Case Study Of Engstrom Auto Mirror Plant

Issues/Problem

Many of Engstrom Auto Mirror plant’s struggles during the recent economic downturn are clearly the cause of problems implementing the Scanlon plan. The first fundamental problem is the complicated formula that the Scanlon plan uses to determine an individual’s bonus based off of the company’s results, which remains confusing and vexing to employees. The bonuses paid out by the company also do not reflect individual productivity, as each employee takes home the same check regardless of the amount of effort shown. In addition, the way these bonuses were doled out over many years caused many of the workers to assume that they were simply a part of their salary, not expecting them to vanish when tough times hit the company. It is also tough for the employees to accept that the management takes a full 25% out of the money for employee bonuses, meaning they feel they are losing money to the very superiors they believe to be unfair and less productive.

Overall, while the Scanlon plan was supposed to instill a sense of unilateral commitment to the health of the Engstrom plant by increasing motivation, all that has resulted is an immense distrust of management and unmotivated workers. As a result of this tension between the

A major fault in the structure of the Scanlon bonus system is that employees are equally compensated despite the fact that they each perform unequal amounts of work or demonstrate varying levels of performance. In the same spirit of the classic reinforcement theory, simply giving employees recognition or extra money in their bonuses for extra work done or exemplary performance would help revive motivation. This solution fixes the problem of workers becoming dependent on bonuses as part of their normal salary, but also faces a risk of creating too much competition between employees that would stifle