...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...
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...The issues surrounding the production and quality concerns at Engstrom seem to have come about as a direct result of a disconnect between the company's compensation package and the outcome of quality control. Moving forward with the concept of attempting to provide more incentive to workers while also improving the quality of the products being offered by the company may seem counterintuitive. The tendency of upper management, particularly in manufacturing companies, to view more benefits and incentives being given to employees as being detrimental to the bottom line is often true, but the way in which it is true is related to shortsighted thinking. Providing employees with medical insurance for instance might seem like an expense without benefit for the company, but employees who are not worried about paying their medical bills often prove to be more productive. Outside of gratitude,...
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...Discussion: 14746 Re: Case Memo #1: Engstrom Auto Mirror Plant Issues: Though the Scanlon plan was effective when it was implemented, there are now several potential issues existing in Engstrom. The employees are no longer seeing the benefits of the incentive plan that originally showed them bounty. They do not trust the system of bonuses, or the methods by which they are calculated, and by extension are beginning to distrust management entirely. They are starting to observe a lack of fairness in payment, valuing relative over concrete compensation. Ultimately, employees as a whole are beginning to be more individually minded as opposed to having a group mentality. This is the main cause of Engstrom’s problems. The Scanlon plan is designed to combat many of the issues that are now facing Engstrom – that is, providing meaningful motivation for employees by allowing them to be a part of the company as a community and see more value in group success than their individual payment. The Scanlon plan was successful as long as the company as a whole was successful, because each employee’s bonus was entirely dependent on the company’s fertility. In the current situation, in the midst of this far-reaching industrial downturn, it is becoming much more difficult as a means of incentive. For a long time it worked well for Engstrom which, due to its small, private nature, allowed for a communal attitude throughout the company. Alternatives: It is clear that the Scanlon program, as it...
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...Engstrom Auto Mirror is facing one of its most difficult periods of its history, driven by a variety of factors. After enjoying several years of prosperity, particularly due to an effective implementation of a Scanlon Plan, the company is facing problems associated with productivity and product quality. These issues have transcended to other areas of the company including its employees, who have been complaining for some time about the company’s policies and its current situation, and have been underperforming, which in turn leads to low productivity. The situation puts plant manager Ron Bent in a difficult position because he has to figure out a way to address these problems, and come up with solutions so that the company can continue operating and supplying its clients. One of the most fundamental factors that has contributed to these problems is related to the work force, in general. A hostile environment, numerous complains by the employees, low morale and lack of communication are just a few of the elements that are present in this organization. Essentially, the employees’ complaints revolve around the Scanlon Plan and how recently it has been less effective. In 1999, the company was facing similar problems and they implemented a Scanlon Plan. A Scanlon Plan is an organization-wide plan that reinforces teamwork and cooperation across the organization, focusing on cost savings and employee motivation. Its main components include: a system where employees from all levels...
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...Engstrom Auto Plant Engstrom Auto Mirror plant has had faced crisis in 2007 which was downturn with performance. In addition, Bent signed authorization with another company a large order. But the problem in cost was a massive, that led to delayed of productivity at the plant. So Bent suggested Although, a Scanlon plan had been good over a seven-year period and sales had fourfold, downturn hit the industry. Because, the plan had outlived it’s usefulness. The employees had become accustomed to the plant’s substantial bonuses stopped, so the workers responded with anger. Engstrom Auto Mirror plant had faced difficulties by the late 1990s. the management at that time was training to used technology to improved it’s production line. But the plant manager lacked the knowledge with technology necessary to find solution quickly and was unsuitable at working. On anther hand, Scanlon plan had outlived it’s usefulness because the employees had become accustomed the plan’s substantial bonuses. Therefore, Engstrom Auto Mirror plant was too small which makes it easier to accommodate the complexity of multiple plans. Money is important motivation to help workers to improve plant’s p products. But if plan don’t development the the workers might be don’t care about the quality and deliver products on time. According to Bent 2006 if the plan outlived its usefulness, the workers had become feel Engstrom Auto Mirror had redesigned it’s production...
