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and Analyzing the Root Cause of Engstrom’s Organizational Issues

After reviewing the case study, Engstrom
Auto Mirror, it is noted that they have had several major organizational issues
that may have contributed to the low employee productivity they are
experiencing which has brought on a company-wide lack of motivation.  It is not beneficial to the company to just identify
their organizational issues, but to also pinpoint what precisely triggered them
from a human behavior aspect.   Investigating the root causes of the particular
issues signifies that management is taking a proactive approach in preventing
situations such as these from arising in the future. 

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To get a better understanding to
what exactly “root cause” is, it would be helpful to understand root cause
analysis.  Root cause analysis is an
approach that helps to trace the problem back to its origin.  It’s one thing to believe you know what the
problem is, but narrowing it down to a few particular incidents takes
investigating the issues at hand (Rooney and Hopen, 2005).  For every problem, there is a cause for that
problem.  In order to solve that problem,
the root cause of the problem must be identified (Doggett, 2005).  If the root cause of the problem is not
identified, then the company would be just merely addressing the symptoms and
the problem they are having will continue to persist.  Most root causes can be traced back to simple
human error (Schmitt, 2016).  There are
three types of root causes, cause-and-effect, interrelationship, and current
reality (Duggett, 2005).  The cause of
the problem with Engstrom is more of a cause-and-effect situation.  With that being said, in this paper I will
attempt to identify the major root causes to Engstrom’s problem from a human
behavior perspective.

            It is believed that the event that instigated
Engstrom’s major organizational issues began with the fall of the “Scanlon
Bonus Plan” (Beer, 2008).   The three main components of the plan were for
the employees to submit suggestions, a committee to review the suggestions, and
monthly bonuses as productivity increased (Beer and Collins, 2008).  This incentive system was primarily formed so
that employees could be motivated to exceed their normal work; which during
that time it worked perfectly.   Basically, this was a very good plan, because
75% of labor savings went directly to the employees and only 25% went to the
company.  The company had set aside a
reserve fund account for the months that productivity was low so employees
still could get their bonuses.  But in
order to receive these bonuses, the company’s payroll would have to be below
38% of sales mark (Rooney & Hopen, 2005).  

Even though there are many
different issues at the Engstrom plant, I believe the main concern to be addressed
is that the employees felt as if they are not being motivated by
management.  In any position, motivation
is important because it is one of the main forces that lead to a good job
performance.  Job performance is a
combination of being motivated, ability, and environment.   From
what I could see when I was analyzing the case study, there is an overwhelming
amount of evidence to show that the employees at Engstrom were not being
motivated.  For example, Engstrom is not
giving the employees the proper incentive to increase their productivity and
they are using an incentive program that has some design problems (Beer and
Collins, 2008). 

From what I gleaned from the
analysis, the Scanlon Plan is a profit sharing program in which employees share
in pre-established cost savings.  These
profits are based upon employee effort and participation in the Plan.  Participation in the Plan wasn’t an option,
it was a necessity.   The dawning failure
of the Scanlon Plan also diminished the entire culture of the
organization.  The employees used to be
upbeat, happy to come to work because they felt like they were a part of the
organization and that they mattered.  But
since they hadn’t received a bonus in 7 months, they lost motivation, trust between
individuals, solidarity, and the overall work culture was at risk. 

The majority of the employees at
Engstrom were not as motivated as they had been to complete their everyday
tasks.  They were not inspired to do even
that which was required of them.  It is
no wonder that the plant’s production was greatly encompassed.  Job deadlines were not being meet.  In fact, a job that should have been
completed on Monday wasn’t completed until Friday.  Not only were there problems with production,
there was also a product quality issue.  The
Scanlon Plan was a profit sharing plan put in place as an incentive for employees
to share in already established cost savings. 
The employees thought that they should receive their bonuses even though
they weren’t earned.  It’s just like any
bonus received, if you get it long enough you come to rely on the extra money
and you start to think it is part of your regular paycheck, but it’s not.  It’s a recognition of a job well done.  Yet the employees at Engstrom thought that they
deserved the bonuses even though they weren’t earning them like in the past.

