Case Study: Engstrom Auto Mirror Plant: Motivating in Good Times and Bad
When issues arise, they don't just appear out of thin air. There is an action or lack of
action that is the root cause from the human behavior perspective. Engstrom faced a number of
organizational issues that caused the business to decline. From a bonus plan that ran its course, to
low productivity, low performance and morale from its' employees, distrust, and low employee
engagement, Engstrom was not doing too well and it was evident.
This bonus plan was a monthly payout based on productivity and it seemed to be working
extremely well for a couple of years. However, dissatisfaction began to grow among the
employees who questioned the way the bonuses where calculated when the payouts began to
decline. The Scanlon plan had run its' course, but before management could do anything about
this the industry took a downturn and made rising tensions at the Engstrom plant worse. This
organizational issue can be attributed to poor managerial communication.
Managerial communication is defined as the use of management and communication
skills to make information commonly understood in order to accomplish organizational goals
(Bell & Martin, 2014, p. 2). Bent tried to keep the employees engaged and active in the Scanlon
plan by having monthly meetings. However, he failed to communicate effectively with his
employees the complex calculations used to determine the bonuses. He also failed to
communicate the reasoning behind the changes that were made to the bonus payout ratios in a
way that the employees could understand. When the industry began to decline Bent focused too
much on the negative aspects of Engstrom's situation during meetings, which in turn alienated
his audience. Bent had failed to positively connect with his employees.
The Engstrom employees' productivity and performance declined at the plant. This
occurred before the Scanlon plan was implemented and after. This decline can be attributed to
the lack of work motivation. According to Newstrom (2015) this type of motivation is a result of
a set of internal and external forces that cause an employee to choose an appropriate course of
action and engage in certain behaviors. The employees at the plant seemed to have lost their
motivation to perform well and boost production for their employer. Engstrom had focused on
providing an extrinsic reward via bonuses to gain compliance from its' employees and used their
monthly meetings as a form of intrinsic motivation. Once the rewards where no longer available
the employee's performance and productivity declined. Their meetings where no longer
motivational, as all that was discussed was negative outcomes if business didn't turn in the right
direction. "The goal in intrinsic motivation is pleasure and enjoyment from the action or
experience" (Locke & Schattke, 2019, p. 280). The employees no longer felt that they were a
part of the dialogue and their views or opinions were not focused on during the meetings,
resulting on the loss of an intrinsic motivator.
Low employee morale and engagement