Professional Documents
Culture Documents
Mariama Ignacio
I. Introduction
Engstrom Auto Mirror [henceforth refereed as “Engstrom”] is a plant that employs over 200
employees. Due to recent employee terminations, managerial attitude, and the halting of a
monthly bonus plan called the “Scanlon Bonus Plan” (Beer, 2008), employee morale and overall
motivation has severely decreased. With such, Engstrom faces low employee productivity, low
There are several organizational issues within Engstrom that needs to be immediately
addressed so as to salvage the company. The top three organizational issues that need to be
addressed first and foremost are as follows: employers need to once again take employee
suggestions seriously, assuring employees feel integral to the system, and fix the Scanlon Bonus
dismal 50 per year, an all-time low number for the company; the true meaning for this is that
employees no longer feel as though providing feedback to their company is important, especially
if it is just going to be ignored by management. If employees feel as though they are not being
received, then they will not contribute to the success of the company; which is very harmful in
the long run. Engstrom ignoring employee suggestions is an example of “psychological distance”
unproductive barrier between employee and employers contributes greatly to the issue on hand.
CASE STUDY ANALYSIS 3
Clearly, employees do not feel equal. In regards to this, employees do not feel equal in
both the overall company and with the Scanlon Bonus plan. The “equity theory” (Newsome,
2015) explains the two concepts of over-reward and under-reward; employees subconsciously
aim to be in the middle of the two. If an employee feels as though they are being over-rewarded,
they will work harder to restore the balance of equity. If an employee is under-rewarded, they
will do the opposite and not work. Employees in Engstrom are being under-rewarded and hence
program; after many years in effect, the current Engstrom employees have grown to dislike and
distrust the system in question. The “expectancy theory” (Newsome, 2015) showcases that
employees need to responds positively to three specific elements for them to exert extra effort on
a task; these are as follows: valence, expectancy, and instrumentality. If an employee feels as
though a task is far too difficult or unachievable, they have failed the expectancy theory and will
not participate. This is the case with the Scanlon Bonus Plan; it is far too complex to fully
Clearly, the current system and inner-working at Engstrom does not work. Engstrom has created
a sort of “psychological distance” (Newsome, 2015) between its management and employees
which was initiated with the deterioration of the Scanlon Bonus Plan; because of such, other
aspects of the company began to deteriorate as well, such as employee morale, productivity, and
profits. To fix the system in place at Engstrom, it is very important to fix the Scanlon Bonus
Plan.
CASE STUDY ANALYSIS 4
Firstly, it is important to analyze exactly how to fix the compensation plan; should it be
refurbished, should something similar be created, or should a completely whole new incentive
program, completely different from the original, be generated? It is important to do one of the
three listed above because it is evident that the current Scanlon Bonus Plan does not work, it is
Theories such as the “equity theory” and “expectancy theory” (Newsome, 2015) are
relevant to this case study analysis since both theories directly relate to employee motivation,
which is needed at Engstrom. It is essential to not only create motivation in the workplace, but
to also sustain it for the sake of company survival. Clearly, there is no equity feeling from
employees at Engstrom nor is there a sentiment to go beyond the standard; Engstrom and the
Scanlon Bonus Plan has failed them [the employees] and there is no incentive or motivation to
Engstrom has several major organizational issues that have contributed to low employee
productivity and a company-wide lack of motivation. It is important to not only identify what
these organizational issues are, but to also identify what exactly caused them from a human
behavior aspect. Delving into the root causes of these specific issues assures that there is a
proactive approach in preventing situations, such as the current one on hand, from arising again
in the future.
As stated above, the event that commenced Engstrom’s major organizational issues stems
from the fall of the Scanlon Bonus Plan. This incentive system was initially created so that
employees were motivated to exceed the standard; and for some time, it worked flawlessly.
CASE STUDY ANALYSIS 5
Unfortunately, the system would later fail; with its deterioration grew a strong distrust between
employees and employers. Further, many aspects that contributed to a healthy work environment
also diminished due to the failure of the Scanlon Bonus Plan; such of which were employee
motivation, trust between individuals, camaraderie, and the overall work culture.
Employees at Engstrom were no longer motivated to complete their everyday tasks; they did
not have the have the incentive, nor motivation, to even meet the standard demanded from them.