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...Milestone 2 Engstrom Auto Mirror Plant: Root Cause Case Study Analysis Sharon McClain SNHU The Engstrom Auto Mirror plant is located in Richmond, Indiana and employs around 200 or more people. The plant has been going through some changes over the last few years and has seen a decline in employee motivation. The focus today will be to determine some of the root causes of the problems facing the plant from an organizational view and a human behavior issue. The bottom line is determining how to solve the issues the company is facing and move forward. Some of the questions that will need to be answered is, “why is motivation at an all-time low, is the Scanlon plan benefiting everyone in the company and can the plan be revamped with the employees input?” From the beginning of the Scanlon plan, the employees were happy when production was good and they were receiving the bonuses. When the profits and sales decreased, so did the bonuses which led to disgruntled employees. It seems the employees were agreeable with the plan at the beginning even though they did not fully understand the concept of how the bonuses were calculated. So is it the Scanlon plan the root cause or the employees? As explained earlier, the Scanlon plan was put into place in 1999. It worked for many years then the company started facing issues with productions, profits, bonuses and employees. To answer the questions of the root cause, it is all stakeholders. First, in order to receive a bonus...
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...Introduction Engstrom Auto Mirror plant is a privately owned business that manufactures mirrors for trucks and automobiles in Richmond Indiana. In May of 2007 the managers were experiencing a crisis at the plant. The most pressing issue at the time was the slow pace of productivity. Low productivity was increasing costs in other areas. Not only was Engstrom having productivity issues but they were having product-quality and moral problems as well. In order to explain the source of these problems we must analyze Engstrom’s history. A company’s past can greatly affect the present and future state of an organization (Schweitzer, S). Engstrom had enjoyed considerable success since it’s founding in 1948. However by the late 1990’s the company stopped being profitable during a period of transition to new technologies. Ultimately this resulted in the replacement of the plant manager with a younger more tech savvy individual. At this time employee moral was extremely low and productivity was at 40% of expectations. After studying the positive results of nearby plants the new management built the support needed to implement a Scanlon Plan at the Engstrom plant. The Scanlon Plan is an incentive plan that pays bonuses to employees. A key component of the plan is the concept of participative management. The idea behind this being that individuals will work harder to achieve an organization’s goals if they have the opportunity to take responsibility for their actions and apply their...
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...ENGSTROM AUTO MIRROR PLANT MOTIVATING IN GOOD TIMES AND BAD CASE STUDY REVIEW 1) Other than the Scanlon, what are some common types of employee incentive plans? Provide a brief overview of what they are and how they work. My research found that basically there are four types of programs classified as gainsharing. These include: the Scanlon Plan, the Rucker Plan, Improshare and Custom plans. These gainsharing plans are all similar. The differences appear in the way they calculate bonus and the level of employee involvement required to support the plan. The Scanlon Plan appears to be the oldest and most widely used type of gainsharing plan. As was shown in the case study: Engstrom Auto Mirror Plant: Motivating in Good Times and Bad, the Scanlon Plan is based on the historical ratio of labor cost to sales value of production (Beer & Collins, 2008). Because it rewards labor savings, it is most appropriate for assembly line companies. The Rucker Plan is based on the idea that the ratio of labor costs to production value (actual net sales plus or minus inventory changes, minus outside purchased materials and services) is historically stable in the manufacturing industry (Recardo & Pricone, 1996). This principle became the fundamental guideline of the Rucker Plan, which tracks the value added to a product as a measure of productivity. Because this plan utilizes a multi-cost formula, it is most appropriate for organizations that want to improve other variables...
