Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

Engstrom Auto Mirror plant in Richmond, Indiana is a privately owned company that manufactures mirrors for automobiles.  Founded in 1948, the company experienced an abundant amount of success employing 255 employees at its peak, but not without its share of problems at two separate occasions, 1998 and 2007 (Beer, Collins, 2008, p. 2-3).  The first cycle of problems arose during the 1990s when the company lost valuable customers due to long production delays due to a rough transition period of technology onto its production lines, and management that lacked the skills to find quick solutions (Beer, Collins, 2008, p. 3).  Second wave of problems began in 2005 when the industry overall faced a downturn, forcing Ron Bent, plant manager, to lay off 46 of 255 employees in June 2006 (Beer, Collins, 2008, p. 2).  These two events, however, are a result of many movements in between; poor management, lack of morale, poor communication within management and employees, decline in production, absence of trust for company and its leadership, disgruntled employees who feel betrayed, and finally an eager manager who had a fix to it all, but not without its long-term implications.  

In 1998, an inept plant manager retires and Ron Bent joins Engstrom with a successful career behind him in the auto industry at a camshaft production plant (Beer, Collins, 2008, p. 3), facing average worker productivity at a low of only 40% (Beer, Collins, 2008, p. 2).  In order to raise the productivity to expectation and turnaround Engstrom, employee morale needed a boost and rewards put in place that would motivate the employees to do just that.  Bent advocated worker incentive programs, after seeing their success at two other plants in Indiana, including the camshaft plant, and wanted to establish the same at Engstrom (Beer, Collins, 2008, p. 3).  While Bent was eager to bring Engstrom back to its optimal productivity, his own paradigms would prevent him from solving the problem at its core. Bent strongly felt that a Scanlon Plan would the best fit Engstrom (Beer, Collins, 2008, p. 3) rather than following evidence-based management that required him to put aside is pre-conceived notions and collect new research data (Newstrom, 2015, P. 7) specific to Engstrom.

Implementation of Scanlon Plan at Engstrom would quickly lead to increased productivity, employee morale and participation, enthusiasm amongst the employees and cross functional collaboration, monetary gains for both the organization and all employees – frontline and managerial, and positive organization behavior overall. This growth lasted for 7 years before the company culture falling back into the tracks of 1998. What had changed?  In this analysis, we will review the issues discussed in the introduction. How a company that was once again experiencing growth did fell back into the same issues it once resolved, or so it seemed.

Outline:

1. History & Growth

1. Background
2. 1998

1. Low employee morale
2. Decline in Productivity
3. New Management

1. Paradigms – Impact (Theory X and Y)
2. Evidence Based Management

1. Implementation of Scanlon Plan

1. What is Scanlon Plan
2. Two way communication process
3. Growth period

1. 2005-2007

1. Industry Downturn
2. Reverse behavior

1. Strengths & Weakness

1. Strengths

1. Employee Participation – Open Door Policy
2. Social Support – Employees feel valued and heard
3. Financial Rewards for all
4. Upward Communication (Policy adaptations)
5. Positive Organization behavior

1. Weakness

1. Behavior Bias – overzealous need to keep frontline happy

1. Organization purpose lost

1. Law of Diminishing Returns
2. Overuse of committees
3. “Moving Carrot” – changing target numbers
4. Distrust of management
5. Fairness – Managers do not deserve the same share as frontline

1. External Environment

1. 2005 Downturn
2. Certified Supplier Status – Toyota

1. Production Delays

1. Credibility
2. Cost impact
3. Competition
4. Quality control

1. Strategize

1. Where does the company stand?

1. Unhappy employees
2. No bonus payout
3. Alienated customers
4. True cost of low production
5. Competition opportunity

1. Moving Forward

1. Establishing Values

1. Vision, Mission, and Goals

1. Scanlon Plan

1. Change or eliminate
2. Working through the 3 components
3. Bonus payout changes

1. Recommendations

1. Conclusion

References:

Newstrom, J. W. (2015). Organizational behavior: human behavior at work (14th Ed.). New

        York, NY: McGraw-Hill Education.

Beer, M. & Collins, E. (2008). Engstrom auto mirror plant: motivating in good times and bad. In

J.W. Newstrom (Ed.), Organizational behavior: human behavior at work (14th Ed.).

(pp. 536-543). New York, NY: McGraw-Hill Education.