In turn, the plant’s production became greatly comprised. The Scanlon Bonus Plan was initially
created as an incentive for employees to exceed the workplace, it was meant to be a reward
system for extra work. Unfortunately, with due time, employees expected to be rewarded for
meeting just the bare minimum of work, the reward system became the workplace norm and it
employee were rewarded for their efforts, their expected level of performance would be higher
than normal; but if no reward were given, employee behavior would not change. However, if the
reward in question were taken away, such as a percentage of one’s paycheck, then an employee’s
expected level of performance would be “low” and “undesirable” (Newsome, 2015). Per the
favorable consequences, these are called reinforcements. With the removal of a monetary
incentive system, Engstrom employees displayed negative behavior; they no longer felt that their
individual work actions resulted in a positive result due to the lack of a bonus. Overall,
Engstrom employee motivation was gone due to the removal of the incentive system.
Engstrom workplace. The trust that was once present within the employee-employer relationship
became non-existent. One specific act that jeopardized this was when the plant managers
CASE STUDY ANALYSIS 6
actively decided not to take employee suggestions seriously; this jeopardized the employers’
“integrity” (Newsome, 2015) in the eyes of their employees. Since the incentive system became
the workplace norm, the reward was expected every time an employee was paid; and not
necessarily when an employee proved to have exceeded the standard demanded from them. With
the incentive system’s disappearance, employees placed blame on those whom they believe
caused it, which were their employers. Arguably, both the managers and employees have created
question. Employees blamed their employers for the lack of bonuses and employers blamed
their employees for the lack of workplace production. With this, there was no longer a sense of
productive and successful company; these are the assumptions, beliefs, values, and norms of an
organization. If these items are jeopardized or lost, then so is the overall organizational culture
of the company. Engstrom no longer had a work culture present due to the failure of the
Overall, the failure of Engstrom’s Scanlon Bonus Plan is to blame for many of the plant’s
downfalls and organizational issues. Unmotivated employees make for unreliable ones; and with
that, the company livelihood, it’s employees, and its products are all put into jeopardy.
There are countless guides and self-help books out in the world that dictate exactly how one can
resolve workplace issues and conflict. Unfortunately, and in actuality, there is no one cookie-
cutter act that can resolve every issue that arises in the workplace. The Human Resources (HR)
CASE STUDY ANALYSIS 7
situation and with discrete analysis, a conclusion can be attempted on the issue on hand. A self-
help book of workplace resolutions does not yield the same result as an actual, physical being;
otherwise if so, all HR positions would all be nonexistent. With that, any theories attempted to
resolve the Engstrom issues must be altered to meet the specific entity that Engstrom is. Per the
organizational issues present regarding Engstrom, two theories are relevant; there are the “equity
In regards to the equity theory, this concept explains the three concepts of the reward
system: over-reward, no-reward, and under-reward; as an important note, “no reward” serves as
the base medium for the theory. Employers present their employees with one of the three. If an
employee is over-rewarded for an act, they will attempt to restore the workplace balance and
work harder; the employee is attempting to restore the “balance of equity”. If an employee
receives no reward, they will work the same as they always have. And if an employee receives
an under-reward, they will take offense and react with working less than they normally did.
With respect to Engstrom and the equity theory, the Engstrom employers initially over-
rewarded it’s employees within the beginning of the Scanlon Bonus Plan. After some time,
employees felt as though they have reached the balance of equity; hence, the over-reward they
were receiving became the standard and was viewed as a “no-reward” over time. With Engstrom
halting the bonuses, employees were suddenly under-rewarded for their workplace efforts; in
turn, employees reacted just as the theory stated they would, which was negatively.
In regards to the expectancy theory, three specific elements must be met from an
employee to attempt to exert extra effort on a task. These elements are as follows: valence,
expectancy, and instrumentality. “Valence” is how much does the employee truly want the
CASE STUDY ANALYSIS 8
“instrumentality” is the estimation that one’s act will actually result in the reward; if all three
elements meet a positive result, then an employee will be motivated to give a greater effort with
the task on hand. In regards to Engstrom, if the three elements of the expectancy theory yield a
positive result, then an employee will exert extra effort in their everyday job; unfortunately, only
valence is met and not the other two, which results in the employee not working thoroughly to
As a result of these two theories being poorly aligned and practiced within the Engstrom
company profit margins, and employee motivation. Theoretically, if the theories were practiced
First and foremost, the failure of the Scanlon Bonus Plan must be addressed; in short, this
compensation plan was clearly not working. In response to this, Engstrom must either make the
decision of keeping the exact plan in place, amending it, or to create a new compensation plan.
