Engstrom Auto Case Study Into

In: Business and Management

Submitted By maineisastate
Words 564
Pages 3
Introduction
Engstrom Auto Mirror plant is a privately owned business that manufactures mirrors for trucks and automobiles in Richmond Indiana. In May of 2007 the managers were experiencing a crisis at the plant. The most pressing issue at the time was the slow pace of productivity. Low productivity was increasing costs in other areas. Not only was Engstrom having productivity issues but they were having product-quality and moral problems as well.
In order to explain the source of these problems we must analyze Engstrom’s history. A company’s past can greatly affect the present and future state of an organization (Schweitzer, S). Engstrom had enjoyed considerable success since it’s founding in 1948. However by the late 1990’s the company stopped being profitable during a period of transition to new technologies. Ultimately this resulted in the replacement of the plant manager with a younger more tech savvy individual.
At this time employee moral was extremely low and productivity was at 40% of expectations. After studying the positive results of nearby plants the new management built the support needed to implement a Scanlon Plan at the Engstrom plant. The Scanlon Plan is an incentive plan that pays bonuses to employees. A key component of the plan is the concept of participative management. The idea behind this being that individuals will work harder to achieve an organization’s goals if they have the opportunity to take responsibility for their actions and apply their skills. The institution of the plan led quickly to an increase in productivity. Unfortunately over time enthusiasm decreased and the employee’s became dissatisfied with certain aspects of the Scanlon plan. The main grievances among employees were distrust of the bonus calculations and questions of fairness in bonus distributions. As management was struggling to rectify the issue an industry…...

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