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Engstrom Auto Mirror Plant

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ENGSTROM AUTO MIRROR PLANT
MOTIVATING IN GOOD TIMES AND BAD
CASE STUDY REVIEW

1) Other than the Scanlon, what are some common types of employee incentive plans? Provide a brief overview of what they are and how they work.

My research found that basically there are four types of programs classified as gainsharing. These include: the Scanlon Plan, the Rucker Plan, Improshare and Custom plans. These gainsharing plans are all similar. The differences appear in the way they calculate bonus and the level of employee involvement required to support the plan.

The Scanlon Plan appears to be the oldest and most widely used type of gainsharing plan. As was shown in the case study: Engstrom Auto Mirror Plant: Motivating in Good Times and Bad, the Scanlon Plan is based on the historical ratio of labor cost to sales value of production (Beer & Collins, 2008). Because it rewards labor savings, it is most appropriate for assembly line companies.

The Rucker Plan is based on the idea that the ratio of labor costs to production value (actual net sales plus or minus inventory changes, minus outside purchased materials and services) is historically stable in the manufacturing industry (Recardo & Pricone, 1996). This principle became the fundamental guideline of the Rucker Plan, which tracks the value added to a product as a measure of productivity. Because this plan utilizes a multi-cost formula, it is most appropriate for organizations that want to improve other variables, such as scrap reduction or energy consumption, in addition to labor.

Improshare measures changes in the relationship between outputs and the time (input) required to produce them (USLegal, 2011). This plan is minimally affected by changes in sales volume, technology and capital equipment, product mix, or price and wage increases. It's the easiest of the gainsharing plans to...

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