Scanlon Plan at Engstrom

Describe and analyze what organizational factors detract from the success of the Scanlon Plan at Engstrom?

The Scanlon Plan worked initially at Engstrom because of the very strong backing and successful communication of the plan by management. Bent worked hard to institute a vision for the company and received buy-in from 81% of the workers for its implementation. Strong sales and growth seemed to coincide with the success of the Scanlon Plan and the people of Engstrom expressed satisfaction with the changes to their work environment and the fact that management listened. Everything was going right for Engstrom. But did Bent work too hard on convincing the workers that the Scanlon Plan was for them? In choosing the Scanlon Plan he already had an agenda in mind and did not go into the

Over time however, the continuous reinforcement of the Scanlon Plan removed the workers at Engstrom from the accountability of their performance. The bonuses were perceived as being part of their regular paycheck, not rewards for high performance. Two things galvanized this perception, the fact that bonuses could be reduced despite high performance and the fact that bonuses could be paid despite low performance. To make matters worse, the Scanlon Plan rewarded on behaviors that the workers couldn’t directly affect or understand. Rather than reward on production levels, quality or some other number workers understood, the plan used a complex formula that served to de-motivate. From the Expectancy Theory, workers at Engstrom perceived that no matter what their level of performance they could not affect the outcome.

How could Engstrom have increased the likelihood of a successful implementation of Scanlon?

The Scanlon plan needed to be based on factors the Engstrom workers understood and could influence. Although Bent spent considerable time and effort in implementing the plan, he should have also asked for participation in setting the goals. It also appeared that...