Engstrom Auto Mirror Plant: A Case Study

The privately owned manufacturing company Engstrom Auto Mirror Plant in Richmond, Indiana has
faced a host of organizational issues throughout its lifespan. Upon the plant’s seventh deficit quarter it
was apparent that the company was facing an epic crisis. The organizational issues faced by the plant
are a failing incentive plan, low employee morale, poor productivity, lack of trust between employees
and management, and a lack of employee engagement (Newstrom, 2015, p. 536). It is apparent that all
of these organizational issues are the symptoms of choosing a poor foundation in which all companies
stand on — that foundation being the company’s culture.

Engstrom Auto Mirror Plant implemented an incentive plan years prior, which was designed to pay out
bonuses to employees for the increase in productivity (Newstrom, 2015, p. 537). Whenever the plant hit
its target ratio, the company would pay out bonus checks to all it’s employees. The aim of this was to
cure the plant’s productivity issue (Newstrom, 2015, p. 538).

The Scanlon Plan acted as a bandaid for Engstrom Auto Mirror Plant and lead the company to a
prosperous seven year period. Unfortunately, when the industry hit a low, the plan could not bring even
the most supportive Engstrom Auto Mirror Plant employee to see a bright future. The workers at the
plant had come accustomed to the bonus checks that the Scanlon plan had provided them for their
efforts as they boosted the plants efficiency (Newstrom, 2015, p. 538). When the downturn of the
industry hit and bonus check compensation stopped, it lead to the employees becoming angry and
suspicious. They felt the extra compensation had been taken away from them.

Communication and trust had clearly become an issue at the plant even though one of the tactics of the
Scanlon Plan to help motivate employees was to communicate financial and other forms of data to the
entire organization (Newstrom, 2015, p. 540). Also, all employees under the plan are encouraged to
suggest different ways to improve the plant’s efficiency. All employees suggestions would then be
reviewed by the plant’s committee. This type of culture is meant to create a change friendly
environment as employees are continuously engaging in different ideas they share to make the plant
more profitable. Again, when times were good the employees were all engaged in the companies new
culture of communication and the company accepted many of its employees suggestions. The
employees were happy that their ideas and thinking were leading to them being rewarded. When the
down turn of the industry hit, the employee’s began to distrust the company’s bonus calculations,
question fairness of the plan’s payout to certain employees that were not supposedly working as hard as
others, and management began to suspect employees were stealing (Newstrom, 2015, p. 540).

For my case study analysis I plan on studying the root causes of the organization’s issues. I believe the
culture at Engstrom Mirror Auto Plant played a major part in the company’s downward decline.
Researching the current organizational behavior literature on how humans respond to different work
cultures may lead me to discovering how to improve Engstrom Mirror Auto Plant. During my research, I
hope to uncover what truly creates productivity, enthusiasm, motivation, trust, and open
communication that’s everlasting in a workplace. Employee morale was a major problem at the plant.
Which factors create low employee morale? Could higher morale have saved the plant? After my
research is completed, I will develop a plan on how Engstrom Mirror Auto Plant can apply behavioral
theory concepts. I will also research strategic steps on how to implement such practices in the work
environment.

Case Study Analysis: Root Causes

The Engstrom Auto Mirror Plant is facing organizational issues that stem from many root causes. One of
the root causes is that the organizational culture was never addressed. It was instead ignored with the
installation of the Scanlon Plan. The Engstrom Auto Mirror Plant thought the incentivized plan would
solve its productivity issue, low moral, lack of employee engagement, and communication issues. When
the industry hit a low, it truly exposed the company’s cultural voids. The Scanlon Plan was not paying
out bonuses anymore to artificially boost the morale and happiness of the employees.

The Engstrom Auto Mirror Plant suffers productivity issues and employee engagement issues due to a
lack of motivation from the employees. The root causes for this epic lack of motivation or the
abundance of it can be found in the factors that motivate us as human beings. In the plant’s case, the
lack of focus on intrinsic motivation is apparent, which can greatly hinder an employees desire to
become engaged (Froiland, 2015). Intrinsic motivation gives the individual a sense of purpose, sense of
accomplishment, and progression, making their work rewarding to the individual (Thomas, 2009).
Without this internal drive, the plant will never reach its optimum performance level since it’s
employees are not motivated to do so. This issue was apparent before the Scanlon Plan and reemerged
once again when the industry hit a low. Once the bonus checks stopped, so did the employee
motivation. When a workers intrinsic rewards are increased, they are more energized, self managed,
and will reach new and higher levels of engagement (Thomas, 2009). Numerous studies have proven
that the higher an individual’s intrinsically motivated rewards are, the higher their job satisfaction will
become (Thomas, 2009). Beyond the notion that the plant is lacking ways to intrinsically motivate its
employees, the focus on external rewards, such as money, decreases this inner motivation (Deci, 1971).
This was proven during a study where undergraduate students external rewards were given to some and
not to others. The results indicated that when money was given to the students as a reward, their
intrinsic motivation decreased (Deci, 1971). Positive feedback, on the other hand, and verbal
reinforcement, increases intrinsic motivation Deci, 1971).

