Topic > Engstrom Auto Mirror Plant Case Study - 1562

Employees protested: "supervisors should have received a reduced bonus because they didn't work as hard as them and the company might be playing with the numbers" (Beer & Collins , 2008 p.6). An advantageous system for the new Scanlon plan is the reorganization of payment counting. This will help regain trust among employees and management. Equity theory emphasizes the integrity of all compensation agreements and, if this is effectively executed, will solve the problem of mistrust that employees have towards their management team. Rewards should not be paid on a constant monthly basis, but according to a pre-established proportional plan, which awards rewards “every time the right behavior is demonstrated” (Bauer and Erdogan, 2013, p. 112). Traditionally, this would involve workers receiving a reward whenever a certain amount of money in their allowable paycheck is reached. “The current allowable payroll is 38% of the value of sales” (Engstrom, 2008). This requires no modification. Instead, when Engstrom gets to a million dollars in payroll, then 10% of that sum should naturally be paid out to workers as compensation. This fixes numerous past issues with Scanlon