Problem Statement

The Engstrom Auto Mirror plant is a small privately owned business that supplies mirrors for trucks and cars. The plant had suffered several years of downturn before Robert Benton introduced the Scalon plan. The Scalon plan, an employee incentive program, was created to boost employee morale, increase productivity, produce quality inventory and lead the plant to a turn around. Now, the plant manager, Robert Benton, must figure out how to get the plant back on track in order to stop the plant from experiencing another year of downturn.

Hypothesis 1: It may be that the organization has not met the employee’s expectations
When an employee enters an organization they have certain expectations. According to the article, ‘Note on managing a psychological contract,’ it states, “A psychological contract is made, which may defined as the mutual expectations of the individual and the organization as articulated by its managers.” Employees and organizations expect to receive certain things in exchange for participation. Employees at the Engstrom plant expected to get their bonuses while Robert Benton, the plant manager, expected an increase in productivity and the quality of the plants inventory. When one side of the contract is being met, this can effect the relationship and the fulfillment of their needs. However, the Engstrom Auto Mirror plant was not meeting their end of the contract. The employees of the plant were no longer seeing the benefits of the bonus plan which caused them to have distrust issues. The employees are beginning to distrust the plant manager entirely because of the system of bonuses and the method in which they are calculated.

Hypothesis 2: It may be that the current plan does not motivate the employees.

The employees at the Engstrom Auto Mirror plant are starting to think more individually instead of having a group mentality. This is a major part of Engstom’s problems. The Scalon plan was originally designed to provide motivation for the plant’s employees by allowing them the opportunity to be a part of the company and a community. The idea behind the Scalon plan was to show value in group success rather than their individual success and payment. Employees expect that when they put forth a certain amount of effort that this will lead to a reward, when these individuals do not see a link between the two, their motivation will decrease drastically.

Hypothesis 3: It may be that the Scalon plan needs to be replaced.

The plant manager had introduced the Scalon plan and now he needs to decide whether or not to try another plan or remove the scalon plan. Robert Benton, the plant manager, needs to make the decision on what’s best for not only the employees but the plant. With the current plan, employees complained that the plan was too complicated and incentives were too sporadic. The employees working at the Engstrom plant expected that when they worked hard, they would be rewarded with their bonus. However, the plan actually decreased the employee bonuses when in fact the employee’s put forth so much hard work and effort.

Recommendations and Implementation:

The Scalon plan should have a fixed ratio instead of continuous basis. This could mean that when a certain amount of money in the payroll is reached then this would allow the employees a bonus. By making a modification to the Scalon plan this would provide the employees the opportunity to earn rewards by hard work and dedication.

Second, the plant manager should bring up the idea about the employees holding regular meetings. Instead of the manager simply making decisions and the employees following, this will allow the employees the opportunity to feel a part of a team. Employees will hold regular meetings a long side the managers in order to talk about increased productivity and team work.