ENGSTORM AUTO MIRROR PLANT Harvard Case Solution & Analysis

Engstorm Auto Mirror Plant Case Solution 

Abstract:

This report discusses the organizational issues of Engstorm Auto Mirror Plant and identifies the root causes of these issues from the perspective of human behaviour and analyzes these causes. It explains different human behaviour theories and discusses the impact that these theories can have on Engstorm Auto Mirror Plant. After analyzing the current situation of the company, this document gives recommendations that how it can sustain in this situation and what steps it needs to take to improve the outcomes and financial results. Further, it discusses the theories with respect to the workplace I am currently working in and recommendations to increase the productivity.

Introduction:

Engstrom Auto Mirror was established in 1948, and since its establishment most of the time it has been successful. In 1990, it hit the first crisis of its life. It was developing a new transition line by implementing new technology but the change didn’t come smoothly and as a result, the company had to face serious losses. Then manager resigned in 1998, and he was succeeded by now chairman Ron Bent. Bent had a lot of experience in different companies and stated that the only way that company can come back to track is by implementing such strategies that would encourage and motivate its employees to work hard and smart because no doubt exists that the success of a company hugely depends on its employees. After taking into account opinion from employees and of other important figures working in the company, Scanlon Plan was implemented. 81% of the total employees voted in its favour. Scanlon Plan gives bonuses to the employees if they put in the extra effort, and also encourages them to suggest new and innovative ideas to increase the productivity of the company. In the start, it was very successful, employees were very enthusiastic as they weren’t provided with this kind of freedom where instead of doing their tasks they can also suggest ideas related to any field of the company. In the first year, it was a huge success and a lot of employees were given the bonuses, the company took a turn and started making a profit again. Later on, the employees started mistrusting the management, that maybe they aren’t giving as much bonus as the employees deserve. Secondly, the employees had this point of view as well that the managers don’t work enough and they should not be awarded with bonuses. Now, when the crisis again hit Engstorm Auto Mirror, the management cut down the bonuses, the employees also stopped putting in the extra effort, they started treating the bonuses as it was the part of their pay.

Root Cause Analysis of Engstorm Auto Mirror Plant:

Engstorm Auto Mirror Plant had to face a few rough situations in the last few years. After the implementation of Scanlon Plan, things got better for Engstorm but recently it started facing issues again. In a span of two weeks, it had three productivity difficulties. The slow pace of productivity was costing a lot to the reputation and financials of the company. The task that had to be completed on Monday was expected to take as much as four days more to finish. Martinez, a key customer of Engstorm has recently marked it as a certified supplier that certificate became the cause of a good image of Engstorm in its respective industry. There was only one other company that was recognized as a certified supplier and for Engstorm, it was important to maintain the certification and the image that it had created. Other than slow productivity, the quality of products was also decreasing. The main cause behind the slow productivity rate and decreased quality of products was the behaviour of the employees. Because of the implementation of Scanlon Plan, the employees started mistrusting their management and due to the recent crisis,the company fired 46 of its employees and the ones who remained were not able to earn a bonus. In the start, company was paying bonuses to most of its employees and was paying monthly. After the crisis, it decreased the percentage from 38 percent to 32.6 percent. The employees firstly had developed a thought that the bonuses were a part of their salaries, now that they were not able to earn it the employees were behaving non-professionally. The mistrust that the management isn’t paying because of its own interest or because the managers are keeping more money to themselves and are paying less to the employees changed the behaviour of the employees and they started putting in fewer efforts and that affected the productivity of the company and became the cause of delays in shipment.

ENGSTORM AUTO MIRROR PLANT Harvard Case Solution & Analysis

 

 

Since the start, the impact that human behaviour can have on the success of an organization has been neglected. Most of the focus of the companies are on its quantitative data. It’s recently that managers and companies have started giving importance and have realized that their success also depends upon the behaviour of its employees. As mentioned earlier, in this case, the employees started mistrusting the management, and because of that, the communication directly between the employees and managers decreased. Interpersonal communication among the management and the employees is an important factor that can become the cause of loss or profit for any company. (Robbins, 2010) The theory “Principal of Coordination” also focuses on the importance of communication between the employees and management and states that to connect with the person responsible for a task that isn’t done up to the mark is a managers responsibility. In this case, it is also important for the manager that he connects directly with his employees. (human-behaviour-theories, 2017)(principle-of-coordination, 2013) The Hawthorne Effect also focused on the importance of the impact of employee’s attitude on the success of an organization. Elton Mayo stated in his theory that there is a greater force that affects a business and it is the employees. The productivity of an organization has a direct relation with the attention that the managers give to its employees. (The Hawthorne effect, 2008)........................

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