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Problem Definition: Riordan Manufacturing

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Autor:  anton  01 July 2011
Tags:  Problem,  Definition,  Riordan,  Manufacturing
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Running head: Problem Definition: RIORDAN MANUFACTURING

Problem Definition: Riordan Manufacturing

University of Phoenix

Human Capital Development

MBA 530

Dr. Alvin H. Steward III

January 23, 2008

Problem Definition: Riordan Manufacturing

Introduction

Riordan Manufacturing is faced with an interesting but not uncommon occurrence among larger businesses. Riordan is faced with a motivation and production problem in a growing, global organization. Employee motivation is an issue that does not discriminate as Organizations of all sizes wrestle with it. This is particularly true in manufacturing companies with a broad range of employees with myriad motivational needs. Usually, these workers represent multiple educational backgrounds, generations, ethnicities and family situations. How well the organization addresses these differences can mean the difference between an energized, productive workforce and a lethargic, non-productive one. Riordan has a strong reputation for paying attention to detail and extreme precision and fascinating quality control. Riordan’s President is the primary shareholder and founder of the company who focused on increasing sales and financial profits while increasing the value of his investments. “Profitability is the primary goal of all business ventures” (AG Decision Makers, 2006). Employee motivation, performance and retention are keys to Riordan’s continued growth, profitability and success. Career development, compensation and rewards, and employee relations programs can be used strategically for maximum organizational effectiveness (Anonymous, 2008).

Overview

Riordan Manufacturing, Inc. an industry leader in the field of plastic injection molding was founded by Dr. Riordan, a professor of chemistry in 1991. The company is now an “industry leader in the field of plastic injection molding” (Riordan, 2008). They have state-of-the-art design capabilities and created innovative plastic designs that have earned international acclaim. Riordan has locations in California, Georgia, Michigan and are global in Hang Zhou, China. They produce plastic beverage containers in Albany, Georgia, custom plastic parts in Pontiac, Michigan, and plastic fan parts in Hangzhou, China. Their research and development is based out of San Jose, California, which is considered Riordan’s corporate headquarters (Anonymous, 2008). Their major customers are beverage makers and bottlers, appliance manufacturers, aircraft manufacturers, automotive parts manufacturer and the Department of Defense. Riordan is a Fortune 1000 enterprise with revenues in the excess of $1 billion and wholly owned by Riordan Industries. Riordan employs 550 people across the globe with projected earnings of $46 million dollars (Riordan, 2008).

Declining sales and uneven profits over the past two years not only forced the company to change its sales processes, but prompted them to adopt a customer-relationship management (CRM) system and implement Six Sigma approach. Customers are now serviced primarily by sales teams rather than single salespeople, with each team focusing on a particular customer segment. Teams typically include a salesperson, product engineering specialist and customer service rep. The hope is that the team approach will improve sales. Unfortunately, as changes have been implemented, employee retention and overall job satisfaction have declined. Riordan employees a broad range of employees who come from multiple educational backgrounds, ethnicities, generations and family situations and comprise three major demographic groups. Baby boomers make up the bulk of the managerial and about half of the manufacturing staff; GenXers make up the majority of the professional staff, as well as some of the manufacturing staff; and the GenY contingent are the newest hires, found primarily in manufacturing, engineering and IT. These three groups have radically different perspectives on rewards and motivation, valuing everything from interesting work to bigger paychecks. The company recently conducted an annual employee survey, which showed a decrease in overall job satisfaction, particularly in the areas of compensation and benefits and about 25 percent of the employees as high achievers, a large group of mid-tier performers and a small group of people who are not performing well at all. “The pay system can be a powerful mechanism for encouraging and supporting a variety of alternative employee behaviors, such as individual goal achievement, or teamwork, cooperation, and quality improvement” (Dreher & Dougherty, 2008, p 7). Faced with declining morale and work ethic, Riordan managers have been pressuring the CEO to do something about the rewards system. The implementation of these changes has negatively affected the employee morale and employee retention numbers are down. Sales management wants an improved commission structure that recognizes the new teamwork philosophy, while salespeople fear their bonuses could be at risk if they depend on team, and not individual, performance. Other managers are concerned that with or without incentives, their employee base salaries are too low to retain good people and are urging the CEO to increase pay levels. Engineering and IT managers are particularly concerned that several employees with proprietary information may leave the organization for greener pastures. Research and Development says that their employees who work on long-term projects would be best served by incentives that reward continued focus. They also want their contributions to the sales process to be recognized and acknowledged.

