Final Project: Case Study Analysis
Engstrom Auto Mirror Plant: Motivating in Good Times and Bad
Southern New Hampshire University
Final Project: Case Study Analysis
Engstrom Auto Mirror Plant: Motivating in Good Times and Bad
Located in Richmond, Indiana, Engstrom Auto Mirror Plant had been a prosperous manufacturing plant for vehicle mirrors from 1948 until the late 1990s. After Ron Brent replaced the former plant manager in 1998, he introduced the Scanlon Plan to provide monthly incentives to employees based on performance and operational transparency. The Scanlon Plan encouraged employee collaboration and input, hence the concept of the Theory Y approach. With the implementation of this incentive plan, Engstrom provided a culture of strong leadership, teamwork, and open communication. However, in 2005, Engstrom experienced an economic shortfall and laid off about 18% of its employees the following year. As a result, there were many organizational issues and by 2007, employees had not received bonuses for seven months and low morale ensued decreasing productivity.
Explanation and Direction
One of main organizational issues was the lack of communication between leadership and the employees. According to Sinickas (2001), “A communications gap doesn’t only undermine morale and performance, it can ultimately impact the bottom line” (p. 3). Leadership ceased communications with employees once bonuses ended and employees were laid-off from the organization. Another example of the communications gap is the employees’ confusion regarding the calculation of the incentives. Bonuses were paid regularly and employees considered them part of their paychecks instead of incentives. Although the employees received detailed information about how the incentives were calculated, they did not understand nor trust the calculations. When the incentives were terminated, employees lost their trust in leadership and productivity suffered.
This case study analysis will focus on the challenges at Engstrom and the practices that can improve operations within the organization. The root causes of the organizational issues and their impact to Engstrom will be identified to determine improvement outcomes. Additionally, strategic actions that would assist the organization in proactively responding to organizations issues will be examined. The lack of motivation among employees is also central to the focus of this case study analysis. According to Newstrom (2014), “Work motivation is the result of a set of internal and external forces that can cause an employee to choose an appropriate course of action to engage in certain behaviors” (p. 126). Employees need to know that they are valued as this can affect their performance in the workplace. Ganta (2014) described motivated employees as “workers who are motivated and excited about their jobs” (p. 221).
The concepts from the Engstrom Auto Mirror Plant will be applied to the workplace analysis examining organizational issues at my employer. I work at a small college in Olympia, Washington as an Administrative Assistant in the President’s Office. The college consists of a diverse population of students including communities of Native Americans, African-Americans, Pacific Islanders, Asians, LGBTQ+, and the disabled. Since the college opened its doors over fifty years ago as a liberal arts institution, it’s mission is to be progressive, engaged, environmentally conscious, diverse, and equitable. Although the college has many wonderful qualities, there have been many concerns regarding social justice and faculty autonomy. The root causes of the organizational issues, the impact of these issues, improvement outcomes that will resolve those issues, and proactive strategic actions will be examined from the perspective of human behavior.
Problem solving and conflict resolution in the workplace requires an analysis of the root causes to determine a solution towards a favorable outcome. According to Newstrom (2014), the equity theory confirms that employers “must at least attempt to understand the employee’s perspective” when creating “workable system of economic awards for increased productivity (p. 162). By examining the root causes of the issues that plague Engstrom, successful business strategies can be applied to improve communications and employee motivation.
Root Cause Case Study Analysis
The former plant manager did not have sufficient knowledge to understand how to implement new technology into production lines (Beer & Collins, 2008, p. 3). The goals for the implementing new technology on the production lines were to decrease productivity times and increase product efficiency. However, production times increased because of an incompetent production manager and employees were slow to learn the new technology. Additionally, the previous plant manager was not able to work with a rigorous employee union. As a result, the root causes of these organizational issues were production delays, low morale among employees, alienated customers, tensions between employees and management, and the lack of product quality control. In 1998, the previous plant manager resigned because of these problems and Ron Bent was hired as the new plant manager at Engstrom.
