October 13, 2008
Engstrom Auto Mirror Plant:
Motivating in Good Times and Bad
Engstrom Auto Mirror Plant is facing the problem of not being able to keep their employees motivated in both good and bad times. Before the problem occurred, Ron Bent, the plant manager, had adopted the Scanlon Plan. The Scanlon Plan was an incentive plan used to motivate employees and to drive changes in their behavior and attitudes. The plan consisted of monthly bonuses for employee productivity, communication meetings, a committee to encourage and evaluate employee’s suggestions, and overall improved working conditions. Employees were satisfied with their jobs and motivated to be productive. Over time, changes needed to be made to adjust the Scanlon plan because employees became less satisfied and enthusiastic. Employees no longer trusted the management and committees; they believed the management team may be changing the ratios and numbers that affected their monthly bonuses. Also, employees began to think the plan was unfair. Bent was not surprised by the reactions of his employees, he knew the plan needed to be revised every so often. In 2005, before he could decide how to revise the plan, the industry downturn gradually decreased the company’s sales figures and the employee morale. The employees weren’t receiving monthly bonuses due to low productivity and Bent had to start looking into the idea of a layoff. He warned the employees of a layoff occurring if sales figures didn’t improve, but the employees didn’t listen. Finally a layoff did occur and it was like an “emotional lightning rod” for the plant and a dividing line between the good and bad times. By 2007, there was increasing evidence of dissatisfied employees and suspected pilfering. Employees had lost their motivation to work productively.
So what caused such a decrease in employee motivation at the Engstrom Auto Mirror Plant? The Scanlon Plan was adopted to improve motivation which would also improve other workforce factors. Although, the plan only seemed to work during good times; as soon as things began to go wrong and head for the bad, the Scanlon Plan alone could no longer motivate the employees. One reason for why it wasn’t able to motivate employees during the bad times because of its variable-pay program. According to Robbins and Judge, authors of Organizational Behavior, a variable-pay program is “a pay plan that bases a portion of an employee’s pay on some individual and/or organizational measure of performance” (p. 229). Engstrom developed a bonus pay, but managers were able to adjust the value for returns and increases or decreases in inventory which would change the size of the employee bonuses. In Organizational Behavior, it is explained that bonuses are part of the variable-pay program and can be used as an incentive, but because Bent allowed for the calculation for the bonuses to be altered by management, employees lost trust in their management instead of seeing the industry downturn due to profitability trends as the reason for bonuses being low or non-existing. The lost of trust in management led to less motivated employees. Bent did not adopt the idea of a variable-pay program usefully. Also, employee motivation didn’t occur in both good times and bad because the job design didn’t match the Job Characteristics Model (JCM). Robbins and Judge describe the JCM as “a model that proposes that any job can be described in terms of five core job dimensions: skill variety, task identity, task significance, autonomy, and feedback” (p. 215). If a job has the one of the first three characteristics—skill variety, task identity, and task significance—and both autonomy and feedback, motivation will occur. Because motivation hasn’t occurred constantly for Engstrom, they must be missing part of the JCM. The causes for the motivation problem at Engstrom Auto Mirror Plant needs to be fixed or...
Cited: Beer, M. & Collins, E. (2008). Engstrom Auto Mirror Plant: Motivating in Good Times and Bad. Retrieved October 13, 2008, from Harvard Business School Publishing.
Judge, T. & Robbins, S. (2008). Organizational Behavior. New Jersey: Pearson Prentice Hall.
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