As a result, key initiatives were identified in a survey done by the company that can elevate employee morale and help the company introduce a more competitive pay system to retain key employees. This paper will cover overview, situation analysis, stakeholder perspectives, problem statement, end-state vision, for Riordan to continue with its growth and succeed and merger as an Industry leader in this global economy.

Situation Analysis

Riordan Manufacturing, Inc. a global corporation in the plastics industry was quick enough to acknowledge the issue. However, change without proper planning will have consequences and Riordan is no exception. Main consequences include employee turnover, low moral due to uncertainty, and declining sales. Declining sales and unstable profits in the past two years have forced the organization to change its sales processes, as well as to adapt a customer-relationship management (CRM) system and six sigma concepts. Customers are now serviced using a team-based approach, rather than by a single salesperson. The changes have been made in an effort to improve sales. However, Management seems to be segmented and not united in a way to address the company’s challenges. Employees are not motivated to perform and their compensation structures are not competitive nor do they reward employees for their performance. Employees do not feel like they are valued and there is a large gap in the employee promotion process causing employee dissatisfaction and low morale. Annual employee surveys indicate that employees are dissatisfied with their jobs overall, especially in the compensation and benefits area. Riordan’s President and the CEO of the company believe that the employees of the company are well taken care of when it comes to compensation and benefits and no change is needed for compensation. The President of the company is concerned with the lack of employee motivation and loyalty among employees and believes that the younger generation is ungrateful. The CEO of the company also agrees that employee compensation is fine and believes that changes need to be focused on improvements in job designs and processes.

Issue Identification

Employee morale is a huge influencer on the businesses productivity. An organization with low turnover and happy employees tend to perform better and contains a workforce full of loyal employees than those companies who have high turnover but unsatisfied employees. Employee motivation, declining morale and work ethics, declining sales, and the restructuring of the sales teams are some of the issues Riordan is currently facing. Employee motivation is currently low at Riordan because the employees are not feeling recognized in their accomplishments, they feel the pay is low, the reward system is not fair to everyone and is not based on individual performance. The employees, comprised of baby boomers, GenXers, GenYs, hold distinctive views on motivation and rewards. The issues causing poor motivation are employee perception of inconsistency in pay structure, inconsistency in reward structure, decrease in job satisfaction, and the recent changes in organizational structure from individual to team based work environment. In addition, Riordan’s current rewards and compensation system is focused on seniority rather than performance. The pay process is secretive and many do not know how it works and effective communication is not established. “Communication is also a key ingredient in employee satisfaction and loyalty” (McShane & Von Glinow, 2008, p.10). Employees are not pleased with the pay portion of their compensation package and to further complicate the employee satisfaction issue, leadership is not in agreement to make any changes. One of the other issues is that some of the members of this leadership team are not very cohesive. In addition, when a problem has been brought forward, the leadership team has differences in opinion. To add to this, organization is losing its employees rapidly and the retention rate of Riordan is starting to become a major issue. Lastly, employee perception of the inequality of pay and rewards systems has caused low moral and declining work ethic. While the fact may be that the pay is in line with the current market, the employee perception of inequality has the same affect on employee motivation and moral.

In order for a corporation to operate at maximum capacity, employees must perform at maximum capacity.

Opportunity Identification

With the identification of issues comes the chance to turn them into opportunities. Riordan has many opportunities to discover the real cause of the issues and problems. They can initiate the 9-step problem-solving model to identify the right problem, and develop solutions which would benefit everybody in the company leading to company’s overall growth. Installing an effective rewards and recognition program in most cases can be very beneficial to companies. Riordan has to learn to measure their employees. There should be an effective measurement system for all employees so that this benefit will be non-discriminating and fair for each employee. This provides an opportunity for Riordan and management to motivate their employees by empowering the employees to participate in the decision-making processes and through recognition of their skills and contributions to the organization. Riordan’s President and CEO of the company need to refocus their strategies on motivating and retaining their employees by focusing on the moral of their current employees. This is a win-win situation for both the company and the employees. The survey done by the consultant will allow the company to analyze and help with job satisfaction, decrease turnover, and increase employee morale. Riordan needs to show their employees they are valued and be given opportunities for professional development that will lead to promotions. Additionally, Riordan needs to recognize that the older employees whose career stages become stagnant need to be encouraged and challenged to participate in training programs. They also need to be offered opportunities to continue their education levels to keep them up to date with changes in technology and business practices.

