Bent with the support of management and labour introduced the Scanlon Plan in the company where the employees of the company got share in the company’s profits. The labours welcomed the plan and the performance as well as employee morale boosted up. Company experienced a vast change on performance and the work culture of the company. Everything went well till the economy faced a bad time and company had lay off some labours to cut the cost. The bonus was also not given to employees for several months.

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The performance went down and the company found it difficult to supply its customers on time. Scanlon plan: Scanlon plan is was a very widely used incentive plan in USA. The plan focuses on the cost saving and performance improvement measures taken by employee to improve the performance. The plan motivates employees to work smarter not harder. Engstrom adopted the plan when the company was facing huge problems regarding the performance of the employees. This plan helped the company to improve the production by 50% and the employee morale was all time high.

But when the company laid off 46 employees and didn’t pay any bonus for 7 months because of downturn in the industry, the worker became accustomed to the plan’s substantial bonuses. they became suspicious about the plan and responded badly which hit the company’s productions. Decision Criteria and Alternative Solution Bent has to take important decisions regarding the scanton plan and its usefulness in the company. The workers’ morale needs to be raised without harming its regular productions as well as they have to meet the customer demand on time.

So bent have following alternatives with him. 1. Scrap Scanlon- the first alternative is to scrap Scanlon plan and give regular pay to the employees. This way he can manage the over expectations of the workers but it will also harm the motivation of the employees which are used to the higher bonus over the years. 2. Continue with the same plan- if bent chooses to continue with the same plan the problem may raise to a greater extent as the employees are already suspicious about the plan and it is costing very high on company’s performance.

Also the plan has failed to keep worker motivation high at the time of downturn. 3. Make changes in the plan – the third alternative is to make some changes in the plan to fit the plan for difficult situations. There should be a proper understanding of the terms and situations that may occur with the plan between the management and workers. It should also keep employees morale high at downtime and workers should not treat the bonus plan as the necessary part of their compensation. Recommendations Bent should make some changes in the Scanlon plan to make it more transparent to the workers.

They should understand that how this plan will give them high bonuses and under what circumstances the company may not be able to give bonus. Company may hire a person to work as a middleman between the management and the worker union to have better understanding of the expectations of the workers. The worker needs to understand the broader picture of the plan to improve performance rather than treat this as a normal bonus plan. The company had a good track record with the plan and should continue the plan for improved performance.

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