Bent decided that it was important to boost employee morale and believed an incentive plan would increase employee productivity. He knew Engstrom employees deserved a supportive leader and in return, management needed to earn the trust of the employees. When the Scanlon Plan was created, management enabled a Theory Y approach. Employees could observe how the Scanlon Plan was implemented in another plant. According to Dobre (2013), “Theory Y practices focus on creating a pleasant work environment and aligning the individuals’ goals with the organizational goals” (p. 54). Employees will be able to collaborate as a team and enforce accountability. The Scanlon Plan’s purpose was to provide open communication between management and employees, hence successfully promoting changes in the workplace. In alignment with Theory Y, employees could have a meaningful voice in the organization and they felt a sense of value through that process.
Unfortunately, the healthy work environment for employees that the Scanlon Plan promoted did not last for long. Employees lost the motivation to complete work tasks and product quality control diminished. The Scanlon Plan was intended to reward employees for their contributions by providing initiatives based on increased production. Eventually, employees expected this bonus pay to be added to their paychecks even though they were not meeting minimum business requirements for work performance. Newstrom (2014) describes behavior modification for employees as a “direct connection between performance and reward” (p. 163). When rewards are not disbursed based on performance of employees, they will become “confused about to perform and may even be highly dissatisfied with the reward system” (p. 163). In Ganta’s (2014) article reviewing motivation to improve employee performance in the workplace, employees who are not motivated will “spend little or no effort in their jobs” (p. 223).
Engstrom employees began to question the fairness of the Scanlon Plan. They did not know how the plan would continue if there were economic changes. In 2005, Engstrom laid off 46 employees and management ceased any communication with employees. The root causes of the downfall of the Scanlon Plan was the lack of motivation among employees and fairness when distributing bonuses. As the economy changed, incentives were not re-evaluated and employee morale diminished the same way as it had during the late-1990s. When management laid-off approximately 18% of its staff, there was a decline in employee motivation. An explanation of the decline in employee motivation is seen with Maslow’s Hierarchy of Needs (Newstrom, 2014, p. 131). The second order of needs includes “economic security,” which provides employees a guarantee that there will not be any lay-offs (Newstrom, 2014, p. 132). Since the “lower-order needs” were not satisfied, management is unable to satisfy the “higher-order needs” (Newstrom, 2014, p. 132). During the period of success with the implementation of the Scanlon Plan, the hierarchy of needs was satisfied. With the economic short-fall, Engstrom employees did not experience the same sense of security and stability from the company.
Engstrom Auto Mirror Plant continued to over compensate employees with bonuses and they continued to rely on them as part of their normal income. Employees misunderstood the calculations of the incentives, which relied on cost-reward comparison. Cost-reward comparison analyzes the middle ground between the personal costs of employees and the reward level (Newstrom, 2014, p. 162). When management decided to interrupt the bonuses without any means of communication, employees reacted negatively and lost their faith in the organization. Management ignored their social responsibility to the employees and disturbed any hope of balance within the organization.
One way that Engstrom may have redeemed itself was to meet with employees to disclose any upcoming changes to the Scanlon Plan. The outcome of that meeting would have assisted employees with understanding their position within the organization as well as the calculations used for incentives. Furthermore, employees would understand how their low productivity levels were adversely affecting the organization. This could have been an epiphany moment for the employees to motivate themselves to increase their productivity. From the perspective of human behavior, management denied themselves an opportunity to give positive reinforcements and set work performance goals for employees. While managers cannot force their employees to become motivated, “they can create an environment that inspires and supports strong employee motivation” (Ganta, 2014, p. 223).
Organizational Improvement Outcomes
While examining organizational improvement outcomes, Engstrom would benefit from creating an assessment for the need to implement change management. Change management activities can lead to better employee performance and identify gaps to close for the future success of Engstrom (Potocki & Brocato, 1995, p. 404). The outcome of this assessment “can serve as an input for planning system changes or process improvements” (Potocki & Brocato, 1995, p. 404). The data received from the assessment can address the issues with the Scanlon Bonus Plan and the needs of Engstrom employees.