We also learned that employees at the plant began to believe other employees did not deserve bonus
checks since they did not contribute as much to the company. The physiological state of weighing out
the outputs versus the compensation or benefits is known as equity theory (Hoffman-Miller, 2013). The
employees believed they were not being compensated fairly as compared to their outputs, which is
further proven by the fact that managers at the plant begun to suspect philtering. Individuals within a
company will compare their contributions and what compensation they have received for that work
compared to those around them (Hoffman-Miller, 2013). When workers feel that the work environment
is at disequilibrium, many problems arise. These problems can include reduced work performance,
stealing, lack of motivation, or decreased job satisfaction (Hoffman-Miller, 2013).
Workers at Engstrom Auto Mirror Plant also felt that the the incentive plans formula had been altered
too many times and was too difficult to understand. They felt that they were being cheated, thus an
imbalance within the equity among the workers and the organization was occuring. When the downturn
of the industry hit, the Engstrom Auto Mirror Plant needed workers to put forth their best effort. On the
contrary, these factors that perceived inequity within the organization caused the workers to have little
motivation and diminishing job satisfaction to make it out through the industry’s low.

Poor communication within the plant is a another major root cause for the lack of job satisfaction and
morale (Baird & Bradley, 1978). As mentioned earlier, the employees are having difficulty understanding
why the Scanlon Plans calculation had been changed. Even though the plant was trying to communicate
financial data and reasoning to the employees, the employees are not engaged enough to attend the
meeting due to the domino effect of all of the reoccurring problems. The lack of job satisfaction creates
a lack of employee engagement, thus communication between the organization and the employees
suffer. This lack of communication has resulted in the employees becoming hostile within the
organization. The communication climate within an organization and the communication with superiors
are the most important factors determining satisfaction among employees (Baird, et. al, 978).

Job satisfaction is directly related to the frequency of communication that takes place between
supervisors and employees, as well as the quality of the relationship between employees and a company
(Baird, et. al, 1978). This is supported by a study where 150 workers that had been taken from twenty
different departments within two different companies and were asked to rate the communication within
the organization (Baird, et. al, 1978). Parts of the survey measured communication style, while other
questions measured communication content within the organization. In other words, the questions
covered the functions that played a role in communication and how open the communication is
between employees and management (Baird, et. al, 1978).

The final questions on the survey asked the workers to rate the their relationship with their manager,
the quality of their communication with that manager, and their overall job satisfaction (Baird, et. al,
1978). The research results proved a strong correlation between the quality of the relationship of
management and the quality of the communication that occurs (Baird, et. al, 1978). Job satisfaction also
directly correlated to the quality of the communication (Baird, et. al, 1978). This research proved that
communication style has a strong impact on employee morale (Baird, et. al, 1978).

The Engstrom Auto Mirror Plant is facing so many organizational issue dues to the lack of motivation,
communication, trust, low morale, productivity and employee engagement. The plant failed to address
its issues when it installed the Scanlon Plan, which would in time implode, thus exposing all of the plants
original issues. The poorly aligned and administered human behavior theories and concepts have indeed
made the plant worse. It will take a whole new framework of behavioral theory and implementation to
turn this situation around. The Engstrom Auto Mirror Plant inefficiencies bring us to the conclusion that
we cannot deny the importance of employee morale, engagement, motivation and communication
throughout the organization. These factors are the true backbone to any organization, thus proving an
organization’s greatest asset is not listed on it’s balance sheet, but rather in the heart of your employees
and the culture of your organization.
Case Study Analysis: Improvement outcomes

The Engstrom Auto Mirror Plant organizational issues are causing the company many stressors that
could have been avoided with the proper human behavior theories and concepts. Now, we must apply
the correct human behavior theories and concepts to fix this broken organization by implementing
strategic steps to lead the organization to success. The Engstrom Auto Mirror Plant cannot be fixed
overnight due to the complexity of it’s issues, but with the proper steps taken it can eventually cure or
ease most of these issues. Human behavioral research has shown us different ways of improving
different areas of human behavior such as motivation, communication, trust, engagement and
employee morale. I will take all of the plant’s issues and apply this research on how to improve the plant
with a strategic plan.

