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Engstrom Auto Mirror Plant 2

In: Business and Management

Submitted By Northwood
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Engstrom Auto Mirror Plant

Problem Statement:
Engstrom Auto Mirror Plant was considerable successful for approximately 50 years then after redesigning production lines with new technology they had long production delays that hurt their business. Ron Bent was hired as plant manager to attempt a turnaround in production and bring profitability back up. Bent needs to ensure workers are receptive to new technology.

Hypothesis 1: Plant manager before Bent could not adapt to use of new technology.
Ron Bent believed in incentive programs; he implemented the Scanlon Plan. The Scanlon Plan worked over a seven year period with sales quadrupling due to the increase in productivity and employee morale. Then a downturn in the industry made it necessary to lay off 46 employees and Scanlon bonus was placed on hold for seven months while Bent decided to change or replace it.

Hypothesis 2: It may be that Bent did not consider the reactions of the workers if Scanlon Plan fails and he did not prepare an alternative plan.
Bent should work closer with other managers to re-design Scanlon Plan or alternate plan. Including changing the ratio target to 44% as suggested by the Scanlon consultant back in December 1999. Similar to Beverly Stevens of Quick-Cook Ovens, Bent did not consider workers performance or lack of performance and corrective actions until productivity regressed. (Stewart, 1985, pg. 2). Now he is concerned with losing his best client Martinez whom designated Engstrom as a certified supplier. Certified status means Martinez authorized Engstrom to be both extraordinary reliable and quality.

Recommendations & Implementation: • Implement a personal management plan (PMP) that outlines how the workers performance and productivity can be measured. This is measured through chain of command, such as the person who signs off for employee to get bonuses. It should be noted that bonus rate is determined by consistent or above average productivity, it is not given to workers just because they show up to work, it is not a part of regular compensation.

• Create incentive plan or re-design Scanlon Plan to give bonuses based on the company’s increased revenue with the extra incentive to the individual who exceeds in their PMP to receive a higher percentage per the ratio established for company. Another incentive would be opportunity to be promoted into management.

• Encourage visits to similar plants to gain a better understanding of the work environment. Take suggestions and give detail review and feedback to the person submitting suggestion. Give reward if suggestion is implemented and provides company gain in revenue.

• Another option would be to leverage everything the company can get and write-off company debt for what can be salvaged, this would be similar to the company with the cracked engine blocks sold by Mr. Keller in Integrity and Management. (President and Fellows of Harvard College, 1991). Were Keller was only thinking of his profit for his family, and not his employees or the people he would hurt.

Beer, M & Collins, E (2008). President and Fellows of Harvard College (2008). Engstrom Auto Mirror Plant: Motivating in Good Times and Bad. 2175. Boston, MA: Harvard Business School.

Clawson, J. (2001). Why People Behave the Way They Do. DBP No. UVA-OB-0183. Charlottesville, VA: Darden Business Publishing.

President and Fellows of Harvard College (1991). Integrity and Management. 9-392-005.
Boston, MA: Harvard Business School.

Stewart, W. (1985). Quick-Cook Ovens: A Public Relations Perspective. DBP No. UVA-E-0048. Charlottesville, VA: University of Virginia Darden School Foundation.…...

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