Engstorm Auto Mirror

Gael Cleophat

MNGT 502

Dr. Premaux

Case Analysis

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

1) Begin by identifying the key problems/issues for Engstrom, and then identify key theoretical contributions that a Scanlon plan should bring to a company. Is Scanlon a good solution for Engstrom’s challenges? Include theoretical concepts covered in the textbook that are relevant to the case in your discussion.

Engstrom Auto Mirror Plant was facing several problems and issues. The main problem that the company faced was the motivational breakdown of the employees during a downturn in the Auto Mirror Industry. During that downturn, the company was unable to maintain and manage the bonus incentive plan that they had in place before the crisis, the Scanlon. The failure of the Scanlon Plans during the crisis brought several issues within the company. First it was the issue of ‘trust”. After seven years, the employees became accustomed to having the bonus as a part of their expected wage, but during the crisis they stopped receiving bonuses. Even though they had clear explanation of the process, the employees thought that the company was “playing with” the numbers. Another issue was the question of fairness between supervisors and regular employees. The employees believe that supervisor should get a smaller bonus since they don’t work as hard as a regular employee. Other issues that came about were layoffs, lack of planning, and the possibility of losing certified status with some of the customers. Even though the Scanlon plans was very profitable during a seven-year period, the crisis in the industry put the credibility of these plans in question.

The Scanlon Plan was created by Joseph Scanlon in the 1930s, and it brought managers and employees together in order to find ideas to increase productivity. A fully developed Scanlon Plan is composed on three components: the submission of suggestion for improvement by employees –...