The case facts (brief
summary; 2-4 sentences of what’s happening and who’s involved):
· Engstrom is a privately owned Auto Mirror
plant located in Richmond Virginia that employs 209 people and is managed by Ron
· Currently using the Scanlon Plan which is an
incentive plan motivate worker productivity with bonuses.
· Engstrom has been struggling in the previous
· Employees are not receiving bonuses that they
The issues/potential main
problem (main issues in OB terms related to the module):
The issue is that Engstrom
is financially struggling. This finical struggle can be linked to the failure
of the Scanlon plan. The Scanlon plan was put in place to motivate workers,
increase productivity, and to encourage teamwork with organization-wide
bonuses. However, because these bonuses are not being paid it is causing
employee dissatisfaction and a hostile workplace. Employees dissatisfaction
is rising because they do not trust management in bonus calculations and feel
as if it isn’t fair that people who are not working as hard are receiving the
same amount in their bonuses. This is the expectancy theory where workers
expect a reward for the effort they put into their work. Failure by the
employers is making the employees unhappy.
Three questions or comments
I want to make in class:
1. How does a company
decide to give an organization-wide incentive such as the Scanlon plan versus
individual bonuses using the equity theroy?
2. Why would a company
choose not to use the equity theory when it motivates workers to get rewarded
based off the effort they put in
3. Is there a way to modify
the Scanlon plan so that it can become more effective at Engstrom?
theories & concepts that may apply:
The employees at Engstrom
have extrinsic motivation which is the motivation comes from an external
reward such as money. They are given the goal to increase teamwork and
productivity in order to receive a monetary reward. However, they are
frustrated that the equity theory is not being used which is the theory that
reward is based on effort.