Leadership would need to revisit the mission of Engstrom to determine if it creates a caring environment that subscribes to “information sharing, open communications, integrity and trust” (Potocki & Brocato, 1995, p. 404). This is the perfect opportunity to examine relationships with employees and invite them to be contributors in the vision of the organization. Leadership and employees will understand their strengths and weaknesses and how they can contribute to process improvements. Process improvement methodology seeks to promote an environment where “everyone has the opportunity to continually and incrementally improve the work of the organization” (Potocki & Brocato, 1995, p. 404).
A “psychologically healthy workplace” combines the concepts of “organizational effectiveness” and “employee benefits” (Grawitch & Barber, 2009, p. 2). The organizational effectiveness approach addresses how management can motivate their employees, hence increasing performance (Grawitch & Barber, 2009, p. 1). According to Abraham Maslow, “an individual is ready to act upon the growth needs if and only if the deficiency needs are met” (Huitt, 2007). Some of these needs that are critical to employees include employment security, adequate compensation for work, growth opportunities, and generous benefits. When leadership have met the needs of their employees, they will notice increased motivation and job satisfaction.
Leadership will need to learn how to model the organization to “increase employee motivation, effort, and performance” (Grawitch & Barber, 2009, p. 1). While organization effectiveness approach motivates employees for the benefit of the organization, the employee benefits approach calls for the organization to benefit the employees (Grawitch & Barber, 2009, p. 2). It is more aligned with Maslow’s Hierarchy of Needs because management “supports the employees” life and family needs” (Grawitch & Barber, 2009, p. 2). Unfortunately, this approach does not advocate for employees’ participation with restructuring the organization. The sole benefit of this approach is that employees can shape their benefits according to their needs.
The Scanlon Bonus Plan contributed to the once healthy work environment at Engstrom, which experienced increased employee motivation and satisfaction in the overall culture of the workplace. With the psychologically healthy workplace approach, organizations can examine their policies and practices to design a model that will “enhance both employee health and well-being and organizational effectiveness” (Grawitch & Barber, 2009, p. 3). This approach is concerned with employee well-being from a psychological standpoint to create a healthier workplace. Additionally, employees can provide feedback about how organizations can create a healthier workplace for them. Grawitch and Barber (2009) describes that the psychologically healthy workplace “recognizes the critical role of employee involvement in ensuring that changes meet real employee needs” (Grawitch & Barber, 2009, p. 3).
Engstrom leadership lacked a solid strategic plan that would have outlined the goals of the Scanlon Bonus Plan and how employees could assist with its success. Ugboro, Obeng, and Spann define strategic planning as:
The process by which organizations determine and establish long-term direction and formulate and implement strategies to accomplish long-term objectives while taking into account relevant internal and external environmental variables. (p. 89)
In addition to outlining strategies, the Scanlon Plan Strategic Plan would include details such as the Engstrom’s mission, objectives, action plans, future opportunities, strengths and weaknesses, and “control systems to ensure that the organization remains on course to achieve intended objectives” (Ugboro, Obeng, & Spann, 2011, 89). The implementation of a strategic plan holds Engstrom accountable and demonstrates organizational commitment to its employees. A strategic plan will also assist with financial performance, employee motivation, equity, data, and defining policy.
Engstrom leadership can redeem itself by disclosing to employees any upcoming changes to the Scanlon Bonus Plan. This form of communication would kick-off with a general meeting between leadership and all employees to discuss concerns and suggestions for new strategies to remedy issues within Engstrom. Employees would understand how their low productivity levels were adversely affecting the organization. This maybe an epiphany moment for the employees to motivate themselves to increase their productivity. From the perspective of human behavior, this meeting will offer management an opportunity to give positive reinforcements and set work performance goals for employees.
