The case study analysis of Engstrom shows that they are currently experiencing organizational issues with employee’s dissatisfaction (lack of motivation), failed incentive plans (Scanlon Plan), and major issues with production and quality issues. When a corporation is experiencing these types of organizational issues such as Engstrom, the root causes of these issues need to be analyzed. A Root Cause Analysis is a five step process to answer the question of why the problem occurred in the first place. (Mind Tools)
Engstrom was a very successful auto mirror plant since 1948. In the late 1990’s they decided to implement new technology. (Collins & Beer 2008) The implementing of this technology caused the organization to have a dysfunctional
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effect. According to Newstrom, a dysfunctional effect occurs when there is a decline in productivity. (pg. 87) In order to increase production at Engstrom, they voted in 1999 to implement the Scanlon Plan. A Scanlon Plan is an incentive bonus plan to reinforce teamwork and cooperation. (Collins& Beer 2008) This particular plan is based on a percentage/ratio of payroll costs to sales volume of production. The plan states that employees would be paid bonuses in months where payroll costs are less than 38% of total sales revenue. (Collins & Beer 2008) In the beginning the plan was a great success. However, over time as sales declined and the ratio percentage increased, the employees at Engstrom were no longer satisfied. According to Collins & Beer, Engrstrom employees had not received a bonus in 7 months. The employees began complaining. They felt that the accounting department could be alternating or fixing the numbers and a question of employee bonuses compared to management bonuses also became an issue. This dissatisfaction with the employees leads to the Equity Theory Model.
This model is where employees tend to judge fairness by comparing their inputs to the outcomes they receive, and comparing this to the output of others. (Newstrom 2015) Inputs are what an employee puts into the company and the outputs are what they expect in return. This theory says that when an employee feels that they are being rewarded on an equal level as what they are contributing, they will be more motivated in increasing their outputs. They also take into consideration the work of others. If they are working at their max capability and they see others who are not, they feel that the compensation should be different. This was seen in the employee’s issue with managements …show more content…
bonuses. In understanding the Equity Theory we also see that there is a procedural justice. This is the approach to motivation which focuses on interpersonal treatment and clarity of explanations. (Newstrom 2015) Interpersonal treatment is based on how management respects the employees. Clarity of explanations is what management expects from the employees for the bonuses to be rewarded. The employees at Engstrom have not received bonuses in over 7 months, the production level is decreasing along with the increasing quality issues. The employees are no longer motivated to succeed. Thopar says that motivation is the ability to measure factors that energize, channelize, and sustain work behavior over time.
(pg.1) The Scanlon Plan is the root cause of the dissatisfaction and the employee’s lack of motivation. The Scanlon plan has also failed at maintaining the Social Equilibrium in Engstrom. Social Equilibrium is when all interdependent parts within a company are working in balance. (Newstrom 2015) When systems are in equilibrium they can also embrace changes within the organization and make necessary adjustments to maintain the balance. Hence, if the system would had been working properly when the sales decreased they would have modified the Scanlon plan to accommodate this adjustment. The current Scanlon plan did not have a contingency fund that could maintain the downfall Engstrom encountered in in the early 2000’s. While they had a percentage of the funds to account for bad months, it was not sufficient. This would have prevented the frustration with the employees and production levels and quality could have been sustained as
well. In analyzing the root causes of the organizational issues of Engstrom. We see that the root cause of the production/quality issues are based on the lack of motivation in the employees. The employees have lost their motivation to succeed since they are no longer receiving bonuses. The employees are no longer receiving bonuses because of the failed Scanlon incentive plan. In this analysis, I see that Engstrom implemented what they thought was a great incentive plan like Scanlon to help motivate the employees. However, in creating this plan they did not account for all aspects of the needs of these employees. This includes not only the incentive plans but measures to ensure the employees, that the numbers of monthly sales were accurate. The impact of not including aspects of human behavior has caused the employees not to be motivated. Therefore, they are not doing their jobs at the most effective and efficient means resulting in a loss of production and an increase in quality issues.
Employee motivation and rewards are effective means to retain employees. When an employee is motivated, his or her needs are being met. When an employee is unmotivated, his or her needs are not being met which results in a high employee attrition rate. Riordan Manufacturing is experiencing a high attrition rate. Riordan Manufacturing has 3 plants and employs 550 people. Recently, Riordan hired Human Capital Consulting to perform an analysis on the underlying issues that are causing the decreasing employee satisfaction and to recommend courses of action that will address the underlying issues. Research has been done to identify the issues and opportunities, the stakeholders and ethical dilemmas, and the end state vision. A gap analysis has also been performed to determine the gap between the current situation and the end state goals. Riordan Manufacturing will use this information to determine the best way to proceed towards improving its working environment for the employees.