The senior leadership team has an opportunity to evaluate the current training and development plan for employees. Creating a career development plan will focus employees on the long-term goals of the organization rather than on the immediate situation of the organization.

Changing the incentive structure from individual based structure to team based structure can motivate employees to cooperate and become productive within a team-based environment. Riordan needs to understand the motivators for all the employees and establish programs to increase productivity and loyalty. This provides an opportunity to evaluate the motivators and realign human resource benefits to the corporate strategy and employee needs.

An opportunity Riordan can consider is identifying components of effective retention initiatives. Riordan can develop and implement many retention and career development processes starting with various pay types; Merit, Lump Sum, Commissions, Individual Incentives, Stock Options.

Stakeholder Perspectives/Ethical Dilemmas

When the business is at risk, everyone involved should be concerned about the future of the organization. However, the responsibility falls on the CEO of the organization to solve the current issues. Stakeholder perspectives are something that needs to be considered when a corporation is deciding on change. Each of the stakeholders’ perspectives need to be looked at and analyzed prior to making any decisions. The concern of each stakeholder is different. This could lead to conflicting interests, conflicting rights, and ethical dilemmas if not addressed prior to the proposed change. The current situation has caused a dilemma that affects all stakeholders equally.

President

Michael Riordan, the founder, President, and Chief Executive of Riordan Manufacturing is the primary shareholder with 80 percent of the company’s stock and is increasingly concerned about the value of his investment as he nears retirement age. His interests are concerned with company performance and maximizing market share via dynamic strategies and employee performance. His right as the CEO is the ability to incorporate decision making to maximize the corporate potential of Riordan. He is aware that the company is faced with motivation problems and believes he treats his employee’s fairly but his employees are not loyal and needs their support in this financially difficult time. Mr. Riordan knows he is not in a financial state to increase wages and frankly, doesn’t believer that it will correct the situation in the long run. His concern for the value of the company may be seen as an ethical dilemma. He does not want to increase compensation and benefits because the change would affect the profits he receives as a primary shareholder.

Shareholders

The shareholders assume that senior management will act in the best interest of all involved and maintain a successful running company. Their main interest is a fair return on their investment and a trusting relationship with the management of the company. If a shareholder does not get the return or lose trust in the company, they will take their money and invest in other companies. The shareholders interest is purely profit. The impact of how Riordan runs the business and implements change has a direct reflection on the company’s image. If the company does not do well, their stocks go down and the stockholders will lose their interest in the company. The stockholders’ values may either go down or up depending on how the company progresses in the market.

Leadership

The senior management has to be the decision makers with everyone’s best interest at heart and increase compensation on all levels and aligned reward programs to match new sales tactics. Each manager is looking out more for their own department rather than for the company as a whole. They believe that changes in job design and employee development will do more for employee satisfaction in the long run than just giving them more money. However, each manager has differences and interests in what types of strategies need to be in place. The senior leadership team is also concerned with losing some of the key players in the research and development, sales, and information technology departments. The Executives with Riordan Manufacturing value their employees because they know that without the employees, the company will not be able to succeed. Faced with declining morale and work ethic, Riordan managers have been pressuring the CEO to do something about the company’s rewards system. They know that if the morale is not improved within the company, valuable employees will leave for better pay and that it will be difficult to find replacements. Their interest lies in the performance of their employees, maximizing company revenues, and leading the employees of the corporation. The ethical dilemma is the performance expectations of the team as the company changes human resource directions to match the vision. “Sharing your company’s vision with your team is imperative for success” (Pellegrini, 2007, p. 60).

Employees

The employees of Riordan range in various ages and are broken down into three groups with differences in their opinions and perspectives on rewards and motivation. Employees are suffering from low morale; they do not feel appreciated and feel trapped in current position without opportunity for career development. Employees in research and development are disappointed with the current reward systems because they are not based on productivity but rather on seniority. In addition to the pay and reward system, the employees believe that management has not communicated how pay works, how promotions are considered. “Pay plays a vital role in a person’s economic and social well-being” (Milkovich-Newman, 2004, p.10). According to the Employee Satisfaction Survey, job satisfaction, working conditions, personal opportunity, compensation and benefits, communication, and management at Riordan Manufacturing scored very low. The employees’ interests are jobs, corporation motivation, and performance opportunities. Their rights are communication from executives and company loyalty. Their values are maximizing personal gain, integrity, reliability, loyalty, and fairness. Since Riordan is changing the vision of the corporation and not providing motivation for the employees to drive them to meet the expectations, the employees’ rights and values may be conversely affected. Riordan wants a company that is successful and the company should realize that employees are going to assist them in achieving this goal only if the employee’s needs are fulfilled.