The Scanlon Bonus Plan was treated as permanent monthly income by Engstrom employees. Instead of ending the bonuses generated by the plan, leadership should have restructured them as quarterly incentives to decrease dependency on them. When the bonuses ended, the employees lost their trust in leadership because their needs were not being met. If employees were paid bonuses quarterly, then they would become motivated to increase profits. Leadership would need to generate reports or post profits using a visibility board so that employees will be able to keep track of their productivity. Moreover, regular meetings, whether weekly, bi-weekly or monthly, to report-out on profit and loss margins will increase communication and eliminate conflict. Employees will feel a sense of empowerment again and understand how their contributions are impacting Engstrom’s bottom line.
The purpose of these meetings should be outlined in a communication plan. This plan should outline how leadership will begin to restore its relationship with employees to build an environment of trust. Employee will be given opportunities to exchange ideas with leadership to create an atmosphere of inclusion and trust. Additionally, leadership can reach out to individual departments to encourage team collaboration and review strengths as well as weaknesses. The outcomes include a sense of engagement and increased productivity among employees.
The practices of the college administration at my employer have not been aligned with the college’s mission, hence ignoring many of the students’ social justice concerns on campus. These concerns include the following:
Another organizational issue that has prompted division on the campus is the heightened level of faculty autonomy on campus. College administration has allowed faculty to dictate the terms and conditions of their contract and provide input into the business operations on the campus. The level of autonomy granted to the faculty has made them untouchable. This is because of the social system created by college administration which denies a system of checks and balances with faculty behavior. The staff is not able to fully engage in the organizational culture of the college and have little room to express their recommendations and concerns. The issues with power at the college has consequently impacted employees’ motivation at the college. Most of the staff is exhausted at the level of faculty autonomy on the campus and the lack of boundaries that have been established by senior leadership.
- Lack of student representation in the student conduct code.
- Termination of faculty and staff who are not equitable partners of the college.
- Armed campus police.
- Voluntary instead of mandatory cultural competency training for administrators, faculty, and staff.
- Absence of a multicultural center.
- The need for a full-time Trans & Queer Center coordinator.
- The need for a full-time position to support undocumented students.
Faculty autonomy contributes heavily to the decline in student enrollment at the college. The faculty has developed “an attitude of entitlement – a belief that they deserve things because society (or their employer) owes it to them” (Newstrom, 2014, p. 246). Students have voiced their concerns on multiple occasions that they do not feel as though they have a voice because college administration will comply with the wishes of faculty. According to Newstrom (2014), “Effective behavioral management that continuously works to build a supportive human climate in an organization can help produce favorable attitudes” (p. 246). Newstrom (2014) defined this autonomy as a “subgroup of individuals within the larger culture – whose values, norms, and behavior are substantially different” (p. 104).
The root causes of the organizational issues at the college are the slow action by college administration to implement change and faculty autonomy. One of the most powerful ways an organization can empower its employees is through effective leadership. The President has not been a strong catalyst or “change agent” for social justice change at the college. Changing, the second phase of change, is the process that involves “helping and employee think, reason, and perform in new ways” (Newstrom, 2014, p. 405). According to Kritsonis (2014), “it is necessary to move the target system to a new level of equilibrium” (p. 2). The President has not proven to the faculty and staff that he is a “transformational leader” who promotes the mission or “vision” of college (Newstrom, 2014, p. 404). Furthermore, the commitment to learning proves that the college “will continue to change” for the better (Newstrom, 2014, p. 404).
The Equity Council, which includes myself, has been requesting that the President outline our power authority so that we can define social justice change on the campus. At this time, the Equity Council is unsure of its charge and the level of influence on the campus. The President has not presented an “objective (performance-related) reason for the change” nor demonstrated his ability to be a champion for it (Newstrom, 2014, p. 407). He has not encouraged employees to participate and “to discuss, to communicate, to make suggestions, and to become interested in change” (Newstrom, 2014, p. 408). The President will need to remain committed to social justice change if he is to motivate the faculty and staff, especially those who resist change on the campus.