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...Abstract The Engstrom Auto Mirrors plant is a small supplier factory based in the state of Indiana who is currently facing a crisis. They are in a drastic downturn in production and finance. The Engstrom plant has been experiencing damaging blows in their sales and morale. Ron Bent, plant manager, had to lay off more than 15% percent of the work force. The productivity was severely hit in a negative way. Employee morale suffered, and the quality of the product was sub-par. Customers of the plant was losing faith in their product. Downturns wasn’t a new occurrence at the plant. When the plant had reached a similar time they introduced the Scanlon Plan which was an incentive plan aim to increase the morale of the workers, increase the productivity and quality. But when the bonuses stopped, Ron Bent was at a cross road to figure out how to get the plant back on track for success. Should the plan be revised or should a new plan be instituted? Introduction The Engstrom Auto Mirror Plant experienced a decrease in productivity over a period of time coupled with the fact of proven employee dissatisfaction from the decline in success of the firm’s Scanlon Plan. Employees expressed doubt about bonus calculations and Assistant Manager Joe Haley conducted inventory reports and conversations with employees which indicated possible stealing of inventory. Irritation and suspicion where emotions the employees felt when their bonuses were taking away. Ron Bent who is the plant manager failed...
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...Engstrom Auto Mirror Plant Problem Statement: Engstrom Auto Mirror Plant was considerable successful for approximately 50 years then after redesigning production lines with new technology they had long production delays that hurt their business. Ron Bent was hired as plant manager to attempt a turnaround in production and bring profitability back up. Bent needs to ensure workers are receptive to new technology. Hypothesis 1: Plant manager before Bent could not adapt to use of new technology. Ron Bent believed in incentive programs; he implemented the Scanlon Plan. The Scanlon Plan worked over a seven year period with sales quadrupling due to the increase in productivity and employee morale. Then a downturn in the industry made it necessary to lay off 46 employees and Scanlon bonus was placed on hold for seven months while Bent decided to change or replace it. Hypothesis 2: It may be that Bent did not consider the reactions of the workers if Scanlon Plan fails and he did not prepare an alternative plan. Bent should work closer with other managers to re-design Scanlon Plan or alternate plan. Including changing the ratio target to 44% as suggested by the Scanlon consultant back in December 1999. Similar to Beverly Stevens of Quick-Cook Ovens, Bent did not consider workers performance or lack of performance and corrective actions until productivity regressed. (Stewart, 1985, pg. 2). Now he is concerned with losing his best client Martinez whom designated Engstrom...
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...Engstrom Auto Mirror Plant: Motivating in Good Times and Bad Quavian Belton Southern New Hampshire University ORGANIZATIONAL IMPROVEMENT OUTCOMES When it comes to a professional business, it becomes very important to begin to initiate advanced strategies for improvement in efforts to increases the organizational performance. When improvements are successfully implemented, beneficial results are obtained within the competitive market. There can be many different improvements when the improvements are made. However, when implementing these new improvements many challenges may arise. When the problems arise, this where the organizational behavior is a good focus to find the solution to many of the issues. According to cognitive evaluation theory, when a task is presented, it is evaluated in terms of how well it...
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...Indian professor named Harvard B-school Dean WASHINGTON: An India-born professor and IIT alumnus who has long championed a pledge for organizational leaders and managers on the lines of the Hippocratic Oath for doctors to enhance accountability in the corporate world has been named Dean of the prestigious Harvard Business School. Nitin Nohria, who is currently the Richard P. Chapman Professor of Business Administration at Harvard Business School (HBS), will become the School's 10th dean, Harvard President Drew Faust announced on Tuesday. Nohria is the first Indian, and indeed the first non-white, to become the dean of the 102-year old institution that typically ranks among the top three business-schools in the world. Nohria, who will take up his new role on July 1, succeeds Jay Light, who in December announced his plans to retire at the end of the 2009-10 academic year after five years as dean. "At a pivotal moment for Harvard Business School and for business education more generally, I'm delighted that Nitin Nohria has agreed to lead HBS forward," Faust said in his announcement. "He's an outstanding scholar, teacher, and mentor, with a global outlook and an instinct for collaboration across traditional boundaries... he's a person who not only studies leadership but embodies the qualities of a leader." While Nohria's current academic interests include the theory and practice of leadership, the analysis of management practices critical to corporate success...