The developing concerns and root causes of Engstrom Auto Mirror Plant in Milestone One and Two were identified and analyzed from a human behavior perspective. However, it is just as equally imperative to recommend solutions to issues identified. The major issues that Engstrom faced stemmed from the failure of the Scanlon Bonus Plan. As a result, employee motivation, management and employee trust, employee attitude and the overall work culture were all tainted. The objective of this milestone is to create organizational development outcomes that are immediate solutions to the organizational issues. Also, suggest strategic plans that will lead the organization to success. This will be successful through evidence-based management and theoretical
A Review and Assessment of Its Critiques, Journal of Management, SAGE. Viewed on5th April 2011, at http://jom.sagepub.com/content/36/1/349.full.pdf+html
In asking the consulting firm for assistance, President Paul Willard stated that the main issue within the organization was a “power struggle between people and departments.” This is precisely where the issues in both the sales and production departments are stemming from. After analyzing the situation, several issues can be pointed out in the sales department, the first being the leadership style of sales executive vice-president Ernie Lane, the second being the dramatic shift in the work force, and the third being the lack of motivation and compensation to maintain morale, satisfaction, and productivity. Most importantly, all the problems are
Throughout this class we have talked about how various disparities can influence both how and when you need health care, be it for physical or mental reasons. Basically if you aren’t a middle class and above white male with a good job you’re basically fucked. Things such as race, gender, education, the environment you grew up in, who you know, and of course your insurance and income play a huge role in how you experience all aspects of healthcare. As explained in the Link&Phelan article, certain social factors can cuase specific health results. As explained in the article the Fundamental Causes Theory “claims that new mechanisms arise because persons of higher socioeconomic status are able to deploy wide range of resources- including knowledge, money power, prestige, and beneficial social connections- that can be used individually and collectively in different places and at different times to avoid disease and death.” What this means is basically those who are better off are more suited and have more chances to combat sickness and to elongate their lives.
Many people believe that in order to succeed in a business that is having difficulties, it is important to focus on a particular area in order to be better productive in each of them, and be able to reach the goal. Instead, Goldratt and Jonah demonstrates that is important to focus on the company as a whole, but at the same time, it shows that it is incorrectly to only focus in an specific manufacturing department, or one plant, or a department within the plant, because people should not be concerned in local optimums.
A root cause analysis is a systematic approach utilized to identify problems within an event and create a plan for preventing that problem from recurring in the future. To be effective, a timeline of the events are created to help identify those areas that may be the reason for the problem or event, and the relationship between the causal factors and those factors identified to be a reason for the event to have occurred.
This study will also identify the theories that will help answer these and other questions. In addition, this research will determine methods in which these theories can motivate the employees.
It is very clear that the problems experienced in the companies are not lone standing but in most of the cases they are dependent on each other and there are strong bonds or relationships with regards to the cause and effects between them. It is therefore important to form or establish a strong cause and affect between them.
The main problems that are affecting the company were the high level of labour turnover, below target production rates, high levels of scrap, the employees had little input in the decision making, therefore resulting in low motivation and job satisfaction, and didn't have enough feedback on there performance. Added to this was the conflict between the supervisors and employees in the production and packing areas, and the grading and payment levels wasn't satisfactory to the employees.
The HR of the company was also facing issues, like there was no proper ways of training the young staff. There was a poor layout in managing and evaluating the performance of the employees in an appropriate manner. No proper system was developed for the motivation of the employees due to which it was making an impact over the productivity of the
Being the lack of career development programmes the main reason for employees to leave the company more in detail issues were identified:
Ø The “comparing employees effect” evaluates one employee to another employee without considering the different tasks they are required to perform. (Neely, G.)
One reason of failure may be the problem of communication through the company which may create an unfriendly working environment. In the presence of a high risk of losing their jobs,it is a difficult task to keep people motivated in doing their best at their working places.(Bulent 2005; Buono & Bowditch 2003).
The effective Human Resource Management in an organization requires an exceptional standard set for motivation, job design, reward system and equity. Nowadays, people are more willing to avoid unfair treatment in the workplace than any other aspect. The fundamental concept behind Equity is an attempt to balance what has been put in and taken out at the workplace with a feeling of justice being served. Unconsciously, values are assigned to many various contributions made to the organization, hence causing an air of misbalance in the environment. There has always been a disparity in the view on the desirability or the cost effectiveness of policy measures. The importance of equity or reducing discrimination has gained a lot of attention in the labour market (Milkovich, Newman & Ratnam, 2009).