Extraordinary Leadership: Implementation Of The Engstrom Auto Mirror Plant

The Engstrom Auto Mirror Plant in Richmond, Indiana, had manufactured high-quality mirrors for trucks and automobiles since 1948. The plant had been a symbol of success until the late 1990´s where it had redesigned it production lines with new technology. This led to the resignation of the former manager, and in 1998, Engstrom hired the new manager, Ron Bent. Bent had to make a turnaround for the plant, and central to this was the implementation of the Scanlon Plan. The Scanlon Plan was an employee incentive program developed in the 1930´s by Joseph Scanlon. The plan worked as a bonus plan to motivate employees by rewarding them for increased productivity and, thereby, cost savings. For several years, the Scanlon Plan worked perfectly for Engstrom,

Theoretical Framework

To understand the underlying and the lesser visible aspect of Engstrom, this theoretical framework will give insight in theories about the system and motivation in the organization. In this case, organizational structure and culture can influence employee motivation which will impact productivity, satisfaction, and overall success. Therefore, this framework will be used to answer the research questions throughout this paper.

In “Extraordinary leadership: Addressing the gaps of senior executive development” by Oshry et. al (2010), the system of an organization is laid upon focus. Organizational structures are important for good leadership and communication. A transparent hierarchy inside an organization can help and, thereby, solve the principle-agent problem of achieving the same goal for the employer and employees. The employer and employees have power over each other, and in the absence of a well-working hierarchy, tension can

People are intrinsically motivated when they find the activity itself enjoyable, interesting, or personally rewarding. The motivation to participate in the activity comes from within, driven by a sense of a desire for personal growth. All three factors from RSA (2010) were intrinsic.

On the other hand, extrinsic motivation is driven by external factors or incentives that are separate from the activity itself. Individuals are motivated by external rewards or recognition. The motivation to engage in the activity comes from the desire to attain something external such as a social reward or money.

It is important that both intrinsic and extrinsic motivation is used to obtain the optimal level of motivation. Extrinsic motivation can have a crowding out effect on intrinsic motivation when it is used in the means of controlling. This controlling effect will work as a lack of trust and understanding, and the wages will crowd out and reduce performance. Extrinsic motivation can also have a crowding in effect when it is used as a concerning tool about the employees’ skills where it has an informing effect. The optimal level can be achieved when intrinsic motivation is supported by appropriate extrinsic