Engstrom Auto Mirror plant in Richmond, Indiana, managed by Ron Bent and his assistant Joe Haley with 209 employees, experienced low productivity caused by low morality of workers. Low productivity has many consequences on businesses like increasing the costs and decreasing the quality of products that leads to customer dissatisfaction and decreasing the overall sales and profits. Improving productivity translates directly to higher profits and that’s what the ultimate goal of Ron and his assistant Joe in the Engstrom Auto Mirror plant.
It’s necessary to rebuild the trust between workers and the management at Engstrom Auto Mirror plant in order to succeed in any motivational program. Revising the Scanlon Plan will be the best solution available in the plant and supported by both workers and the managers. It’s also necessary to remove all roadblocks that weaken the Scanlon adoption. Based on Path Goal Theory; Leaders know how to motivate subordinates in order to accomplish designated goals (Northouse, 2006). Ron and Joe play a role in leadership success in the Engstrom Auto Mirror plant.
Finally, Ron and Joe should understand the downturn that hit the industry, thus, it’s important to develop a marketing strategy aimed to increase the sales volume and not to rely on Scanlon alone to turnaround the plant.
Lack of communication: The main problem that seemed to affect the Engstrom Auto Mirror plant inversely is the lack of proper communication between the management and the employees regarding the calculation of bonus payment. If this communication was properly given, the employees would not have thought that the bonus they are receiving every month is part of their entitled salary.
Any new technology or machinery should be introduced only after making the employees understand the lag period in the production that may follow and the future increase in the productivity. The employees should be well aware that faster they adopt the new technology, faster their bonuses are going to increase.
Lack of motivation: When the employees started to think that whatever they are receiving as bonus are their entitled salary, naturally the motivational force that is incorporated in the Scanlon plan becomes non functional. When a new technology is adopted or a new marketing strategy is adopted definitely a deficit month will follow.
But the employees are not aware of these calculations and are getting irritated each time they get a reduced bonus. They think that the management is cheating them and are not giving the entitled money.
Lack of proper leadership: When the overall productivity is reducing, instead of trying to dissect out the reasons as early as possible, the company is giving out orders to other companies for higher prices and thereby reducing their profit. A proper leader would be able to understand the reasons behind the low productivity and organize solution programs before involving third parties such as union leaders.
Laying off employees could aggravate the situation and could not be a remedy.
Involvement of parties: Without understanding the positive aspects of the Scanlon plan and also the strategies taken by the company, the union members are standing in favor of the employees and thus the overall productivity is decreasing. Alternatives In order to solve the problems in Engstrom Auto Mirror plant there are mainly two alternatives. First alternative is to reorganize the Human Resource Department and bring highly talented personnel to understand the problems of the employees and to communicate with them effectively.
The department has to organize motivational programs so as to incorporate motivation and thereby increase productivity. It is the ultimately the function of HR to effectively communicate with the employees and management and make the management decisions transparent to the employees. The disadvantage of this alternative is that if the new officials are not efficient this could give negative results and thereby aggravate the situation. The procedure is also costly. A second alternative is to adopt a new plan after considering the pitfalls of the Scanlon plan.
This would allow the management and the workers to start afresh with clear views, and ideas of the mission, objectives as well as the criteria for bonus payment. The disadvantage is that the process would be time consuming and would involve more expenditure. It will be difficult to bring about a change in a cloudy environment of the company. Conclusion Thus it could be seen that the downturn in the plant is mainly because of the lack of proper communication between the management and the employees regarding the calculation of bonus payment.
The workers do not understand that the reason for the lack of payment of bonus is the reduction in their productivity. They are demotivated and are backed by the union leaders to aggravate the situation A good HR department, which could properly communicate with the management and the employees, could actually solve the problem. This would encourage employees for team work, ethical behavior, and could create an environment where there is equality of employment and the workers who are the pillar stones in the success of any firm and better benefited compared to the supervisors or any other personnel in the plant.
It will be beneficial to understand any pitfalls in the Scanlon plan and bring about a modification with the full support of the employees. Thus a combination of the two alternatives that result in better communication with the employees and better motivation for the employees would solve the problems in the plant.
The implementation process could be divided into three stages.
Stage one: Reorganization of the HR department by carefully selecting those who have proved their efficiency in the work. It is necessary to see that the whole HR is working as a team and there is no difference of opinion among them.
Stage two: A detailed discussion of the management with the HR regarding the existing plan, the pitfalls in the plan and course of action to be selected. This would include development of motivational and communication strategies in order to understand the grievances of the employees and to motivate them so that they are satisfied in the work as well as benefits. A better marketing strategy to increase the volume of sales also has to be worked out in this stage.
Stage three: Implementing new strategies with the cooperation of the employees. A better communication and a cordial relation with management and employees can increase the motivation of the employees. Before implementing each technology, the ultimate benefit to the employees could be highlighted so as to increase the motivation of the employees. This would help them to adopt the change more quickly and reap its benefits. This would in turn lead to employee satisfaction and a better productivity and profit for the company.