MID-TERM EXAMINATION

ORG 6130 ORGANIZATIONAL BEHAVOIR

Full name: Nguyen Thu Hien

Date of birth: 18/11/1982

Class: MBA CMU 7A. Total pages: 6

Grades

In number In word Signature of Examiner

ENGSTROM AUTO MIRROR PLANT:

MOTIVATING IN GOOD TIMES AND BAD

SUMARY:

Engstrom automobile mirror plant is a private enterprise specialized in

manufacturing glass and mirrors for cars and trucks with 209 employees. Engstrom is falling
into recession and has not had solutions to the problem. At the present, Engstrom leaders
must find a solution to the declining Engstrom.
Ron Bent a successful manager at age 40, was hired from a factory camshaft to reverse
the situation of Engstrom and the key to solving the problem of Engstrom is a bonus plan
named Scanlon plan which has been successfully applied at the camshaft factory.
Scanlon plan is only to help small companies facing difficulties, the variations of his plan
"benefit sharing" has been applied in many organizations.

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 The three plan components - the submission of suggestions for improvement by
employees at all levels, the structure of the company committees that evaluate the
suggestions, and then the sharing of the fruits of increased productivity through monthly
bonusesideally work together to drive big changes in behavior and attitudes. When things
are working properly, teamwork and knowledge-sharing typically improve in Scanlon
organizations: collaboration fosters innovation and creativity, which in turn drive
improvements in productivity, thereby ensuring the payment of bonuses. The culture in a
Scanlon plant also typically becomes more change-friendly, as workers have the opportunity
to make more money by changing the status quo for the better.

Question 1: Identify the key problems or issues for Engstrom, and then identify the
key theoretical contributions that a Scanlon plan should bring to a company. Is
Scanlon a good solution for Engstroms challenges?

1.1. Major issues for Engstrom:

1.1.1. Internal problems:

- A crisis at the factory with the issues of productivity, work efficiency of workers.
- Quality problems of products have also washed into the activities of Engstrom,
Engstrom could lose the certified supplier status.
- The workforce are having complaints, grievances, suspect of Scanlon Plan, a plan
has been adopted for a long time but no change. "what senses does bonus plan make while
bonus has not been paid for months?".
- The enthusiasm and motivation of employees has been reduced, many people feel
there is unfairness going with the current motivation plan.
The causes of above problems:

- The company could not adjust in time Scanlon plan to maintain staff motivation.

- Engstrom did not answer and address the employees complaints promptly.

- Unable to pay the monthly bonus.

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 - The layoffs shook the confidence of employees, leading to insecurity affecting the

morale of staff.

1.1.2. The impact of external problems::

- Current economic downturn.

- There are many competitors in the field of distribution and production of

automotive mirrors.

- Quality problems cause customers distrust the company's products.

1.2. Theoretical contributions that a Scanlon plan should bring to a company?

The heart of Scanlon plan is the concept of participative management. Scanlon

believed that individuals will work hard to help achieve their organizations goals so long as

they have an opportunity to take responsibility for their actions and apply their skills.

It brings a lot of beneficial contributions to a company:

- Employees would work smarter, more proactively and could contribute many
initiatives to increase productivity, reduce costs for companies. The staff found themselves
closer to the company when their knowledge and experience is appreciated.
- Create incentives for staff to work with encouragement and reward policies.
- Focus on cost savings and promote employees "work smarter, not harder.
- Contribute to change company culture, cooperation and mutual assistance among
the staff, working groups will be improved.
- Reduce stress and conflict in the company when all employees are aware of their
bonuses will be good when the company achieved good profits.
1.3. Scanlon plan adjustment - good solution for Engstrom:

With the nature of the Scanlon Plan can confirm that this is the best solution for

Engstrom in the present that demonstrates:

- After applying all employees understand the meaning of the plan.

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 - Scanlon has changed the culture of conduct between employees and more

importantly, changing attitudes of individuals working in the organization.

- Employees are motivated to work than receive income worth of labor has put out a

reward to labor productivity.

- Labor productivity is higher, resulting in costs to produce one unit of low rise in

prices of competing products on the market.

- Sales increase, bringing in more profit for the company.

- Employees working more active, enjoy higher incomes than there are bonuses paid

on labor productivity.

Question 2 : What organizational factors at Engstrom impacted how well Scanlon

performed at the plant? In other organizations, including your organization, how are

pay-for-performance systems influenced positively or negatively by other

organizational factors?

Leaders when facing a crisis need to be calm sharp to resolve the problems of the
organization. Ron Bent was a successful leader in dealing with issues of Engstrom when he
applied Scanlon plan to Engstrom. In other words Engstrom policies are consistent with the
nature of the Scanlon plan:
- In late 1990s, Engstrom mired in non-profit status. Under these circumstances
Engstrom family had a change of director: Ron Bent - a successful manager at age 40 was
hired on as director.
- With the current situation: low productivity, higher production costs; The
enthusiasm and motivation of employees to work reduced, the average yield was assessed at
a modest 40%, the Scanlon plan that applies and its content is to reward to employees for the
increase of productivity. The plan was the perfect fit and create incentives for employees to
work effectively.
- At the time, Engstrom has redesigned its production lines to accommodate new
technologies. This is also a factor, is a prerequisite to be able to increase productivity for

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workers.
- Engstrom has a system and provide the means to communicate information to staff
an effective way: Sign up bulletin boards, building a network of communication throughout
the organization, set up meetings to communicate every month to all personnel involved,
visits to other factories that applied Scanlon.
- Engstrom employees have the opportunity to develop their personal knowledge,
respect the personal opinions of them, encouraging them to work in teams to work
efficiently, thereby improving the productivity, quality product.
Since then, Bent think Scanlon is the best plan for Engstrom, based on the challenges
facing the factory: "With Scanlon, receptive to new methods and new machinery because
they feel they area part of the company-wide program. When youve established a Scanlon
plan properly, youve also built a good communications network throughout your
organization.
But the encouraging attitude to work by paying efficiency wages will encounter the
negative issues as follows:
- When employees focus on the quantity to achieve the objectives of individuals and
groups, workers will then take enough care of product quality so poor-quality products go on
to the market and must be recovered. This is the aspect causing huge funding deficit due to
sales minus returns to poor quality affecting reward fund.
- The bonus fund deficit caused doubts about the salary that Engstrom is applying, it
decreases the confidence of the employees with the organization.
- With the democratic nature of Scanlon, all individuals in the organization
understand and have the right to input the opinions so a conflict can be easily arised to
demand fairness, for example: Some people feel that it reduced rewards to supervisors,
because they "do not work as hard as we do."
Question 3 : How important do you feel money is as a motivator? Does pay

motivate you? Would you be less likely to spend time on innovative, creative pursuits if

you were not paid for that effort? How does pay, and employees perception that pay is

seldom fairly linked to performance hinder collaboration in an organization?

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 - When you use money as incentive factors must be encouraged to know what objects
are effective for any individuals who have different values, the needs of each individual
according to five different levels of Maslow .
RESULT = MOTIVATION X CAPABILITY

Motivation can be: Money, work environment, position and power, etc.
Therefore it can be said that say that the money is an effecitve motivator for many in
the organization. But when using the money as incentive factors we need to pay attention to
the issue of fairness, but wages are rarely paid fairly for the efficiency and that causes the
conflict having adversely affected the employee incentive and is also the cause of the
failures of groups and organizations targets.