Engstrom Mirror Case Study

HUMAN RESOURCE MANAGEMENT
(HRM 5001)
PGDM
TERM 1
BATCH 2019-2021
FAS L2
ADITYA SHAHRI (19F205)
DAMINI DESUR (19F215)
PRATIK UPADHYAY (19F236)
SAI SUJITH (19F245)
SONALI JAKHAR (19F256)
Engstrom Auto Mirror Plant: Motivating in Good Times and Bad
Problem Recognition –
Engstrom Auto Mirror Plant , a manufacturer of mirrors for automobile
industry, was going through a downturn in performance. Plant-Manager Ron
Bent and his assistant, Joe Haley were convinced that this dip in productivity
and increased anguish among the employees were to be attributed to the low
morale and motivation due to the sudden reduction in payments, specifically
from holding back of bonuses which the employees had been enjoying since
the past few years.
When Ron Bent was appointed as the plant-manager ,he was keen on
deploying a group incentive plan to bring a change in the current situation and
motivate employees to work together and reap the benefits of their hard work
in the form of bonuses from the Scanlon plan.
Bent, after due deliberation and a fair opportunity to the employees to
understand how the Scanlon incentive plan works, instated the same at
Engstrom. The plan gave outstanding results and kept both the employees and
the employers happy for the initial few years, however there were problems
starting to creep up in the process –
 The workers had begun to take advantage of the profit sharing/bonus
plan by reducing their work load/under delivering and still securing the
same benefits – Low employee productivity.
 Feeling of distrust crept in, employees believed that the employers were
“playing with numbers”, even though they were aware of the bonus
sharing system, they didn’t really have a say about how much
percentage should it be – Lack of motivation and thus disinterested to
take contribute in decisions.
 Inequality in the work load shared and yet the same amount of bonus to
everyone started to annoy those who worked comparatively more as
opposed to others who escaped their responsibility and just enjoyed the
benefits – workers restricted their output and avoided responsibility;
they displayed characteristics of Type B personality.
Bent realised that some measure had to be taken immediately to curb this
downturn and get production back on line.
Identification of External & Internal factors which affect the
situation –
INTERNAL FACTORS –
 The employees were too set in their “routines” because of the same
set of tasks , hence the motivation to contribute in idea generation
had slacked.
 This disinterest led to low productivity among the employees
,harming the company as a whole.
 Employees could take part in decision in making but only to the
extent of their work and not their compensation plan, thus later
when the percentage of bonus changed, a feeling of doubt crept in
which made the employees question their employers’ integrity.
 This sudden reduction in their income, made the employees hostile
towards the management – seen from Maslow’s Hierarchy the
second level of “security needs” was shaken.
 Workers were restricting themselves from delivering to their capacity
and inhibitive to accept changes.
 Employers started to perceive every employee as a Type B
personality due to their falling performance.
EXTERNAL FACTORS –
 The market downturn which forced the employers to make changes
in the Scanlon Plan affected the employees’ morale.
 The following lay-off made the employees sceptical of their future at
Engstrom.
 Employees lost their confidence and trust in the Scanlon plan and the
employers.
Concepts to reach at solutions/decisions –

 Job Redesign – Repetitive tasks provide little variety, autonomy or
motivation, thus proactive steps to incorporate job rotation in order
to nurture, develop and increase intrinsic motivation.
 Employee involvement and participation – Since the employees felt
left out from the decision-making process to fix their bonus
percentages, employee involvement would have made them feel
more in control of their work lives and committed to the
organisation.
 Variable pay – Employers should have kept it clear from the
beginning that there is possibility of variable bonus percentages
based on measure of performance which would have motivated the
employees to perform continuously.
 Merit based pay – to appreciate the employees with more feasible
ideas with higher rewards.
 Supportive model -Employers should have made attempts to discuss
and explain the Scanlon plan with greater detail; also, should have
delivered the information about change personally, helping
employees recognise their worth and importance in the organisation.
 Employee Recognition program -non financial incentives given
formally to appreciate and highlight valuable contribution from the
employees; this in turn would help employees enhance their self-
esteem and instil higher job satisfaction.
Recommended Action Plan(s) –

1. Goal Setting theory – Employers should have elaborated on performance
benchmarks and set up a feedback channel which would have led to higher
performance from the employees.
2. Setting up two-way communication channels in the organisation – to
promote open and free communication which will eradicate any sort of
ambiguity.
3. Organise team building seminars in order to make employees more
proactive and promote superior performance as a usual practise.
Final Solution Plan –

Engstrom Auto Mirror should have made more clear communications from the management
to the employees, explaining the changes in the organisation, they should also incorporate
any or combination of above mentioned strategies in order to motivate the employees,
there should have been proper guiding instructions to overcome the current crisis and
prepare the organisation better to tackle future obstacles/changes.

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HUMAN RESOURCE MANAGEMENT

Concepts to reach at solutions/decisions –

Recommended Action Plan(s) –

Final Solution Plan –

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