Case Study Analysis: Case Study of Engstrom Auto Mirror Plant: Motivating in Good
Times and Bad
Olufunke Olowu
Southern New Hampshire University
OL 500: Human Behavior in Organizations
Instructor: Mark Romejko
Due Date: October, 24th, 2021
Introduction
Engstrom Auto Mirror Plant located in Richmond, Indiana is a privately-owned business that
manufactures mirrors for trucks and automobiles (Newstrom, 2015). This plant with 209
employees was being managed by Ron Bent and his assistant, Joe Haley. Back in 1998, the plant
was faced with issues stemming from low productivity and poor quality of its products. The
management searched for a way to increase productivity, which led them to enforce a plan
known as the Scanlon Plan. The main heart of the plan is the participative concept. This concept
is composed of three elements: the submission of suggestions for improvement by employees at
all levels, the structure of the company committees that evaluate the suggestion, and then the
sharing of the fruits of increased productivity through monthly bonuses (Newstrom, 2015). This
plan proved propitious, as evident by increased productivity, higher profits, growth, and quality
standards.
However, over time, a downturn hit the industry, which compelled Ron to lay off some of his
employees and those that remained had not received their monthly bonus for several months
which is reducing their mood and morale of doing the job they are supposed to do.
Issues
The problems that can be deduced from this case are:
Low productivity due to lack of motivation of the employees because they were used to
getting their bonuses each month, so when the bonus stopped, the employees responded
with anger.
Lack of communication and trust. Employees complained of the change and calculations
of the bonus. Though the management gave a detailed explanation of the process,
workers felt the management had manipulated the numbers. The calculations seem so
complex to them because before the plan was adopted, production achievement was
measured by total units produced. Some also suspected the management changed the
ratio which they noticed occurred four times between 2000-2005. (Newstrom,2015)
Low morale as evident by the drop-in rate of employee suggestion to 50 a year compared
to 276 in the first year the Scanlon Plan was implemented. (Newstrom,2016)
Employees also felt the management was not being fair in sharing the bonus. They felt
they should be paid more than the supervisors because they work more than them.
Another problem with Engstrom was that Joe Haley discussed that the employees were
stealing from the plant. (Newstrom,2015).
Model
The model that dominates the manager's thought and action is the custodial model. The custodial
model is based around the concept of providing economic security for employees through wages
and other benefits that will create employee loyalty and motivation (Organizational Behavior
Study Guide,2021).
As seen in the case of Engstrom, the manager motivated the workers to improve their
performance by giving out bonuses through the Scanlon plan. The employees depended on the