Case Study of Engstrom Auto Mirror Plant

Introduction

The Engstrom Auto Mirror Plant is a privately owned business dealing in mirrors for trucks and automobiles. The company is located in Richmond, Indiana and has 209 employees. The company has been facing a series of organizational issues that have negatively affected production levels and caused dissatisfaction among the employees thus reducing the performance of the company. The company adopted the Scanlon plan that greatly raised production levels but still, there were some issues that arose from the employees.

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The Scanlon plan on the calculation of bonus was not trusted by the employees. Despite the fact that a detailed explanation of bonus calculation was made to the employees, they felt that the bonus calculation scheme was not efficient and that it was being cooked to favor the company. Before the adoption of the plan, achievement in production level was defined by means of total units produced. However, many other factors influenced the allocation of the bonus such as the length of the month, overtimes, and returns in production. Therefore, this meant that a low bonus could be paid to employees in a month in which a record number of units could be produced.

Distrust also arose among the employees when they became suspicious that the management team made changes to the ratio which happened four times between 200 and 2005 reducing the ratio to a final value of 32.6%. in addition to this, they felt that the Scanlon plan was not fair. The employees were not satisfied with the fact that some individuals were not contributing much yet they were paid high bonuses. For instance, employees felt that some supervisors should have received a reduced bonus because they were not working as hard as they were working.

The Scanlon plan was an effective measure that was undertaken after the realization that most employees showed low morale. Before the plan came into place, there were low levels of teamwork and cooperation among the employees and even a poor relationship between the employees and the management. The management led by plant manager Rob Bent and his assistant Haley realized that there was a need to foster teamwork and cooperation among the employees and therefore thought of the Scanlon plan. The plan is essentially based on the concept of participative management and consists of three main components. The first component is suggestions from employees on areas of improvement whereby employees are given the opportunity to give their suggestions on particular areas that required improvement or needed to be changed. Employees are given the opportunity to suggest the best practices that would prosper the company to greater heights. The second step involves company committees whose role is to evaluate the employee's suggestions. The last step involves the company sharing of the profit from increased productivity with the employees through giving of bonuses to the employees.

After the implementation of the Scanlon plan, production levels started rising and teamwork and cooperation were greatly enhanced. As McShane (2013) concluded in his research on teamwork and levels of productivity that, teams are replacing individuals as the basic blocks of organization and any company or group that has teamwork among its individuals is most likely to prosper. Brown et al (2015) also in his research on the effectiveness of teamwork in organizations concluded that managers must encourage teamwork and corporations among the employees because teamwork provides a basic structure for effective decision making. There is value in teamwork and therefore any organization that practices teamwork among its members achieves the best. The Scanlon plan applied in the Engstron Austo Mirror Plant produced results immediately the company started to gain profits as it initially did.

Poor alignment and administrative human behavior can negatively impact the employees and overall operations of a company. The Engstrom Auto Mirror Plant company went through various downfalls due to poor management of the company. When new effective management came in, the company immediately produced good results. It is, therefore, a fact that poor alignment of administrative human behavior can impact a company or an organization negatively. Some of the impacts include low morale among the employees, reduced levels of production, a decrease in profits and general business failure. When employees in an organization complain a lot to each other or they complete their normal duties with minimal efforts there may be problems with the management that they are not happy about. This shows that their morale is very low and what is needed is to provide motivation to them. Once they are motivated they start performing to their best levels and company reaps a lot. When the management fails to provide a clear description of each employee's or group of employees' responsibilities and duties, the revenues of the company are greatly minimized. The management should appraise the employees so that the employees feel that the company is appreciative of their performance. Poor management leads to increase in employee's turnover and therefore the cost of recruitment and training the employees becomes huge thus reducing the ability of the business to operate.

Conclusion

From the foregoing discussions, The Engstrom Mirror Plant went through various known organizational issues greatly associated with its management. But after a new management came in, things started working out and profits were realized. Poor management of an organization or a company greatly impacts the company negatively leading to low morale among the employees, reduced levels of production, a decrease in profit margins and general business failure.

References

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Hutchins, H. M., & Wang, J. (2008). Organizational crisis management and human resource development: A review of the literature and implications to HRD research and practice. Advances in Developing Human Resources, 10(3), 310-330.

Korte, R. F. (2007). A review of social identity theory with implications for training and development. Journal of European Industrial Training, 31(3), 166-180.