 Looking at the situation from a human
perspective, in our textbook, Newsome speaks about behavior modification (2015)
which he states that if you reward an employee for their efforts you can expect
their level of performance to be higher than normal.  But if that same employee was not rewarded then
their behavior would not change.  Conversely,
since the employees were getting rewarded for a job well done, taking the bonus
away left the employees with no desire to perform and their performance became
low to undesirable (Newsome, 2015).

 We can also look at this from another
perspective.  For example, the law of effect
is behavioral conditioning which states that if something is done to produce a
satisfying effect in a certain situation would more than likely occur again if
put in that same situation (Newsome, 2015).  So, if the company started giving employees their
bonuses again, then it would produce a favorable result.  With the elimination of the monetary incentive
system, Engstrom employees’ behavior was very negative.  The employees no longer felt that their work
resulted in positive outcome because they didn’t receive bonuses.  In a nutshell, their motivation was

Furthermore, there is no longer a
sense of solidarity in the Engstrom workplace. 
The trust that was once present within the employee-employer
relationship is absent.  One specific
reason that threatened this relationship was the fact that the employees perceived
that the plant managers weren’t taking their suggestions seriously.  That perception wasn’t necessarily true
because the committee accepted approximately 90% of the suggestions that were
submitted; namely, 276 out the 305.  Also,
the employees began questioning the integrity of their employer (Newsome, 2015).  Subsequently, the incentive system became the
workplace standard where employees expected a bonus every time they got paid.  But not necessarily when they proved to have
exceeded the standard that was set for them. 
When the bonus plan started to dwindle down somewhat, the employees
placed the blame on management because they felt like they were the ones who
caused the breakdown in the plan. 
Questionably, there was enough blame to go around.  The employees cast the blame on their
employer because of the lack of bonuses and the employer blamed their employees
because productivity was falling down.  They
both were caught between a rock and a hard place, so to speak.  There was no compromise on behalf of the
employees because they felt cheated and not valued as important.

There was definitely a dysfunctional
effect at Engstrom, but I don’t really think it was caused strictly by the
downturn of the Scanlon Plan.  In most
companies, there will be a degree of functional and dysfunctional effects on organizational
culture that may have an impact on the people and the organization.  Organizational culture is the groundwork of an
industrious company where the assumptions are based on beliefs, values, and
norms of the organization.  If these
items are threatened so will the organizational culture of the company.  Engstrom still had their organizational
culture, it was just weakened a little by the distrust of the employees.  The employees failed to realize that they had
to at least take some responsibility for the situation that Engstrom was
facing.  If they had continued to meet
production as they had done before, they would have continued to get their
bonuses on a regular basis. 

Engstrom’s Scanlon Bonus Plan was a
good plan, but the employees blamed it for the plant’s downfalls and
organizational issues.   But I truly believe that the cause goes a
little deeper than that.   Employees can make or break a company, but unmotivated
employees are also unreliable ones.  As
I’ve stated earlier, the employees not only didn’t trust management, they
distrusted how management calculated their bonuses.  Creating discord among other employees is a sure-fire
way of putting a company as well as the employees in jeopardy as was the
situation that Engstrom was facing.

