Case Study Example: Analysis of Engstrom's Organizational Issues

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Vanderbilt University
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Case study
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In 1948 the Engstrom Auto Mirror Plant was opened, and it enjoyed success until the late 1990s (Engstrom & Hollnagel, 2007). Initially, the company had employees over 200 people with its location in Richmond Indiana. After that, the company started to experience major organizational issues that significantly contributed to weak employees productivity, and there was a general companywide lack of motivation. The commencement of Engstrom significant regulatory issues stemmed from the fall of Scanlon Bonus Plan, with the incentive system initially created so that the employees were kept motivated it failed and the deterioration translated to distrust developing between the employers and staff. Furthermore, other work environments also diminished as a result of the failure of Scanlon Bonus Plan with the work culture shifting as a result of mistrust between the employees and the employer and lack of staff motivation. The employees lack motivation translated to the company production significantly compromised. Consequently, with the continual decline in the company production, the plant manager Ron Bent had to cut the workforce by 20%. Translating to a further drop in the employees morale and low-quality production of items begun (Engstrom & Hollnagel, (2007). Also, the customer relationships were at risk, and this proved to be a nightmare for Ron Bent as he had to figure out how to get the plan back on its success path.

Engstroms Organizational Root causes

Root causes from a human behavior perspective identified in Engstrom Auto Mirror Plant entailed the lack of employees morale, the loss of trust by the employees on the company management and the lack of Scanlon Plan no longer having an effect on the current organizational culture. These issues impacted the employees and the organization itself significantly. The company cause of the financial problems was brought about by productivity problems. Furthermore, the productivity problems were contributed to the lack of motivation and also distrust on the company management. Work motivation has been defined to entail a combination of both internal and external factors that contribute to behaviors and also actions towards the company overall goals. Employees need to remain not only engaged but also motivated especially when the company is experiencing financial difficulties as they are requested to do more work yet the company was going through a lack of funds and layoffs.

The company had earlier on established Scanlon Bonus Plan so as to increase productivity and with several weaknesses identified it had a dysfunctional effect on the plant social system with translated to an environment of small employees dissatisfaction and morale (Engstrom & Hollnagel, 2007). The decrease in production and quality turned to the company facing a loss to their certified supplier Toyota plant they do business with, and this worried the company executive more than the noted employees complaints. Moreover, with the company employees motivation further declining, the company failed to consider the effects that a country economic downturn would impact the current Scanlon plan. Scanlon Bonus Plan was impossible to be implemented continually in the current company financial crisis. Moreover, with the company lack of planning for these unforeseen economic times, translated to the employees not understanding why they could not get their regular bonuses on their paychecks and they did not see a reason to continually work harder despite the bonuses that previously were being issued.

The resulting impact of poorly aligned and administered human behavior theories and concepts.

The system approach identifies the organizational structure as established patterns of relationship among other significant parts of the organization. The critical themes in the relationship included, integration with the way activities are conducted, differentiation and structure of hierarchical relationships and formalized policies and procedure that guide the organization (Horsager, 2015). Moreover, the theory notes that there is a nonlinear relationship that exists between variables ad when there is a change in one variable it can significantly cause a massive shift in another. Furthermore, many research has been conducted to examine the relationship between employees behavior and the organizational behavior and conclusions have been made on structural deficiencies often translated to low motivation and morale for the employees (Galvin, 2014). This is the scenario experienced in the Engstrom Auto Mirror Plant with the failure of Scanlon Bonus Plan which ideally was an incredible plan to motivate the employees. However, when the company faced financial difficulties in 2005, it could no longer fund this policy which translated to the employees feeling demoralized as there were no more bonuses on their paychecks (Galvin, 2014).

The humans relation model consider the importance of individuals and how the managers have the ability to increase the productivity with increment in the worker's job satisfaction. The aim of every manager is to increase the employees productivity (Horsager, 2015). Engstrom Auto Mirror Plant experienced a dissatisfied employees group as they did not find trust with the executive (Galvin, 2014). The employee was not happy with how the company was being managed particularly when the business started to lay off people; the employees notable revolted with the production of poor quality items. This, in turn, affected the company credibility in the market at some point almost losing Toyota one of their biggest business partners. In conclusion, employees are one of the most valid assets in an organization, and it is fundamental for their moral and motivation to be at par so as to ensure there is continual optimum production.


Engstrom, J., & Hollnagel, E. (2007). A general conceptual framework for modelling behavioural effects of driver support functions. Modelling driver behaviour in automotive environments, 61-84.

Galvin, B. (2014). BA 651 Organization Behavior.

Horsager, D. (2015). The Daily Edge: Simple Strategies to Increase Efficiency and Make an Impact Every Day. Berrett-Koehler Publishers.

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