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Case Memo On Motivation: Engstrom Auto Mirror Plant

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The Scanlon plan was effective when originally implemented to solve low productivity and product quality problems until other issues arose. First, the workers were originally driven by extrinsic monetary bonuses that were placed for them but Haley mentioned that no bonus was paid for months since they weren’t meeting the numbers. Also, workers became less enthusiastic and dissatisfied because they began to distrust the fairness and calculations of bonuses and feel as if the company is playing with them. Since the plant’s turnover was originally succeeded where employees relied on trust, teamwork and bonus incentives, when they no longer received the benefits, they became dissatisfied, leading to no motivation.

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Second, since the plan’s incentive is based on team performance and not individual, individuals don’t work as hard as they used to since all employees are rewarded the same even when they don’t put in the same effort. This caused employees who used to work hard to lose motivation since they won’t get rewarded for their extra work, causing a lack of productivity. Also, due to overall distrust of the company, they no longer see the workplace as a community where their voices are heard and receive adequate benefits. Without intrinsic motivation, they return to the original mindset of not seeing value in team success and just focus on themselves. In addition, since there hasn’t been a bonus in months, there is no motivation left to work hard at all.


Herzberg motivator- For Engstrom, employees had distrust in company policy and bonus pay system in addition to working in a hostile environment. No motivating factors played a role in their work satisfaction because they didn’t feel appreciated. Although Bent feels strongly about a team recognition system, it’s important to give individual reassurance.

Equity theory- When Engstrom employees compare their outputs and inputs with coworkers, they sense unfairness since those that don’t work as hard receive the same bonus. They want to trust management and feel safe in their positions but the layoff questions their job security. They think they don’t get reciprocated enough from what they put in and as a result became dissatisfied.

Edwin Locke and Gary Latham’s Theory of Goal Setting- “Goals that are specific and difficult lead to higher performance.” However, Engstrom never set any goals for the employees to achieve and without a goal in mind, employees don’t have the willpower to be more productive since there are no consequences other than having a smaller bonus. Management was not giving enough feedback so workers didn’t receive any praise or criticism. Without motivation to achieve a goal, employees have less satisfaction, and motivation employees perform even better.


I am going to focus on Equity Theory. Bent and top management need to come up with a way to address the worker’s complaints of fairness and management distrust. They need to show employees specifically how the bonus plan works and how the money is being distributed maybe through meetings with a team leader where they can then explain it to others. Also, once a week employees should meet in teams to discuss problems and make suggestions to be more efficient. Management should work harder and be able to let employers see that they are doing their job as well as caring for their employees so that they deserve what they get paid for. Since some are worried about job security, the company can set goals for each team or individual so that it motivates them to be productive persistent with work ethics . As a result, with greater performance, the company does better overall and there is no need for layoffs. With personal and team achievements, the workplace will be less hostile and become an enjoyable place to work at because they have a sense of belonging and achievement.

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