B1-Sec1-Engstrom Auto Mirror Plant

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD
Problem Statement
Group B1
In what ways should Engstrom revise or revisit the plan to lift employee morale and increase quality productivity? Or is it a simple case of performance management at shop floor level?
Environmental Analysis Economic Downturn of economy (Recession) Decreased demand of Automobiles and parts Rising oil prices (further reduced demand) Standard and Poor downgraded 25 U.S. auto suppliers (Increased pressure on Engstrom to retain certified supplier status) Short business cycles (labour flexibility needed according to upturn and downturn) Social With increasing layoffs, increasingly stronger unions Pay cuts and rising costs (Decreased motivation of workers) Technological Just in time delivery of parts required without compromising quality ( Toyota and other automobile firms followed JIT) Legal Potential Lawsuits for defective deliveries
Submitted by: Group B1- Challawar Mayur (11109), Harsha Vatnani (11117), Jayakrishnan T R (11120), Pavan Trivedi (11135), Sumit Kumar (11151)
Group B1
SWOT ANALYSIS OF ENGSTROM Strengths Received the certified supplier status a recognition of both extraordinary reliability and quality Encouraged participative management Organizational Culture promoting cooperation and teamwork Management ready to listen to suggestions Knowledge sharing among workers is promoted Weaknesses Productivity issues and product quality issues Dissatisfaction among employees due to arrears of bonus for 7 months Current Scanlon plan is not satisfying the needs of the employees Low employee morale Drop in suggestion rates by employees Opportunities Can become the primary supplier of mirror to other automobile firms Threats Competitors may gain advantage over Engstrom owing to the fall in quality product and non-compliance to the timely delivery of the product
SWOT ANALYSIS OF SCANLON PLAN Strengths Promotes participative management


Cost savings through innovative suggestions Employee morale boost, increased motivation Increased productivity with consistent quality Increased communication between management and workers Reinforced teamwork and cooperation Plan agreed by majority of the workers (81%)
Group B1
Weaknesses Reward plan needs periodic renewals Complex Bonus calculation system Lack of trust among the employees regarding bonus calculations Enthusiasm waned and dissatisfaction grew with certain aspects of Scanlon Employees got used to substantial bonuses and responded with anger and suspicion when the bonuses stopped
Opportunities The plan can be tailored to support an organizations specific strategy and hence it can be customized to face the current downturn in the economy With proper implementation, the plan can ensure increased productivity and provide motivation to employees Achieve organizational development and improved work culture
Threats This plan did not work out when downturn hit the industry Huge variations in the ratio over a single year. (30.5 to 68.2) Strong unions ( workers could stop work entirely, demand greater bonuses) Dissatisfied employees (increased pilfering)
Group B1
List of Factors Performance Management System o Recruitment and Selection. o Training and Development. o Appraisal of the employees. (Why have you given rect, trg and appraisal under PM? Are they independent or under the PM System? Fairness and Equity among employees Lack of trust, motivation and collaboration among employees Reduced Demand Shorter Business Cycle Organizational Culture Work environment Standardized Evaluation and Feedback system Goal Setting and Management outlook towards the employees Critical Factors
Detailed Analysis of the problem
Performance Management (PM) system: PM system is critical to the organization as it leads to setting of measures that evaluates the most priced asset of the organization i.e. employees. For a performance management system, there are 3 parts: a. Recruitment and Selection: Engstrom needs to design its selection procedures such that employees who are skilled, hard-working and committed to the growth of the organization are selected. It must also clearly state in its recruitment procedures the tasks that an individual will be required to perform and the basis on which the evaluation will be performed. Thus, it will lead to realistic picture about the work and evaluation in the minds of the people joining the organization and thus, would ensure

clarity ensures that people are clear as to what is expected of them.
Group B1
their commitment, loyalty and high performance. By Hackman and Oldman, job
b. Training and Development: Engstrom must constitute measures that ensure continuous training of its employees. It will lead to skill development among the employees and hence, will keep the employees motivated. Also, employees will be trained on the areas where they are lacking. By Maslow theory, self-actualization needs of the individual get fulfilled when employees get an opportunity to learn new things which increase their area of knowledge.
Group B1
c. Appraisal of the Employees: Engstrom must institute appraisal methods and techniques that appraise the employees on efficient parameters. They must review their appraisal measures and modify them to ensure that realistic goals are set for employees and, hence doesnt lead to wear and tear, and burnout among the employees. Also, effective appraisal will ensure productivity of the employees and will motivate them to perform better and, also maintain their work-life balance. Fairness and Equity among employees The theory of motivation and equity as mentioned below explains it in a better manner.
Group B1
Lack of trust, motivation and collaboration among employees: Extrinsic motivators like bonus will cause only temporary effects; it will not result in long lasting commitment towards productivity of quality goods. Also in order to get rewards, people tend to take fewer risks and hence innovation suffers Intrinsic motivator (connect with the organization, job empowerment, giving more responsibility) are missing in the organization. Hygiene factor Employees began considering the bonus as a hygiene factor instead of motivation. So when the bonus was reduced and eventually stooped, employee dissatisfaction grew nAch People were driven by their need for achievement which is understandable by the fact that when workers were asked to suggest ideas they felt happy to know that their education and experience was useful Training and Development: Engstrom must constitute measures that ensure continuous training of its employees. It will lead to skill development among the employees and hence, will keep the employees motivated. Also, employees will be trained on the areas where they are lacking. By Maslow theory, self-actualization needs of the individual get fulfilled when employees get an opportunity to learn new things which increase their area of knowledge.
Group B1
Growth of the Employees and Equity: Engstrom needs to implement measures that ensure growth of the employees in the organization. With growth they will get sufficient compensation and, it will raise their profile in the organization by analyzing from the perspective of Herzbergs two factor theory, it accounts for almost the entire context factors such as salary, supervision, etc., and also satisfies the content factors of motivation which involves recognition of achievement, responsibility and advancement. Thus, it ensures motivation amongst the team members. Standardized Evaluation and Feedback system: The performance evaluation system should be standardized and should be followed at regular intervals. Open working environment: The work environment is about open minded work and a lot of intellectual input and output goes in the system. In this case external rewards become insufficient. Therefore more emphasis should be placed on intrinsic motivating factors (connect with the organization, job empowerment, giving more responsibility). Work environment refers to the way things are done in an organization. Work environment influences work behavior and attitudes at an individual. It is directly related to job satisfaction. The workplace environment impacts employee morale, productivity and engagement - both positively and negatively. Creating a work environment in which employees are productive is essential to increased profits for any organization. Some component in work environment is employment security agreements, practices to help balance work and family, as well as various forms of information sharing. In addition to motivation, workers need the skills and ability to do their job effectively. And for many firms, training the worker has become a necessary input in the production process. Constraints Engstrom will have to maintain its strong foothold in the market. Product innovation and quality should stand as a pillar. They will have to maintain high quality service and low turnaround time after expansion and growth in global markets.

