Engstrom Auto Mirror Plant: Case Study

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Abstract

Organizational success and stability depend on human aspects of a business: operational efficiency and productivity levels. An organization must align human behavior with its strategy and vision to avert specific problems. The analysis of the Engstrom Auto Mirror Plant reveals key organizational issues that affected its growth. Different theoretical frameworks and principles on human behavior are used to analyze the organization and recommend solutions. The models are also applied to a practical workplace experience to derive related conclusions and insights into human factors affecting the firm.

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Introduction

Explanation

Organizational issues, if not addressed, can impact turnover, productivity, and operations management. Engstrom Auto Mirror plant, an Indiana-based automotive mirror supplier, had experienced considerable success before 2007. After two years of a downturn in the industry, the plant manager, Ron Bent, was forced to downsize, reducing the workforce by 20% in 2006. The key organizational issues that Engstrom faced at this point were declining plant productivity, low employee morale and job satisfaction, and mistrust in management. Product-quality issues also started to emerge, posing a reputational risk.

Relationships with major clients were at stake due to production delays. The sales drop was not new; Engstrom had faced a similar crisis previously, but the adoption of the Scanlon Plan in 1999 helped enhance staff morale and increase output. Subsequently, employees were paid bonuses until 2006, when the program was halted. Bent considered revising the plan, removing it, or trying a different one to address low morale and productivity at the plant.

Direction

This case study analysis will identify and examine the root causes of the organizational issues in Engstrom. Behavioral theory concepts will be applied in the analysis of their impact. Engstrom’s work culture is a major factor affecting organizational behavior and growth. The analysis will also reveal the management actions influencing workplace enthusiasm, motivation, communication, and productivity. Based on this research, recommendations for improving organizational outcomes and strategic actions at Engstrom will be developed based on behavioral theory concepts. Finally, the root-cause analysis will be applied to a personal workplace experience.

Root Cause Case Study Analysis

Organizational Issues

Engstrom is grappling with reduced productivity, low morale, and mistrust of managerial decisions, even after implementing the Scanlon Plan. A major root cause of these organizational issues is the failure to address its corporate culture. The incentive program was adopted to productivity, morale, staff engagement, and transparency in order to boost productivity. However, the economic downturn revealed that unresolved cultural issues impacted the business. Unresolved conflict, mistrust, and old mindset reduced employee engagement at work and teamwork.

The plant’s suboptimal output and low staff morale stem from a lack of employee motivation. Their root cause relates to limited external rewards that affect internal work drive. For Engstrom, employee motivation declined after the bonus payments under the Scanlon Plan were stopped. Also, some workers perceived the incentive plan as unfair to supervisors. This distrust of bonus calculations may have contributed to reduced work performance and overall job dissatisfaction. Engstrom supervisors may have felt that they are not adequately compensated for their efforts due to an unfair incentive plan formula.

Poor communication is another possible root cause of low staff morale at Engstrom. The staff was unaware of the reasons for changing the Scanlon Plan calculation. Although Engstrom communicated financial data to staff during meetings, the level of engagement with these reports was low. Low job satisfaction may have disengaged them from organizational matters, affecting the effectiveness of top-down communication. As a result, the union was more assertive and unwilling to work with the management.

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Root Causes

The underlying causes of Engstrom’s organizational issues must be resolved as a part of its turnaround strategy. Among them is corporate culture, which was not addressed in the plant. Cultural voids emerged when the industry experienced a downturn, and Engstrom’s bonuses from the Scanlon Plan stopped. According to Devito, Brown, Bannister, Cianci, and Mujtaba (2016), performance management plans can strengthen shared beliefs and priorities and promote fair incentive programs for staff embodying those values. However, from the case study, the industry slump in 2005 hurt its bottom line; a once successful automotive mirror supplier lacked social equilibrium.

This balance must be maintained among mutually dependent parts of a firm (Newstrom, 2015). Layoffs after the downturn affected this equilibrium, as staff workloads increased. The physiological state of comparing efforts to compensation or individual gains is founded in the equity theory (Devito et al., 2016). In a context of perceived unfairness or disequilibrium, decreased work performance, theft, and job dissatisfaction are bound to emerge.

A root cause of declining productivity and low morale is the lack of motivation and its dysfunctional effect on teamwork. Low output exposed Engstrom to financial distress that affected bonus payments for seven months. Humans need extrinsic and intrinsic motivation to perform well in the workplace. The latter fills one with a sense of purpose, achievement, and focus due to a perceived rewarding work environment (Devito et al., 2016).