The President and his administration have not engaged in open lines of communication regarding the progress of social justice changes. Sahoo (2011) stresses the importance of communication through “allowing access to relevant information” (p. 47). Newstrom (2014) describes effective communication as providing a bridge of meaning between the two people so they can share what they feel and know” (p. 54). There has been a lack of transparency in communication on the part of management because they refused to “share meaningful information on a timely basis with employees” (Newstrom, 2014, p. 63). The President and senior leadership have shared the least amount of information and they are responsible “the communication’s framework” (Ergen, 2010, p. 7). For years, students of color have been unsuccessfully meeting with college leadership regarding the lack of action to enforce diversity, equity, and inclusion on the campus. It was not until administration was forced by the students to discuss the social justice issues on campus that open dialogue was encouraged.
The uncontrolled level of faculty autonomy is a result of organizational politics.
Schneider (2016) describes organizational politics as “generally negative” because the concept “minimize(s) the production of an organization and potentially undermine(s) and organization’s ability to function at the most basic levels” (p. 2). He further states that “Organizational politics sets the stage for a negative work environment, which does not support production” (Schneider, 2016, p. 3). Although the President of the college is considered the main source of power, the faculty tend to have an upper hand in decision making.
Since the college began 50 years ago, faculty was granted a high level of autonomy and they have set the tone for the guiding principles of the college. Most of the faculty will place their “self-interests ahead of organizational interests” (Schneider, 2016, p. 2). When compared to “low self-monitors,” most of the faculty are “more insulated from social cues, behave as they wish, and show less concern for making positive impressions on others” (Newstrom, 2014, p. 320). Students often struggle to convince deans and the president about faculty who choose to run their classes like dictators instead of leaders. Additionally, staff members, like myself, are divided from the faculty because they are allowed intervene in business operations without prior experience. Most of the faculty do not have formal training and/or experience in business operations and their decisions tend to have many consequences that negatively impact the college.
The impact of the lack of response from administration regarding social justice concerns prompted disruptive action by the students. After pleading for months with administration, the students decided to occupy the school. Administration, including support staff such as myself, were forced to remain in our areas until the students demands were addressed. Furthermore, because of faculty autonomy, one member of faculty has expressed via email, social media, and national television his discontent with the recent communication to discuss new equity policies and action planning. This faculty member’s practice of “individualization” consistently challenged campus culture and deviated away from it in favor of examining race through a scientific lens (Newstrom, 2014, p. 103).
The staff, like myself, at the college are put into a vulnerable situation. Because we are state employees, we cannot engage or express our opinions about the events on campus. Employees have been leaving the campus in large numbers, but there is concern that many more will leave because they feel marginalized. Employees need to know that they are valued as this can affect their performance in the workplace. Ganta (2014) described motivated employees as “workers who are motivated and excited about their jobs” (p. 221). Employees who are not motivated will “spend little or no effort in their jobs, avoid the workplace as much as possible, exit the organization if given the opportunity and produce low quality work” (Ganta, 2014, p. 223). Managers cannot force their employees to become motivated, “but they can create an environment that inspires and supports strong employee motivation” (Ganta, 2014, p. 223).
Until the wave of student protests, many of the staff and students did not feel empowered to engage in decision-making processes. They are not feeling motivated because of the lack of clarity about the college’s goals about social justice. Leaders must be emotionally intelligent to motivate their employees by using their “empathy, compassion, optimism, humor, integrity, caring, and persuasiveness” to build trusting relationships (Newstrom, 2014, p. 227). Leadership has not been accountable for their own actions and the students as well as staff do not feel a sense of empowerment.
Organizational Improvement Outcomes
College administration will need to improve the current climate of the atmosphere of the college or there will be more student protests. Students will need to participate in the revision of the student conduct code to ensure that it is equitable for the student body. When leadership engages in a participative approach to management style, they will be able to work together with the students to address their concerns (Newstrom, 2014, p. 187). The current student conduct code punishes students harsher than faculty who have full autonomy at the college. Furthermore, student relations with campus police will need to improve if trust is to be developed between students and police. One method needed to improve relations is to provide continuous training for police officers that will address safe student engagement, de-escalation procedures, disabilities, racism, and sexism.
