Nicole Ferrin October 13, 2008 BUSA 305 Case Analysis Engstrom Auto Mirror Plant: Motivating in Good Times and Bad Engstrom Auto Mirror Plant is facing the problem of not being able to keep their employees motivated in both good and bad times. Before the problem occurred, Ron Bent, the plant manager, had adopted the Scanlon Plan. The Scanlon Plan was an incentive plan used to motivate employees and to drive changes in their behavior and attitudes. The plan consisted of monthly bonuses for employee productivity, communication meetings, a committee to encourage and evaluate employee’s suggestions, and overall improved working conditions.
Employees were satisfied with their jobs and motivated to be productive. Over time, changes needed to be made to adjust the Scanlon plan because employees became less satisfied and enthusiastic. Employees no longer trusted the management and committees; they believed the management team may be changing the ratios and numbers that affected their monthly bonuses. Also, employees began to think the plan was unfair. Bent was not surprised by the reactions of his employees, he knew the plan needed to be revised every so often.
In 2005, before he could decide how to revise the plan, the industry downturn gradually decreased the company’s sales figures and the employee morale. The employees weren’t receiving monthly bonuses due to low productivity and Bent had to start looking into the idea of a layoff. He warned the employees of a layoff occurring if sales figures didn’t improve, but the employees didn’t listen. Finally a layoff did occur and it was like an “emotional lightning rod” for the plant and a dividing line between the good and bad times.
By 2007, there was increasing evidence of dissatisfied employees and suspected pilfering. Employees had lost their motivation to work productively. So what caused such a decrease in employee motivation at the Engstrom Auto Mirror Plant? The Scanlon Plan was adopted to improve motivation which would also improve other workforce factors. Although, the plan only seemed to work during good times; as soon as things began to go wrong and head for the bad, the Scanlon Plan alone could no longer motivate the employees.
One reason for why it wasn’t able to motivate employees during the bad times because of its variable-pay program. According to Robbins and Judge, authors of Organizational Behavior, a variable-pay program is “a pay plan that bases a portion of an employee’s pay on some individual and/or organizational measure of performance” (p. 229). Engstrom developed a bonus pay, but managers were able to adjust the value for returns and increases or decreases in inventory which would change the size of the employee bonuses.
In Organizational Behavior, it is explained that bonuses are part of the variable-pay program and can be used as an incentive, but because Bent allowed for the calculation for the bonuses to be altered by management, employees lost trust in their management instead of seeing the industry downturn due to profitability trends as the reason for bonuses being low or non-existing. The lost of trust in management led to less motivated employees. Bent did not adopt the idea of a variable-pay program usefully.
Also, employee motivation didn’t occur in both good times and bad because the job design didn’t match the Job Characteristics Model (JCM). Robbins and Judge describe the JCM as “a model that proposes that any job can be described in terms of five core job dimensions: skill variety, task identity, task significance, autonomy, and feedback” (p. 215). If a job has the one of the first three characteristics—skill variety, task identity, and task significance—and both autonomy and feedback, motivation will occur.
Because motivation hasn’t occurred constantly for Engstrom, they must be missing part of the JCM. The causes for the motivation problem at Engstrom Auto Mirror Plant needs to be fixed or diminished. Ron Bent needs to find a way to once again get his employees motivated. He could revise the Scanlon Plan to work during the bad times, like during a downturn, or Bent could change organizational factors that might be undermining the plan or he could just get rid of the Scanlon Plan all together and find a new way of motivating employees whether it being an incentive plan or not.
When the plan no longer was enough to motivate the employees, Bent knew the plan needed to be revised. He had said, “A Scanlon program won’t perpetuate itself. You have to give it a shot in the arm every so often—whenever the work force needs it” (Beer and Collins, p. 6). To revise the plan, Bent needed to listen to the employee’s complaints. Part of the Scanlon plan was to listen to suggestions of the employees, so the complaints should have been just as important to listen to and evaluate.