This internal drive was lacking in Engstrom’s employees, as the company relied only on extrinsic motivation. An intrinsically motivated staff is driven by passion and enthusiasm for work, not external rewards (Devito et al., 2016). After the regular bonuses stopped, staff morale and productivity declined sharply. Further, a firm that used the collegial model, where people worked collaboratively and efficiently to realize organizational objectives, seemed to adopt an autocratic approach that included penalties for unmet production targets.

Ineffective communication is another human factor underlying low employee morale in Engstrom. The staff misunderstood the Scanlon Plan bonus computation – payouts based on production. Despite providing financial reports and rationales, the employees appeared detached due to poor communication by the management. Limited job satisfaction creates a disengaged workforce; hence, employee-management interactions decrease (Mayfield & Mayfield, 2017). The style and content communicated are critical in sharing information on new policies or changes. Engstrom’s employees did not understand the Scanlon Plan, especially why their bonuses were declining or receiving no payments.

Impact

Engstrom’s organizational problems emerged from poorly aligned behavioral concepts, especially on human motivation. Established frameworks can help identify, prioritize, and meet human needs that impact workplace performance at the plant. The lack of motivation due to the inefficient incentive plan impacted the production function negatively. The focus was only on bonuses, not on intrinsically motivating factors. Maslow’s hierarchy of needs recognizes five categories of human requirements that drive individual behavior, including esteem and self-actualization (Devito et al., 2016).

Based on this theory, Engstrom’s staff may be motivated by factors other than bonuses. Newstrom (2015) states that “what employees are currently seeking” is a strong motivating factor than “receiving what they already have” (p. 122). Therefore, adopting another incentive plan would not improve the plant’s productivity because the staff believes that the current program did not work. Maslow’s hierarchy of needs can help Engstrom determine staff needs and address them in order of priority to create a highly engaged and satisfied workforce.

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Solutions Development

Organizational Improvement Outcomes

Application of behavioral human concepts could have averted the organizational problems at Engstrom. Appropriate steps can help remedy these issues to improve the situation at this plant. Human behavioral research for increasing human motivation, communication, and staff engagement is applied to develop these solutions. First, intrinsic rewards are recommended to complement Engstrom’s incentive plan. While extrinsic rewards, including the Scanlon Plan, positive feedback, fame, and accolades, can motivate people, they can decrease individual drive if not used correctly (Devito et al., 2016).

Human motivation depends on not only incentives such as bonuses but also the quality of the work environment. Employee engagement and energy increase when one feels a sense of choice, competence, progress, and meaningfulness (Mayfield & Mayfield, 2017). As a result, positive emotions exceed negative feelings, leading to a healthy work engagement. Regular feedback would be necessary to elicit the emotional charge in this workplace.

Second, internal communication competency is an improvement outcome recommended for Engstrom. The staff does not understand how the Scanlon Plan works, especially the bonus computation method. Creating effective communication of financial information in the organization would involve staff training on productivity analysis and interpretation (Dewhurst & FitzPatrick, 2019). Establishing a data-driven culture at the plant will require educational modules on various performance metrics and cost data used in the incentive program leading to bonuses. Through the training, data presentation and top-down communication will be clear and effective for the audience to understand.

Strategic Actions

Proactive steps anchored in the correct behavioral concepts can help address the issues at Engstrom. Strategic actions for increasing motivation, engagement, and communication are recommended. Intrinsic incentives at the plant will establish a new culture that supports staff choice, skills, meaningfulness, and career advancement (Devito et al., 2016). Four strategic actions are recommended for enhancing the staff’s intrinsic motivation.

The first step is granting employees freedom or control over tasks, which creates self-directed teams. Enhancing a worker’s self-direction and autonomy has a motivating effect and promotes creativity and mastery of different skills, translating into higher productivity (Devito et al., 2016). The second strategic action is quick, consistent, and effective feedback on individual performance – supervisors and employees. This managerial strategy can decrease mistakes and enhance feelings of efficiency or competency, contributing to higher motivation.

The third strategic action is aligning individual goals with corporate objectives. Showing how one’s role directly contributes to organizational output will give staff meaningfulness (Dewhurst & FitzPatrick, 2019). The fourth step is introducing progress markers (key performance indicators) to help employees identify opportunities and constraints to the achievement of milestones. The planning tool will also enable them to evaluate individual progress, producing a motivational effect and strengthening employee engagement.

Better presentation and communication of financial information are needed at Engstrom. Training on productivity analysis, metrics, and variance is recommended to help address this issue. Engstrom needs a clear communication strategy for conveying data to internal stakeholders. A proposed strategic action is establishing a vision for data-driven culture at the plant. Such a step will ensure all decisions, including bonuses, are based on well-understood performance metrics, contributing to higher job satisfaction (Mayfield & Mayfield, 2017). The second strategy is setting expectations for data engagement to enhance accountability and ensure commitment to organizational goals. These steps will help address Engstrom’s communication problems and increase job satisfaction.

