Harris 1
Root Cause Analysis
Reading over the Engstrom case it can be very easy to note the Scanlan plan as the
downfall of the company. Bent was also quick to blame Engstrom's problems on the Scanlan
plan, but in reality the root causes existed before Bent was even hired. "The root cause is "the
evil at the bottom" that sets in motion the entire cause-and-effect chain causing the
problem(s)" (Andersen & Fagerhaug, p. 15, 2006). Engstrom was experiencing low productivity
low morale, and poor communication. Looking into each of these issues reveals the root causes
that need to be addressed
The Scanlon plan is an incentive program that has the potential to increase employee
motivation and boost productivity. Bent believed that implementing a Scanlon plan would make
workers more receptive to the new technology being used and the new methods implemented.
However, the Scanlon plan was only a temporary relief and eventually caused more problems for
Engstrom. Initially the plan resulted in higher profits and improved employee satisfaction. Jim
Lutz, a worker on one of the plant's lines stated, "I'm getting rewarded for thinking, not just for
performing the same tasks every day. To me, that means the plant values the knowledge I have
about how my line runs" (Human Behavior in Organizations, p. 540). Employees felt important
to the company which significantly improved cooperation at Engstrom. Enthusiasm eventually
waned when employees became dissatisfied with the Scanlon plan. Bonuses eventually stopped
and at the same time employee morale dissipated. Without an incentive the employees at
Engstrom had no reason to put in the extra effort.
Harris 2
Tension at Engstrom grew when people became skeptical of the Scanlon plan. The
formula used to calculate bonuses was a complicated one that could be confusing to follow.
Employees had access to the calculations but felt as though the company might be "playing
with" the numbers. With the bonus being affected by numerous factors including, length of the
month, sales mix, overtime, and product return, it was difficult for employees to grasp. To make
the distrust worse the company changed the ratio four times over five years. The employees saw
this as management adjusting the ratio for their benefit. As employee suspicion rose, trust
declined. "When managers lose the trust of their employees, it requires concerted and extended
efforts to repair and re-earn it" (Human Behavior in Organizations, p. 293). Trust is an important
element in a relationship and has a direct impact on performance. "Trust is an aspect of the
workplace that high performance cannot live without" (Reina & Reina, 2015). Employees at
Engstrom lost trust in Bent and the company which caused tensions to rise and performance to
plummet. This caused a vicious cycle because the reduced productivity meant that Bent couldn't
supply bonuses and this angered employees and caused further decreases in productivity.
The employees at Engstrom felt that they deserved the bonuses. Research shows that
"employees experience feelings of anger and betrayal" when a promise is reneged (Human