Clearly, keeping the current bonus plan would be a terrible choice for a variety of reasons that
were explored in the previous milestones; hence, the obvious choices would be to either amend
the current plan or to create an entirely new one. For the sake of this proposal, I recommend that
a new compensation plan should be generated; I state this because the alternate would be to
simply change the current bonus plan, which employees currently do not trust.
CASE STUDY ANALYSIS 9
With this, it is recommended that a new compensation plan, titled SCANLON 2.0, be
generated. The previous Scanlon Bonus Plan was confusing and could easily be manipulated;
and in due time, it became inefficient. SCANLON 2.0 will yield an across the board
compensation percentage for all employees, regardless of standing; this percentage will be based
off the monthly profit margin of the Engstrom plant. In a study pertaining to employees in an
executive level, this has shown very positive results (Overton, 2005); I grandly believe this
process to be more promising than the former compensation plan. The biggest issue with the
previous Scanlon plan was that it was far too complex to fully understand; regardless, it
motivated employees to exceed the standard mandated of them. It is important to upkeep some
resemblance of these monthly bonuses; SCANLON 2.0 will do just that. The inner-workings
and procedure of the SCANLON 2.0 plan will be publicly displayed for all employees to view; a
meeting will also be held in regards to the explanation of this new compensation plan.
Aside from amending the current compensation plan, management must also address the issues
that arose from the failure of such. One of the biggest downfalls caused by the compensation
plan failure was employee motivation, or the lack thereof. The overall lack of motivation in the
company stems from the failure of the compensation system. With the amending of the bonus
plan, the lack of employee motivation will slowly arise with due time; it will be a slow process
due to the time it takes to build the trust back between management and employees, but it will
occur eventually.
With that, the trust and comradery between employers and employees were severely
severed due to acts committed by management; regardless of how necessary certain actions were
CASE STUDY ANALYSIS 10
for the company as a whole, management lost the trust of its employees. Two of the main
reasons that led to this was the following: employee layoffs and management blatantly ignoring
any successful business, so long as it is done in a respectable matter, most employees are
To repair the issue of trust, it is recommended that a 3-hour monthly meeting, in which all
employees of the Engstrom plant are present, occur. The goal of this meeting is to discover new,
(Newsome, 2015) employees through their suggestions. Management will offer rewards, both in
the form of financial compensation and tangible items, to those who participate. Those who
suggest new approaches to completing common tasks will be commended; the reward system
meetings, will be different from the above proposed SCANLON 2.0 plan. These bi-monthly
meetings are important in that they will assist in repairing the relationship between employees
and employers; it will be a forum in which employers and management alike will discuss how to
make the company better. A company cannot run successfully if management does not listen to
its people; “people leave managers not companies” (Fernandez, 2015). It is with this
(Newsome, 2015) must be repaired. Due to the sudden halting of bonuses, the termination of
employees, ignoring employees, lack of trust, and management’s response to this, the overall
work culture at Engstrom has perished. It is important to upkeep some sort of workplace culture
CASE STUDY ANALYSIS 11
because it is a direct correlation to job satisfaction, innovation, and employee pride; these are
determinants of whether employees leave or stay. As a company, it is to one’s best interest and
benefit to keep good employees on board; incentives must be placed to assure such. This is
where workplace culture comes about. Arguably, out of all the issues present in Engstrom, this is
perhaps the most difficult to repair; it is also the most important one to address. To successfully
repair this, especially in the case of Engstrom, employers must assure the following: employees
are happy with their task, employees must enjoy working together, employees must understand
and believe in the company values, employers must reward the good work, both management
and employees know the mission statement, and that all management leaders are all in sync
(Saltzman, 2015). Debatably, if these tasks are completed, the workplace culture in Engstrom
issues that are somewhat comparable to Engstrom. I am currently the Senior Vice President of
Operations for a Southern California-based print media company; we currently yield fifty full-
time employees and another fifty part-time employees. The leadership in my workplace are
generally in sync with one another and knowledgeable of all issues and projects occurring in
departments other than their own. In general, the current staff have all contributed to the
company seeing it’s largest profit margin since the company’s initial conception. I grandly
believe that my workplace is a positive one for the sole reason that we understand and believe in
our company mission statement; which is to keep print media alive. Unfortunately, I greatly
believe that no workplace, regardless of how seemingly perfect, is in fact truly perfect. Two
CASE STUDY ANALYSIS 12
major organizational issues present in my workplace are as follows: the difference in employee
dynamics, also known as the employee culture clash, and the over-communication with each
workplace that often clash with one another. There are employees of the company, whom have
worked in the media industry for decades and believe, that they comprehend the business more