Alternative Solutions 1) Redesign the reward policy:
Group B1
Owing to the global challenge Engstrom should look at redesigning their employee reward system if required. Current system was less stable as in the individuals who contributed and added values to the organization were rewarded with pay hikes and bonuses irrespective of their stay at the organization. This made an impact on equity belief of existing employees of the firm. Thus, the culture and environment within the organization became highly competitive. Advantages: Redesigning reward policies helps in gaining a competitive edge in the market. Generates interest of employees and keeps them motivated for long term association. Disadvantages: May effect the company operation and capital structure. People believe in equity theory, comparison within the industry among different firms may impact negatively Requires complete change and overhauling of existing HR practices and policies at corporate level. Market conditions and culture may not be in accordance with the new system. 2) Implement new methods of employee motivation: Employee motivation comes as an important aspect in having a high class people management system. The policies and procedures in the organization should be such that they could not be easily imitated by any other organization, be it in terms of work environment or compensation scheme, job nature etc. A periodic feedback system to
Group B1
evaluate managers and rate them, rating of HR practices within organization, feedback on Job satisfaction, work life balance imbues the feeling that organization is caring and the place is best place to work. Owing to such acts an employee is obliged to work hard diligently. Advantages: Employees become highly productive and efficient. Overall success and profit of organization. Motivated employee is a source of competitive advantages in legal service industry. Disadvantages: Excessive experimenting may put limited resources of the organization under strain. Motivation schemes if not equitably applied across the organization may result in de-motivation of other employees. 3) Bringing changes in Scanlon Bonus Plan Make some changes so that it suits changes with time and encourage workers to participate in goal setting and bonus plan with plant supervisors. This should be done so that workers feel part of the goal (amount of productivity to be achieved, quality to be maintained) of the plant. Bent should also revisit the features of the bonus plan since it is quite evident that the plan is not working in the present downward economic scenario. Due to recession, the total sales value of production is expected to lower a bit which will eventually lead to less or even zero bonus for a fair amount of period. Hence the basic formula for calculating the bonus can be changed to the increase or decrease in monthly sales in the current year over the same monthly average in the previous five years.

Recommendations
Group B1
We recommend bringing changes in Scanlon Bonus Plan (option 3) and including workers in goal setting and bonus plan with supervisor since motivation is a goal directed process and employee who has found his goal will also find knowledge and skill to achieve it. So, bringing these changes will remove the discontent among workers as they will feel they are participating in goal formation and indirectly bonus setting. Motivation level among workers will rise due to this, leading to improve quality and productivity at Engstrom. Their basic agenda should be to reduce the over dependency of employee productivity on the bonus system and hence the methods of increasing the employee morale should be implemented immediately. The organization must revisit and access the Bonus plans periodically in such a way that employees feel they are a part of the change and hence feel motivated always. Action Plan Intrinsically employees can be motivated by recognizing their performance and giving rewards like employee of the month . This all will motivate employees to give their best and a sense of achievement will get inculcated in them. The factors going into calculation of Scanlon Bonus Plan should be clearly mentioned. A proper workshop or orientation program can be conducted by workers so that they can know how their Bonus is being calculated and what are factors governing it. Also, it should be clearly mentioned why and when workers are not entitled for a Bonus. The factors going into calculation of Scanlon Bonus Plan should be clearly mentioned. A proper workshop or orientation program can be conducted by workers so that they can know how their Bonus is being calculated and what are factors governing it. Also, it should be clearly mentioned why and when workers are not entitled for a Bonus. Pay hikes should also be given on consistent performance and not just single performance.
Group B1
As the industry will need more expertise with changing times, all the employees should be kept on knowledge check. This will add value to the individual, company and the sector as a whole. Skill based (pay for knowledge) pay should be introduced in the firm. The employees should have a particular level of growth in their competencies to be eligible for getting hikes. Supervisory Behaviour: Satisfaction tends to be higher when employees believe that their supervisor is competent and considerate. Modification of appraisal measures to ensure individual targets balance the work-life of employee. A good effort

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ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

SWOT ANALYSIS OF SCANLON PLAN Strengths Promotes participative management

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

Detailed Analysis of the problem

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

ENGSTROM AUTO MIRROR PLANT : MOTIVATING IN GOOD TIMES AND BAD

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