The plan proved to be successful mainly because employees in Engstrom had never been in a position where they were part of the decision making process of the company, and were responsible for their actions, similar to empowerment. In this case, employees felt valued by the company and were motivated to be more productive and to contribute to the companys improvement. Workers expressed satisfaction and they felt that the company was a better place to work.
While all Scanlon plans, when implemented properly, improve teamwork, collaboration, creativity, productivity and innovation, the plans can be adjusted to support the strategy of a specific organization. In this case, Engstrom was aiming for higher productivity and cost savings and thus the bonus given was based on the ratio production per labor hour. However, organizations with different strategies base their compensations on different factors. For example, Parker Pen Company implemented the Scanlon plan not focusing on cost saving, but on improving the incentive plan the company had. In this particular company Joe Scanlon was the main player in improving the companys incentive plan to a more productive and balanced one.
Generally, a Scanlon Plan will result in any organization if the employees receive what they have agreed, and in this plant they were supposed to receive bonuses for their productivity. This means that employees will give their best and work collectively for the benefit of the company as long as they are being compensated for their performance. When an employee is not receiving what they were promised, then his or her performance will decrease significantly and it will affect the companys productivity as a whole.
A pay-for-performance system is one in which employees receive compe View More »