than anyone else, these employees believe they know the exact equation leading to success in
media and will not entertain any other ideologies that are not their own; I personally deem these
individuals as those in “old culture” category. With this, there are individuals who understand
that media is an ever-changing industry; and in recent years, technology has a played a large part
in media success. These individuals, who yield plans to move our media company from print to
digital, have very extreme plans for the future of the magazine; I personally deem these
individuals as being in the “new culture” category. The ideology that those in the new culture
directly conflicts with those in the old culture; I believe that this issue is a “culture clash” (Fogg,
2009). Unfortunately, this issue directly affects team dynamics because certain ideologies are
of our employees feel incredibly overwhelmed with the mandate that all employees must all be
in constant communication with one another. Per company policy, updates on everyone’s daily
tasks must be notified to immediate supervisors, co-workers, and subordinates several times a
day. Furthermore, any information that can be deemed important must include a slew of
individuals who must be carbon-copied (CC); this very subjective practice accounts for
dilutes the importance of other emails; for example, emails that should yield lengthy, well
thought-out replies will often receive one word responses due to timing constraints. This has
created frustrations from all employees whom are required to partake in this policy; aside from
the company President and the HR department, everyone must yield to this business practice.
With respect to the “culture clash” issue in my workplace, I believe the root cause of this is due
individuals lived at different times and yields different philosophies that have shaped their
mentalities, with this, they are all essentially different people (Oudhuis, 2015). With the
With respect to the current issue of communication overload, the exact root cause can be
easily determined. In short, employees are exhausted by the mandate, via company policy, that
all employees must be constantly keep their counterparts, supervisors, and co-workers
knowledgeable of their current work status. This practice is known as “lateral communication”
(Newsome, 2015) and has been adopted by the executives of the company long before I arrived.
The belief is that if everyone is aware of what is occurring in all aspect of the company, then
ideology that is considerable easier stated than executed. Ironically, this particular business
practice was initially meant to ease employee dealings and relations with one another, but in
actuality, it has just overwhelmed everyone involved. I truly believe that the only means in
correcting this is to amend the current policy in place and to begin only releasing information on
CASE STUDY ANALYSIS 14
a need-to-know basis; unfortunately, this proposed practice also yields several downfalls. It is
conflicts. We yield a very responsive HR department who do handle conflicts and complaints as
they arise; but as a general rule, management does not directly interfere with arguments or issues
between employees. This is due to legality reasons; management shares in the mentality that the
workplace HR are the group of individuals in the workplace that yield the education, training,
As an individual who is part of the management team, I do not concur with the above
mentioned mentality. I greatly believe that this is arguably a very poorly aligned belief and
practice. I believe that a lack of managerial present in regards to workplace conflicts that
a HR individual with limited knowledge. With this, I believe that there is a lack of hierarchy that
is comparable to poor management; in such, employees have a higher probability of bullying one
Because of this poorly aligned and administered concept, I greatly believe that my workplace
will soon experience a downfall in employee motivation and morale that is comparable to that of
In order to prevent a situation from occurring that is comparable to what occurred at Engstrom, I
grandly believe that my workplace management and HR must act swiftly and professionally in
Firstly, I believe that management in my workplace must break the clique-culture that is
currently in place; the actions of certain employees are comparable to bullying. This act is not
only detrimental to employee productivity and health, but is also a gateway act that can possibly
lead to a severe lawsuit that can conclude my workplace’s livelihood (Simons, 2010). This
clique-culture was brought upon by the differencing views regarding the direction the company;
factors such as belief, age, and professional background have contributed greatly to this. My
strategic recommendation in rectifying this issue is employee education; such as the explanation
of the negative aspects of the clique culture, from job dissatisfaction and health concerns
(Simons, 2010). From such, if certain employees engage in certain behaviors deemed
inappropriate, certain legal actions can be taken; stemming from suspension, write-ups, and
possible termination.
must be rectified. Personally, I have never been a fan of the hands-off approach of the
management within my workplace; because there are situations that call for management to step
up at times. Indeed, it is arguable that it is HR’s job requirement to assure both a civil work
environment for all employees and to diffuse chancy situations; but at certain times it must fall in
the hands of immediate management. In regards to Engstrom, there was no comradery in the
workplace which demonstrated a poor social system. To yield a strong comradery system with
CASE STUDY ANALYSIS 16
respect amongst employees, a strong social system must be in place (Kalliath, 2014). I believe
that my workplace must practice this belief of a strong social system in the workplace.