Human Behavior Theories and How
Engstrom Needs to Learn From it


According to the human behavior
theories, everyone in the work place needs to be motivated to go beyond what is
expected.  Motivation is defined by
Saraswathi (2011) as the willingness to exert high levels of effort, toward
organizational goals, trained by the effort’s ability to satisfy some
individual need.  Also, employees can gain
their job satisfaction when their expectations and values are met while working
in their jobs.  The problems that
Engstrom is having within their organization is not unique and they are based
on human behavior.  Most companies have
gone through downturns when employees rebel. 
But there are so many ways that Engstrom can look into too help them
solve these issues.   There is no right or wrong way to solve these
types of problems in the workplace.  Unfortunately,
solving the perceived issues at Engstrom will take some planning on behalf of
management.   Even then, they will not be able to resolve
every issue that has arisen in the workplace.  When problems creep up in the workplace, the
situation should be completely analyzed and a resolution should be

The root cause of the problems at
Engstrom bears a strong resemblance to the Herzberg’s theory of
motivation.  This two-factor theory have
a tendency to divide motivation and job satisfaction into two groups of influences
known as motivation factors and hygiene factors,  This theory states that there are certain
factors in the workplace that cause job satisfaction, while a separate set of
factors cause dissatisfaction (Lazaroiu, 2015). 
Further, the theory states that employee motivation stems from the
following factors that include achievement, recognition, the work itself,
responsibility, advancement, and the possibility of growth.  The theory also states that hygiene factors would
include company policy, supervision, and relationship with supervision, work
conditions, relationship with peers, salary, personal life, relationship with
subordinates, status, and job security (Ruthankoon and Ogunlana, 2003).

Herzberg’ theory is the belief that
the chief components of employee satisfaction are basics that underline their
performance that is done; namely, recognition, accomplishment, promotion.  These incentives are adequate in stimulating workers
to greater endeavors and accomplishment (Lazaroiu, 2015).  According to the Herzberg theory, individuals
have two sets of needs: one as an animal to prevent discomfort, and one as a
human being to advance emotionally.  This
means that there are certain characteristics of a job that is consistently
related to job satisfaction, while other factors are associated with job
dissatisfaction (Tan, 2013).  Any feature
of the job that brings job contentment such as achievement, recognition,
advancement, and growth are known to be job satisfiers.  But, job dissatisfaction comes from things
such as company policy, work conditions, salary, relationship with boss/peers,
and supervision are all dissatisfiers (Tan, 2013).  

The satisfiers, or job contentment,
according to Herzberg (2002), are connected to the character of the work being
done and the reward that results directly from doing that work.  Looking at the case study from the beginning motivation
was very adequate in the workplace.  The
employees were very content because they were being recognized as being part of
the organization and they were being motivated beyond belief. They were given
bonuses in addition to their regular compensation for a job well-done, and the
company were using some of their suggestions to improve the production of the organization.  They had a good relationship with management
as well as a good working relationship with their peers. All of this would be
considered part of the human equation theory.  

But discontentment sets in when the
person is not rewarded after the work has been completed.   At
Engstrom, that is exactly what has been happening.  The employee hygiene factors started kicking
in.  The employee no longer felt satisfied
with their jobs.  They were missing some
of the human factors that gives them job satisfaction.  They felt that they were not being promoted nor
rewarded as they should have been.  The
employees felt that they were no longer being seen as part of the organization
like they once were.  They mistrusted management
and blamed management because their bonuses were no long prevalent.  They also blamed management for changing the
policies and the way that their bonuses were calculated.   The
hygiene factors made them feel unworthy and they reacted just as the theory
stated they would, which is negatively.

Most employees, no matter where
they work, all need motivation to feel good about their jobs and perform well.  Some employees are highly motivated by money
while some find being given some sort of recognition and rewards for a job well
done personally motivating. The different motivation levels in the workplace could
have a direct impact on employee and their productivity (Ganta, 2014).  Employees that are motivated and excited about
their jobs will give the company 100 percent this is how the employees felt at
Engstrom.  In any organization,
unmotivated employees will not spend a lot of effort in their jobs, they avoid going
the extra mile on the job, they only tend do to the bear minimum they can do to
keep from getting fired.  On the other
hand, employees who feel highly-motivated would be persistent, creative, and
productive, and would turn out high quality work and would be willing to
undertake any extra assignments to ensure that productivity was met (Ganta,
2014).  If these theories were practiced
at Engstom’s plant, with accuracy then positive results would have been the

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