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...The organizational issues in the Engstrom Auto Mirror Plant: Motivating in Good Times and Bad stems from both the organization itself and the people employed at the plant. The main organizational issue in this study is that the plant manager, Mr. Bent, refuses to see that the Scanlon plan is no longer working and needs to be replaced by a more suitable program or adapted to the current situation the plant is in. The Scanlon plan, while a fine one for a production department, operates too much on a custodial model of organizational behavior. Newstrom (2015), states that the employees in the custodial model “become psychologically preoccupied with their economic rewards and benefits and as a result…, become well maintained and reasonably contented.” So long as the rewards and benefits continued to come in the employees remained happy and productive, but as soon as the bonuses became less frequent the more irate the employees became. In the Engstrom Plant case, these benefits and rewards bred passive cooperation; productivity went down so rewards weren’t as frequent which in turn affected employee morale and productivity lowered even more especially since the employees were no longer producing at their full capabilities. All of this was happening at...
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...Gunby November 29th, 2015 Southern New Hampshire University Final Project Submission Engstrom Auto Mirror Plant and Work Analysis Case Study Abstract During May 2007, the Engstrom Auto Mirror Plant faces a low employee morale issue. The newly appointed manager, Ron Bent, sees a decline in work place productivity and culture throughout his recent years of working at the plant. When Bent joined the company, it was facing a similar issue of low morale. He then decided to introduce the Scalon Plan, an incentive program for the employees, to raise morale. The program was successful when it was first introduced but ran into problems time after. Bent was faced with many challenges with the Scalon Plan that caused him to ask many questions. 1. Should he remove the Scalon Plan and try another? 2. What is the root cause of employee morale declining? 3. Should there be revisions to the Scalon Plan and who oversees it? In order to answer these questions, it is suggested that Ron Bent and the other management team work together with employees to identify the root cause to their issue of low morale and work productivity and come with a possible solution to fix the issue. Introduction Engstrom Auto Mirror Plant is a privately owned business that manufactures mirrors for trucks and automobiles in Richmond, Indiana. The mirror manufacturing plant employed over 209 people. Engstrom Auto Mirror has operated since 1948 and has seen many years of success. In the late 1990’s...
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...Engstrom Auto Mirror Plant Case Motivating in Good Times and Bad Prepared by: Lily Yuan, Vicky Pan, James Xu, Kate Li, Issakson Wang, Ariel Cao, Vivian Fu 9 November 2013 Contents Introduction to Engstrom Scanlon Plan Scanlon Adoption Plan at Engstrom Problems and Solutions? 2 Introduction to Engstrom (I) A privately owned business manufacturing mirrors for trucks and automobiles Located in Richmond, Indiana 209 employees Use Scanlon Plan as an incentive for staff 3 Introduction to Engstrom (II) Creation 1948 late 1990s Troubles:unprofitability,production delays Ron Bent hired 1998 Dec.1999 Scanlon plan is voted by 81% workers Downturn in industry 2005 46 employees lay off June 2006 Need a new solution! May 2007 Economical Context 1948 1990s 1999 2005 2007 Contents Introduction to Engstrom Scanlon Plan Scanlon Adoption Plan at Engstrom Problems and Solutions? 5 Scanlon Plan Developed in 1930s by Joseph Scanlon, a cost accountant by training and a steelworkers’ union official at a steel mill facing bankruptcy. The heart of the plan is the concept of participative management. The three plan components: • the submission of suggestions for improvement by employees at all levels • the structure of the company committees that evaluate the suggestions • then the sharing of the fruits of increased productivity through monthly bonuses Ideally work together to drive big changes in behavior and attitudes! 6 Contents...
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