We will first start with motivation, which the Engstrom Auto Mirror Plant has seen a significant decline
in when the industry hit a down turn and employee bonus checks stopped (Newstrom, 2015). Extrinsic
incentives such as the Scanlon Plan are commonly necessary to motivate people, but if misapplied can
reduce motivation (Schroeder & Fishbach, 2015). Humans strive not only for incentives such as money,
but also meaningful work that they find rewarding (Schroeder, et. al, 2015). I would install methods of
nourishing four intrinsic rewards that drive employee engagement. These methods would include
meaningfulness, choice, competencency and progress. When a worker feels the meaningfulness in their
job, an ability to make effective choices within that position, and feels a sense of competency and
progress, their intrinsic motivation is nourished (Thomas, 2009). When an employee does a self-
management examination of their position and these factors are satisfied, they will feel positive
emotions, referred to as emotional charges, which fuel employee engagement (Thomas, 2009). As seen
in the table below, an energy cycle occurs where the self management leads to increased intrinsic
rewards (Thomas, 2009).

Kenneth W. Thomas and Erik Jansen, “Intrinsic Motivation in the Military: Models and Strategic
Importance,” Technical Report NPS-SM-96–001 (Monterey, CA: Naval Postgraduate School, September
1996).

People who score high regarding the four intrinsic rewards have a high level of positive emotions and a
decrease in negative emotions (Thomas, 2009). Work itself is highly enjoyable and thus creates healthy
work engagement (Thomas, 2009). The four intrinsic rewards also create a strong form of commitment
with one’s organization (Thomas, 2009). Increased intrinsic motivation also leads to employees being
rated as more effective by their managers, as you can see in the above model as the self managed
employee is likely more likely to be innovative due to the self enjoyment of work itself and wanting to
continue the positive energy cycle (Thomas & Tymon, 1994). In order to help the Engstrom Auto Mirror
Plant begin this nurturing cycle of self management through intrinsic rewards the organization will need
a new culture that nourishes employee choice, competence, meaningfulness and progress (Thomas,
2009). First, the organization needs to give the employees the ability to to make decisions which will
nourish the choice section of the energy cycle (Thomas, 2009). The second step is to create a vivid
picture of what needs to be accomplished and how they contribute to the goals of the company
(Thomas, 2009). This will give the employee meaningfulness. The next step is to give positive feedback
and skill recognition to the employees which will give them a sense of competence (Thomas, 2009).
Lastly, I would give the employees progress markers so that they will know they are accomplishing true
milestones (Thomas, 2009). This also offers ways for them to measure their progress, which will nourish
progress of the energy cycle (Thomas, 2009).

Furthermore, to remedy the lack of motivation at the Engstrom Auto Mirror Plant, I would implement
the concept of flow (Seemann & Seemann, 2015). Flow is a state of intense enjoyment and
concentration, which is a highly focused state of intrinsic motivation (Seemann & Seemann, 2015).
Studies have shown that managers experience an increased level of flow while they are engaged in
cognitively challenging activities (Nielsen, Karina, and Cleal, 2010). The study also concluded that this
creates engaged employees that perform at a high level (Nielsen, Karina, and Bryan Cleal, 2010). In
order for this flow state to occur within the Engstrom Mirror Auto Plant, I would implement the
following steps. Step 1: Create clear goals for the employees with short term feedback on the progress
(Seemann & Seemann, 2015). Step 2: Create tasks that cognitively stimulate the employees (Seemann &
Seemann, 2015). Step 3: Give the employees the ability and free to make choice. This will create a work
environment where the employee is challenged at the appropriate level so they are not over challenged,
but at the same time not bored (Seemann & Seemann, 2015).