Lastly, the overall culture of the company needs to be changed. Due to staff members
being composed of new and older employees that yield different mentalities, the once unified
workplace culture has been destroyed. Rather than having one unified belief that all employees
can concur with, there are two directional beliefs; this has been of great conflict amongst
employees. With this issue, I believe an internal discussion amongst management must occur so
as to yield a definite plan and direction of the company as a whole. From there, management can
notify the entire company staff of the direction that the company will be leading in. The clash of
cultures and beliefs in workplaces are common; the only true response that an individual can
have is understanding and open-mindedness (Fogg, 2009). Unfortunately, this is not occurring
In conclusion, the “improvement outcomes” listed above are actions and factors that need
positive direction. As stated in regards to the Engstrom issues, one must not only fix the
problems that arise in a workplace, but also assure that it does not occur again. This could be
done with monthly meetings, training exercises, and management intervention. With Engstrom
fresh in my mind, I believe that this recommended strategic actions need to occur sooner rather
than later.
V. Conclusion
With special regards to the Engstrom case study analysis, there are certain key points that I
greatly believe needed to be analyzed to truly understand the issues set forth. The most
CASE STUDY ANALYSIS 17
important of all key points was the breakdown of the incentive system, the Scanlon Bonus Plan.
Much of Engstrom downfall can be directly correlated with the failure of this system; the issues
arising at Engstrom arose after signs of the incentive plan were deteriorating. As such, analyzing
the root causes of why the system failed and how to rectify such was crucial in understanding
how to prevent similar instances from happening in both at Engstrom and my own personal
workplace.
With regards to my own personal workplace analysis, I genuinely believe that I benefitted
significantly from learning about Engstrom. I am a firm believer in learning from mistakes,
regardless if they are your own personal mistakes or others. The failure of the incentive plan
showcased the importance of a reward system and the need to maintain an employer-employee
relationship; truly, without the cooperation of the staff, regardless of how low in the totem pole
they are, they are all integral in the success of the company.
Engstrom had the Scanlon Bonus Plan, which initially was a great incentive program;
overall, it failed because it was far too complex. I believe the answer to such is to create a
simpler program that all employees can easily comprehend. In 2013, the Journal of Labor
Research (Tomohara, 2013) published an empirical study called “What Are Relevant Work
Incentive Models? Shirking Model, Gift Exchange Model, or Reciprocity Model” that researched
what the best incentive program is in regards to motivating employees. The final answer that
was concluded from this research was that it all varies depending on the situation. As the
Scanlon Bonus Plan initially worked with Engstrom, time assisted in it’s deterioration; perhaps
the logical response from Engstrom to do was to modify it as needed or change programs. In
regards to my own personal workplace, I genuinely believe that one singular system cannot be in
place for a long period of time, I have learned that from Engstrom. With due time, either
CASE STUDY ANALYSIS 18
modifications need to be had in regards to incentive systems or new programs must be adopted;
this is the only true way to allow for incentive programs to survive. Personally, I believe
incentive programs are a great means in rewarding employees for hard work and to incentive for
future instances. If employees believe that they will be rewarded for extra efforts exerted in the
workplace and it is within reasonable means to act as such, then there is a high possibility that
more energy will be applied to the task on hand; this is evident in such workplace theories as the
I used several human theories to analyze the issues within Engstrom and assist in providing
suggestions to fix such. With that, I have gained several insights in practically administering
these theories to an actual workplace setting, such as my own. Two theories that I believe are
relevant to most, if not all, workplaces are the equity theory and the expectancy theory.
Both theories have been analyzed in depth throughout this paper, but as a brief overview,
the equity theory explains the concept of over/under-reward whilst the expectancy theory
explains the concept of how employees become motivated to do certain tasks. In any tasks,
especially in a workplace setting, these theories are relevant. Understanding the drive of
employees is the key to understanding exactly how they will benefit their respective company.
For example, if my employees were motivated to work harder knowing that they will have a half
day, then that reward should be in place moving forward; unfortunately, this reward is not
applicable in all workplaces. The theories presented above, and those that were applied to the
Engstrom case study analysis, are great guidelines in assuring how management should react in
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CASE STUDY ANALYSIS 20
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