Reference no: EM132687559

Question: Whirlpool is a major manufacturing of washing machine in United States of America. It has subsidiaries and subcontractors who make the parts for the final product. One of these companies. Whirlpool Corporation has a plant based in Michigan State that turns metal rods into washing machine parts.

The plant is not a high tech state of art facility, but only a small old fashioned tooling and planting shop. The company employs 265 workers, because of low productivity the company was even considering closing the plant. The company also did not want to invest additional capital to upgrade technology. It did however, revamp the manufacturing process and held training workshops for the workers to improve the efficiency and improve the quality of the product. However productivity per man hours remained low, rate of defective parts of the production remained high and the employee morale remained low.

Then the company decided to introduce a profit sharing plan, whereby the workers would be encouraged to improve upon productivity as well as the quality of the product and they would share in the extra costs saved or extra profits earned.

Even though the workers were sceptical the programme was initiated, they negotiated. A gains sharing formula that was suitable to both management and the workers. It was agreed that there would be no increase in the base pay, but the workers share in the additional bonuses which would be proportional to the savings achieved. Since the inception of the program, the productivity improved 19% to 110.6 units per workers as against 92.8 parts per worker prior to this program. Similarly the number of defective parts has decreased from as high as 837 per million to only 10 per million. During this time the total worker pay has increased by 12 percent.

The workers have become so involved that they themselves keep looking for ways to cut costs. For example one group of workers has been involved in finding ways to recycle the oil used to cool and lubricate machines. If these efforts are successful, the workers feel that they can save about $41000-and can be shared by them.

Even though the programme has been successful some workers are unhappy that the gains are shared by all workers equally and inhibits individual motivation. They feel that some unproductive workers are being benefitted because of some highly productive workers and this arrangement does not seem to be equitable.

1. Do you think gain sharing program are considered to be motivators for workers as individuals? Explain how the programmes has motivated the workers at Whirlpool Corporation?

2. Should the management continue with programme or should it invest more on upgradation of technology of production? Which option would help the management more and why?

3. What can the management do about unproductive workers who are getting the same benefits as the productive workers?