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Workplace Analysis

Organizational Issues

I once worked in software and IT infrastructure provider serving individual and institutional clients. The firm was a startup with no substantive departmental heads for sales, marketing, engineering, and research and development. To boost efficiency and performance, the management decided to recruit a leader for each department. However, the new heads were recruited from outside the organization, which lead to resistance from staff. In my department, I observed that the sales team I was supervising was not well engaged. Further, communication from senior management was not consistent, hurting productivity. After hiring new highly paid managers, turnover involving key employees increased and workloads increased, resulting in more complaints.

Root Causes

The organizational issues relevant to my workplace are employee dissatisfaction, poor communication, and lack of leadership. The root cause of a dissatisfied workforce in my organization is ineffective social skills that affect interpersonal relationships. An awareness of one’s environment and the effect of one’s actions on others is needed (Devito et al., 2016). Positive feelings of achievement can enhance team motivation and satisfaction. The initial resistance to leadership change was not addressed in my organization, escalating the problem – dissatisfied employees. The expectancy theory’s premise is that more effort will translate to better performance (Newstrom, 2015). However, feelings of unequal treatment and a lack of policy on external versus internal recruitment contributed to communication issues.

Impact

The behavioral concepts of expectancy theory and communication were not applied correctly in my organization, impacting motivation and turnover. Goal setting can help staff strive to meet expected performance levels (Mayfield & Mayfield, 2017). Promoting a positive employee response to expectancy, instrumentality, and valence can improve leadership change outcomes. Team leaders in the organization feel unequal to the new managers hired externally. Based on the equity theory of motivation, fair treatment (equal pay) will improve employee motivation and teamwork.

Improvement Outcomes

To remedy the organizational issues at my organization, the management should strive to achieve two outcomes. First, effective leadership communication skills are needed to enhance team efficiency. Introducing a new policy or change should be consultative to promote stakeholder buy-in and avoid resistance (Mayfield & Mayfield, 2017). Second, employee feedback and input should be used to inform decisions. The approach will motivate staff to be proactive in their roles, share ideas, and trust the management.

Strategic Actions

Specific strategic actions based on behavioral concepts can help my organization address existing issues. First, leadership training for the top managers can help reinforce teamwork at the firm. Equipping employees with communication skills can foster teamwork and collaboration across functions and motivates staff (Dewhurst & FitzPatrick, 2019). Second, team-building activities for departments and departmental meetings are recommended as a strategy for improving workplace relationships. Team-building seminars have been shown to enhance communication and teamwork (Dewhurst & FitzPatrick, 2019). They can create a sense of shared accomplishments and success among employees, reducing the rift between the staff and the new department heads.

Conclusion

Key Points

The case study analysis revealed serious organizational issues at Engstrom: declining productivity, low morale, and mistrust of management decisions. Their root causes relate to limited intrinsic motivation, poor communication, and cultural voids. The equity theory and hierarchy of needs are useful tools for creating a healthy organizational culture. A workplace environment that values intrinsic motivation is more desirable than one that emphasizes extrinsic rewards only.

Insights

The practical application of behavioral concepts gives insights into workplace dynamics and creating an optimal work environment. Specifically, human behavior theories, such as the expectancy and equity models, recognize the significance of communication, staff motivation, work independence, and team building in increasing morale and productivity. Appropriate application of these frameworks can help address constraints to the optimal performance that result from human interactions and relationships in the workplace.

References

Devito, L., Brown, A., Bannister, B., Cianci, M., & Mujtaba, B. (2016). Employee motivation based on the hierarchy of needs, expectancy and the two-factor theories applied with higher education employees. International Journal of Advances in Management, Economics and Entrepreneurship, 3, 20-32. Web.

Dewhurst, S., & FitzPatrick, L. (2019). Successful employee communications: A practitioner’s guide to tools, models and best practice for internal communication. New York, NY: Kogan Page.

Mayfield, J., & Mayfield, M. (2017). Motivating language theory: Effective leader talk in the workplace. London: Palgrave Macmillan.

Newstrom, J. (2015). Organizational behavior: Human behavior at work (14th ed.). New Yor, NY: McGraw-Hill Higher Education.

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BusinessEssay. (2022, May 28). Engstrom Auto Mirror Plant: Case Study. Retrieved from https://business-essay.com/engstrom-auto-mirror-plant-case-study/

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