanlon Plan, a company-wide employee incentive program, had proven critical in building morale, increasing productivity and product quality, and leading Engstrom into a turnaround. For several subsequent years, Engstrom workers had received regular Scanlon pay bonuses. But the bonuses had stopped in 2006, and now Ron Bent must determine how to get the plant back on track. Should he revise the Scanlon setup? Remove Scanlon and try another plan? Identify and change other organizational factors that may be sabotaging Scanlon?
Due to the low productivity and profitability of the Indiana plant, the Engstrom family was threatening to close the plant altogether. Bent described the issue at the plant as “a vicious cycle. We’re paying a