In addition to the police, administrators, faculty, and staff will also need mandatory cultural competency trainings. The current social contract will need to be reviewed by college administration to determine if changes are needed. Furthermore, faculty will need to improve their curriculum by including courses that do not have a heavy Eurocentric influence. Hiring practices at the college needs to be improved to recruit more people of color. There are many instances when there is a diverse pool of candidates applying for various positions on campus, but they are not selected.
College administration should begin to improve relations between the faculty and staff. The staff does not have confidence in administration that they will soften the level of autonomy exercised by the faculty. The President will need to take steps to improving the social contract to determine how faculty are abusing privileges. Also, he will need to work with senior leadership to improve engagement with the staff and strategies to boost morale.
During the summer, college administration will need to organize a student task force who will report to Student Affairs while revising the student conduct code. The student task force should have a few mentors to guide their input while maintaining peaceful interactions between college administration and the students. Furthermore, since the staff have failed, mainly Student Affairs, to maintain an atmosphere of peace, students should be paid for their time on campus. The students should be allowed to select the peers who will be involved in the revision of the student conduct code.
When training campus police about safe student engagement, de-escalation procedures, disabilities, racism, and sexism, a Police Services Review Board is needed to establish the training. Since this is a state-funded institution, private funds will need to be raised to pay for the trainings. The Police Services Review Board must research various third-party agencies that can provide these trainings. The mandatory training that is needed for administrators, faculty, and staff will need to be a collaborative effort between the faculty union and Human Resources. While establishing these trainings, there should be a review of the college’s policy on non-discrimination. Also, the level of faculty autonomy should be reviewed by college administration and the faculty union to determine where it can be minimized.
The Engstrom Auto Mirror Plant and my employer faced crisis because of poor leadership practices and other organizational behavioral issues such as lack of communication. Engstrom employees did not have faith in management, which decreased productivity and motivation to work. Management at Engstrom need to improve their communication with employees to provide clarity about the organization’s goals. The calculation of the bonuses need to be more transparent to employees so that they will understand that they are based on performance and not part of their compensation. If trust is to be rebuilt, leadership will need to improve how they are communicating with employees. Engstrom leadership will need to inform employees of changes in the plant and the reasons for them. Furthermore, leadership should resume soliciting feedback from employees so that they can feel a sense of inclusion in business operations.
With my employer, the root causes of the organizational issues are because students are frustrated with the lack of social justice and faculty autonomy on campus. Recently, the campus has experienced waves of student protests because campus administration did not engage in open communication with students about these concerns. Faculty autonomy has not only become problematic for the students, but it is affecting the morale of the staff. The President of the college has not been a proactive catalyst for change and has not proven that he is a transformational leader. Furthermore, college administration has refused to “share meaningful information”, which provoked student protests on campus (Newstrom, 2014, p. 63). Organizational politics have taken control of the college and because of faculty autonomy, the faculty participates in most of the decision making.
This case study analysis demonstrates that the root causes of organizational issues are a result of uncontrolled human behaviors. Management will need to develop leadership skills that involve the ability to communicate the goals and mission of an organization. They will need to learn how to establish trust from employees and in the case of my employer, students. The Engstrom Auto Mirror Plant demonstrates how a lack of faith in leadership can affect productivity and motivation. Furthermore, building trust is key to increasing employee motivation, which is crucial for productivity in the workplace. According to Newstrom (2014), the “dysfunctional effect” at Engstrom plant decreased employee morale and trust (p. 87).
The Scanlon Plan at Engstrom and the lack of social justice as well as faculty autonomy with my employer were the main causes of the dysfunctional effect. At Engstrom, the explanation of bonuses must be transparent and an improved system to calculate bonuses is required. In the case of my employer, transformational leadership is needed to address student concerns as well as decrease division among faculty and staff. This case study proves that organizational issues are a result of human behavior. When human behavior is analyzed, major organizational issues can be addressed and resolved when reviewing them through a critical lens.
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