Case Study Analysis
Engstrom Auto Mirror Plant
Southern New Hampshire University
OL-500: Human Behavior in Organizations 20TW5
Dr. Bogner
July 19th,2020
Case Study Analysis
Engstrom Auto Mirror Plant
Engstrom Auto Mirror Plant was established in 1948 as a privately owned business located in
Richmond, Indiana. Historically successful, the company has gone through ups and downs over
the last ten years. Profitability troubles in the late 1990's led to new leadership and an employee
incentivization plan (Scanlon) ushering in seven incredible years where sales quadrupled. Since a
2005 industry downturn, what once worked well has put Engstrom in a fragile position of low
employee morale and productivity, while also risking high level customer relationships.
Late 1990's. In their case study Beer and Collins (2008) stated "The plant manager
lacked the sophistication with technology necessary to find solutions quickly and was
inept at working with an increasingly militant union." This was a critical time for
Engstrom as they working to implement new technology in their redesigned production
lines which led to the then plant manager resigning in 1998. Ron Bent was hired the same
year as the new plant manager focused on turning around the plant. Bent believed that a
proper worker incentive program would lead to improved productivity based on his
experience and research. Upon implementing Scanlon incentivization the subsequent
seven years saw a quadrupling of yearly sales. Employees felt empowered to be part of
the solution and received rewards in kind.
Industry Hits A Downturn in 2005. By June 2006, the industry landscape was changing
because of the downturn that started the year prior which then required drastic measures
to stay in business. Bent laid off 46 of 255 employees, however, by January 2007
employee morale and disaffection was prevalent which contributed to Bent hiring Joe
Haley as his assistant. Haley quickly developed good relationships with employees
allowing him to gain insights such as the growing contempt from workers who have not
seen a bonus in seven months while some workers have moved on to pilfering from
Engstrom.
Organizational Issues
Communication Opportunities. Bent has been resting on his laurels since implementing the
highly impactful Scanlon plan. According to Newstrom (2015, p.16) "managers should learn to
become discerning consumers of theory" which is not the case here. Since the downturn started
in 2005, Bent does not appear to have re-evaluated his options or even re-engaged what made
Scanlon so successful for seven years. By starting with layoffs rather than going deeper into the
Scanlon process of feedback loops and worker involvement he may have laid the foundation for
the productivity and low morale he is working through today. Bent has become disconnected
from the people, avoiding the clear discontent by hiring Haley and still not acting. The result of
this poor communication had displaced trust and transparency with employees. This has
ultimately put the company at risk of losing their certified supplier status which would
exacerbate the downward spiral for Engstrom.
Bent discusses with Haley his desire to pay bonus due