The employee complaints were about the distrust of bonus calculations and questions of fairness. Bent and his management team should have seen the complaints as a suggestion for improving the bonus plan. Another alternative would be to change the organizational factors of the company. Bent could do this by using the Job Characteristics Model. Due to the Scanlon Plan, the company had already met the fifth characteristic of feedback, but Bent could also look at ways to improve the autonomy, task significance, task identity, and skill variety of his company.
By improving those characteristics, it could help the Scanlon Plan to further motivate employees. Lastly, Bent could decide to ultimately get rid of the Scanlon Plan at his Engstrom Auto Mirror Plant. Bent could motivate his employees by solely using the Job Characteristics Model. The Scanlon Plan caused his employees to distrust the management, so the best idea would be to no longer use the plan. Having distrust in management wouldn’t help to motivate employees at all. Bent should redesign the jobs at his plant to better meet the JCM, which in theory would motivate his employees.
There are five characteristics of the Job Characteristics Model that Bent would need to try to meet. First off, he would need to look into offering his employees skill variety, task identity, and/or task significance. If Bent could meet at least one of those characteristics, it would be very beneficial to his plant. Skill variety would consist of the employees’ jobs including a variety of different tasks, so that they could use different skills and talents they may have. Task identity would require the employees’ jobs to consist of completing a whole and particular piece of work.
Task significance would mean the employees’ jobs would have a significant impact on the lives or even work of other people. By at least offering employees jobs that meet one of those characteristics, Bent would be also offering meaningful work. Also, Bent would need to offer his employees jobs that consisted of Autonomy. Autonomy would give the employees freedom, independence, and discretion to scheduling and carrying out their work. By giving employees this freedom, Bent would be offering his employees personal responsibility. Lastly, Bent also would eed to offer feedback to his employees. Feedback should be done by giving employees information about the effectiveness of their performance. By meeting the criteria of the Job Characteristic Model, Bent would not only see greater employee motivation, but also greater performance and satisfaction, and lower absenteeism and turnover. Once, Bent had figured out how he was going to meet the criteria of the Job Characteristic Model, he could take it further by redesigning his employees’ jobs. Organizational Behavior gives threes ways this can be done.
First of all, Bent could use job rotation. Job rotation is when an employee is periodically shifted from one task to another when an activity is no longer challenging, but the nature of the work would stay the same. According to Robbins and Judge, “this would reduce boredom and increase motivation through diversifying employee’s activities, and helps employees better understand how their work contributes to the organization” (p. 218-219). Bent could also use job enlargement. Job enlargement consists of increasing the number and variety of tasks an employee performs.
This is different from job rotation because the employees’ job would be actually changing; the nature of the employee’s work would be different. The best choice of redesign that Bent should choose for his Engstrom Auto Mirror Plant is job enrichment. Robbins and Judge explain it as, “an enriched job organizes tasks so as to allow the worker to do a complete activity, increases the employee’s freedom and independence, increases responsibility, and provides feedback so individuals will be able to assess and correct their own performance” (p. 220).
If Bent were to redesign his plant to have job enrichment, he would most likely see a great increase in motivation and satisfaction, and also reduced absenteeism and turnover costs. If the Engstrom Auto Mirror Plant, adopted the Job Characteristics Model as their plan to motivate their employees, employees would be motivated at all times. The problem with the Scanlon Plan was that when things went bad in the company, the employees would blame the plan for any problems and lose motivation. By using the Job Characteristics Model, employees would have a hard time placing the blame on it.
Also, during the bad times, the working conditions of employees wouldn’t be affected very much or at all because the model is based more on individual work than as the whole organization production. Ron Bent should consider ending the Scanlon Plan and then using the Job Characteristics Model to motivate his employees during both the good times and bad. Work Cited Beer, M. & Collins, E. (2008). Engstrom Auto Mirror Plant: Motivating in Good Times and Bad. Retrieved October 13, 2008, from Harvard Business School Publishing. Judge, T. & Robbins, S. (2008). Organizational Behavior. New Jersey: Pearson Prentice Hall.
