Engstrom Case Study Solution Report
CASE STUDY ANALYSIS Case Study Analysis (Milestone 3): Strategic Recommendations Pertaining to the Improvement of the Engstrom Plant Introduction In Milestone 1 and 2, the issues arising in the Engstrom Auto Plant were determines and the exact root causes of such were explored. In any workplace organization, not just at the Engstrom plant, it is equally important to not only identify the issues on hand but to provide solutions to those issues. The major issues that Engstrom faced stemmed from the failure of the Scanlon Bonus Plan. Because of this, employee motivation, employee-employer trust, comradery, and the overall work culture were all greatly compromised. With that, the below sections pertain to recommended solutions that Engstrom must ensure to once again yield a successful and profitable company. Solutions Development: Organizational Improvement and Strategic Actions Amending the Scanlon Bonus Plan . Before anything else, the failure of the Scanlon Bonus Plan must be addressed; in short, this compensation plan was clearly not working. In response to this, Engstrom must either make the decision of keeping the exact plan in place, amending it, or to create a new compensation plan. Clearly, keeping the current bonus plan would be a terrible choice for a variety of reasons that were explored in the previous milestones; hence, the obvious choices would be to either amend the current plan or to create an entirely new one. For the sake of this proposal, I recommend that a new compensation plan should be generated; I state this because the alternate would be to simply change the current bonus plan, which employees currently do not trust. 2
Each month, your team really seems to be working hard to meet its goals. Yet each month, as you near the deadline, you find that your team is running behind. In March, someone told you that the problem was a software glitch. So you bought new software.
In April, you heard that a shortage of marketing material was causing the problem, so you wrote a stern memo to the Director of Marketing, asking for an explanation. In May, your team was late again; this time, a team member explained that the problem is connected to a network slowdown. So you called IT to get the issue resolved.
Now it’s June, and you’re looking at yet another missed goal. And you’re sick and tired of putting out fires. Something must be at the root of all these missed goals, and you want to figure out what the real problem is and deal with it. Once and for all.
This is a job for Root Cause Analysis.
Root cause analysis, according to the Washington State Department of Enterprise Services , is “a systematic process for identifying 'root causes' of problems or events and an approach for responding to them. [It] is based on the basic idea that effective management requires more than merely 'putting out fires' for problems that develop, but finding a way to prevent them.”
Root Cause Analysis is often—though not always—associated with Six Sigma, a set of business tools developed by Motorola during the 1980’s. The goal of Six Sigma is to set and strive to consistently reach a very high set of standards through a continual process of evaluation and improvement.
Are you ready to get to the root of your team's business problems?
Symptoms Versus Causes
Imagine you’ve never heard of the common cold. Then, one day, you develop a stuffy nose, a fever, a headache, and a cough. You see each separate symptom as a unique problem, and you see yourself as suffering from a whole range of illnesses—each worse than the last one. You treat the stuffy nose with a decongestant, the fever with aspirin, and the cough with cough syrup. For a while, at least, you feel better. But within a few hours, each of the symptoms reappears. You begin to despair that there isn't any cure at all.
Then you analyze your symptoms, noticing that they all appeared at the same time. You do a little research, and you discover that no, you don’t have four different illnesses. You have just a single illness which can be addressed very simply with a combination of rest, plenty of fluids, and the passage of time.
In the business example above, you were looking at a set of symptoms—missed deadlines, software problems, connectivity problems, a lack of marketing materials—but you had not yet diagnosed the underlying problem.
Root Cause Analysis allows business managers like you to analyze the symptoms of a problem and diagnose the underlying issue. Once you know what the underlying issue is, you stand a much better chance of resolving the symptoms—permanently!
Digging Deeper Into Root Causes
The purpose of Root Cause Analysis is simple: to determine the underlying reason or reasons for a problem and to eliminate those reasons. The process, however, is not quite as simple. There are multiple tools for Root Cause Analysis (which we’ll explore more fully later in this article), and multiple steps along the road to analyzing a root cause.
No matter which tool you choose for Root Cause Analysis, you’ll go through the same basic steps:
- Defining the problem.
- Determining the reasons for the problem.
- Determining the underlying conditions that give rise to the reasons for the problem.
- Designing a solution.
- Implementing the solution.
- Evaluating the success of your solution.
Let’s look a little more deeply at each of these steps:
First, you’ll define your problem—and most problems are deceptively simple. We keep missing our goals. We have low morale in our workplace. Our products are flawed. These simple statements, however, may be the result of a complex set of issues and circumstances.
Before accepting a very simple definition of the problem, it’s worthwhile to dig a little deeper by asking questions such as “how is the low morale expressed?” or “in what way are our products flawed?” The more you know about the symptoms, the better you’ll be able to diagnose the underlying issues.