Communication is the next major issue that the plant is facing that has caused disruption throughout the
organization. The employees are having a hard time understanding the financial data that’s being
presented to them and do not trust the Scanlon plan bonus calculations due to this lack of
interpretation. To create better communication throughout the organization regarding financial data, I
would implement the teachings of fundamental grammar for data visualization (Schuermann, Galentino,
Gemignani & Gemignani, 2014). The teachings would include metrics, distributions, relationships and
variance to give the employees a solid base to interpret data (Schuermann et. al, 2014). One of the
greatest challenges a company may face is communication of its data (Schuermann et. al, 2014). Not
only does an organization have to present the data clearly and effectively, but the audience needs to be
willing and capable of interpreting the information (Schuermann et. al, 2014). I would focus on
cultivating a data fluent culture at Engstrom Auto Mirror Plant due to all of the benefits that come from
such a culture, such as productivity, performance, focus, and motivation (Schuermann et. al, 2014). The
strategic actions to create such a culture would involve creating a clear vision for how important data
fluency is within the organization and how it will increase productivity and other positive factors
(Schuermann et. al, 2014). Next action step is to give the employees clear expectations of data
engagement that they will be held to (Schuermann et al, 2014). On-going training must also be
implemented to ensure that the employees are continuously building their data knowledge base
(Schuermann et. al, 2014). Managers would hold individuals accountable to ensure all employees are
meeting the necessary goals, and if needed, can be brought up to speed (Schuermann et. al, 2014).
These actions steps would greatly improve many of the current communication problems the Engstrom
Auto Mirror plant is facing. Organizational communication plays a major role in job satisfaction, which
contributes to the success of a company (Muchinsky, 1977; Pettit, Goris & Vaught 1997). The happier a
person is with their job, the more satisfied they become.

Companies need to be able to withstand low economic downturns in their industry. Different
organizational cultures can contribute to an employee’s morale and ultimately, to the company’s
success. Success within a company is deeper than just a profit and loss statement and maintaining a
positive net income. For an organization to be successful, it’s employees need to be happy. Research has
concluded that a fun work culture correlates to a company’s success. This is further validated by
Fortune’s 100 “Best Companies to Work For” List, where ten thousand employees were asked if their
workplace was fun, with statistics being quite interesting (Gostick & Christopher, 2008, p. 13). On this
list, a company is renowned as being a “great” company if on average 81% of its employees considered
the work environment to be fun, while the companies that were considered to be “good” only 62% of its
employees considered the work environment to be fun (Gostick & Christopher, 2008, p. 13). The
Engstrom Auto Mirror Plant never embodied a fun culture before nor after the Scanlon Plan, but instead
believed bonuses would solve employee dissatisfaction. I would implement team outings in order to
make the culture more fun oriented, which is something my current company does and every employee
has a great time. Each team would be allowed to go out two times a quarter during work hours to a
restaurant for example. Besides outings, I would have a common room within the company’s building
that has fun games such as ping pong or arcade games. These action steps would help to make the
organization more fun thus helping to make the employees more satisfied.

These improvement strategies would be a great start for the Engstrom Auto Mirror Plant. No
improvements would happen overnight but instead would take time to change the culture of this
organization. I would monitor the overall morale and productivity within the company and continue to
implement improvement outcomes. By following the action steps I have described that are supported by
research, I am confident the plant can make changes for the better. Employees will always be a
company’s greatest asset and their happiness should not be underlooked.

Conclusion

The key points taken from the case study analysis are quite interesting and eye opening. We learned
that the Engstrom Mirror Auto Plant was having some serious issues within the organization and which
factors caused such organizational problems. We examined the root causes of the plants issues which
taught us what truly creates a healthy organizational culture. Intrinsic motivation, equity theory, poor
communication, job satisfaction, and morale are crucial to organizational health and must be
implemented into the culture of an organization. As we have learned, compensation alone cannot make
employees happy. Humans are complex beings that require an environment that allows individuals to
flourish within their professions, while challenging them as they all they pursue a common goal as a
team. We desire a team environment where we know we are truly cared about and not just pay check,
only if it was that simple many organizations would have much better performances.

The key insights taken from the practical application of human behavior theories and concepts for my
actual workplace experience are also quite interesting. When it comes to the behavioral theories, such
as open communication, employee recognition, work autonomy, team outings, and being able to also
pursue a common goal, it reminds of me the issues faced by the Engstrom Mirror Auto Plant. We as
human beings desire a team environment, a feeling of connection, to know we have voice, and to know
we matter and that we are contributing. I have learned that as simple as these concepts sound, they are
truly complex theories that are never addressed by many organization. Being able to analyze the
Engstrom Mirror Auto plant and my own professional experiences has given me insight into the world of
organizational behavior — the science of humans interacting within the complex framework of an
organization