Once you’ve defined the problem, you and your team will brainstorm potential reasons why the problem exists. These are not root causes; instead, they are starting places from which you’ll derive a root cause. These reasons may be human (Joe neglected to update our virus software), organizational (no one ever tells marketing what they need until it’s too late) or physical (my car broke down and so I was late to the client meeting).
Now, it’s time to determine the underlying condition or root causes behind the problem you’ve defined. There are many tools available for doing this, but they all have in common the ability to help you dig below the surface.
The process of brainstorming will take some time, and may even require a bit of research. Why did Joe neglect to update the virus software? What created the communications gap between marketing and the rest of the company? In the long run, you’ll have a solid understanding of a problem which may be much more significant or broad ranging than you expected.
Once you understand the real, underlying, root cause for your problem, you can begin to design a solution. Of course, that solution may not be as simple as “update the anti-virus software.” It might require rethinking the processes behind updating software—or choosing a whole new software system. It might entail a reorganization of the organization to enhance communication. Whatever the solution you develop, you’ll also need to think through the steps required to successfully implement and evaluate it.
Steps 5 and 6
Implementing and evaluating a solution or solutions are relatively straightforward. The key to implementation is planning and ensuring buy-in at all levels. Evaluation can be done in many different ways, but no matter what your method, your basic process is the same: by asking questions, such as "are the symptoms gone?" or "Is the problem resolved?" you’ll determine whether your process was successful.
Many Tools for Root Cause Analysis
Root Cause Analysis is a very popular business tool, and as a result many different business theorists have developed tools to get the job done. Some of these tools are relatively simple; others are quite complex. Your choice of tool will depend upon the complexity of your problem, the size of your business, and the resources and time you have available. Here are just a few of your options:
The Five Whys
This process is, in many ways, is as simple as it sounds. It's a process of asking a series of questions, each leading you deeper. For example:
We have not been able to land a new client. Why? Because we have done a poor job in our client presentations. Why? Because we have not had the materials we needed to make a good impression. Why? Because the Marketing Division has not updated the Powerpoints and brochures. Why? Because Marketing does not have the information it needs to create updated Powerpoints and brochures. Why? Because the information has been sitting in the IT director’s “in” box for six weeks.
Of course, this is a simplified version of 5 Why’s, but you can see how quickly the apparent problem—in this case, difficulty with making sales—can be traced to an internal organizational issue just by asking “why” over and over again.
Cause and Effect Analysis
This “mind-mapping” technique uses a fishbone diagram, brainstorming, and analysis to determine the cause that underlies a problem or issue within an organization. Together, a group determines the issues, the possible causes of the problem, and then the possible reasons behind the causes. Once a map is created, the group can analyze the results, determine the most likely causes, and begin developing ideas for addresses these root causes.
According to the theory behind Pareto Analysis, 20% of causes lead to 80% of results. This goes for negative results as well as positive results. By analyzing and scoring the negative outcomes of various causes, it’s possible to pinpoint the rotten 20%—and then target those causes for positive action. In other words, Pareto Analysis allows you to decide which problems really matter, and take action to eliminate them.
Does Root Cause Analysis Work?
For each company, and for each situation, different tools and processes will yield information about Root Causes. At Boeing, Root Cause Analysis of problems with the C17 aircraft finally yielded the Integrated Safety Management System, which has 12 essential elements, including open communication processes and challenging goals and objectives. Here’s how the process is described in an article called "Incredible Journey":
[Root Cause Analysis] tools and data, as well as stakeholder involvement, found seven final root causes for why the C-17 program had so many lost workdays and high workers’ compensation costs. These root causes—which the team validated using the same methods, tools and data—were:
- No personal accountability for safety performance.
- Lack of communication. Inadequate procedures, training and rules.
- Lack of management commitment.
- Not a business priority.
- No safety integration.
- Complacent safety culture.
After assessing the current state, determining root causes and involving stakeholders, the team developed and deployed a new C-17 Integrated Safety Management System, which team members believed was the foundation for achieving a world-class safety culture.
If Root Cause Analysis can work for Boeing, chances are it can work for your company. The key is to start with the right questions, select the right tools, and follow up to ensure that analysis leads to action—and not to a dead end.
By using tools like Cause and Effect Analysis, Pareto Analysis, and the Five Whys, companies around the world are rooting out serious problems and planning for success. In this series on Root Cause Analysis, we dig deeper into each of these strategies, giving your team the problem solving tools it needs.
Graphic Credit: Wrench designed by Tony Gines from the Noun Project.