Customers

Riordan needs to have strong customer service base to have a successful company. The customers are not aware of the job dissatisfaction or arguments between leadership on compensation; they are however, aware of the costs of the products they buy. Their perspective is that they do not want to see price increases, so if changes are made to the compensation and reward system, Riordan must work to make sure this increases are not passed on to the customers in price. All they want is quality product with strong customer service base.

The customers are also looking for up-to-date products and a wide variety of products to meet their needs.

Problem Statement

Riordan Manufacturing has been a successful global plastic company that has revenues in excess of one billion dollars. The problem facing Riordan Manufacturing is concerns with employee moral, motivation, retention, and an employee perception of inequality in pay and rewards systems. Riordan has seen employee morale drop and this has led to a major increase in turnover in the company. The solution comes from providing a rewarding situation for the employees. The company will identify and solve the core problems by striving to understand what motivates employees, working as a cohesive team, and treating all employees fairly in order to improve employee morale and company performance. Riordan Manufacturing needs to develop a compensation package that can offer benefits and incentives that will strategically align the staff and raise employee morale. Thus, strategically aligning the staff to be future focused on the company’s goals of increasing sales and profit. Riordan Manufacturing will also utilize the employee survey and recommendations from Barbara Masterson to redesign the company’s compensation and reward system. Riordan will increase employee productivity by developing human resource tools needed to promote job satisfaction. Through uncovering and resolving underlying issues, Riordan Manufacturing can unify management team, increase employee satisfaction and return the company to sustained sales increase and profitability. “A well-defined problem is halfway solved” (Zikmund, 2003). So, Riordan needs to identify what the problem is and work to realize its vision.

End-State Vision

The end-state goals for Riordan Manufacturing are to create a new rewards system that offers appealing compensation in salary, benefits, and other incentives. This new system will simultaneously help raise employee morale and increase employee retention. Riordan will have defined salary grades that will allow them to compete with other markets. Research and Development can focus on creating new innovative products to increase sales and customer satisfaction. Riordan Manufacturing will be a well-known employer and supplier and a company that is known for taking care of their employees through compensation, benefits, job training, and opportunities for career growth. Customers will increase purchases due to the new customer-relationship management system that allows for them to be serviced by a complete team, instead of just a sales individual. Riordan will follow SMART (specific, measurable, attainable, realistic, and time-bound) objectives in achieving their goals.

Riordan Manufacturing’s vision is to continue to be an industry leader and provide solutions to customer’s challenges while increasing employee moral by creating an employee friendly atmosphere that increases productivity and incorporates a total rewards package for the employees.

Conclusion

Riordan Manufacturing is facing many challenges that are preventing the company from transforming their business model. Most of these challenges are based on resistance from their employees and these challenges need to be addressed in order to become the best in the industry. To do so, the company has to face its challenges such as a decline in morale, work ethics, and employee retention, declining sales and profit, aligning the staff, reducing turnover rates and increasing job satisfaction. Riordan Manufacturing has determined that long-range success is based on employee motivation and retention. Riordan Manufacturing can overcome these issues by establishing a coaching and feedback process, planning career development programs, and updating pay for performance reward systems. In addition, solving the issues in a timely manner and establishing good communication system will limit the amount of unproductive work by both management and employees.

Maintaining the company’s performance is crucial to the success of present and future operations. If a plan is not executed with a solid direction then employee morale will suffer and cause huge losses for the organization. Implementing change is not enough because there has to be a continual process and commitment to improvement even after the new processes are put into place. A solution which is cost efficient need to be adopted to allow for the goals set by the company to be met as well as the opportunities. Riordan can overcome the obstacles they encounter by working as a team that supports and recognizes one another’s value to the organization. As a team, Riordan will learn that together they form a stronger force than each could possibly bring individually. As a team, Riordan will also strive to hold one another accountable to achieve goals by adhering to SMART objectives.

Career development planning is clearly on the minds of Riordan employees and challenging the employees with goals and expectations in focusing on the future will reap rewards to the company. To stay at top in this competitive world, Riordan needs to develop long-term career opportunities and training courses to retain new and long-term employees and increase overall job satisfaction.

References

AG Decision Makers (2006, August). AG Decison Maker. Retrieved September 7, 2007, from www.extension.iastate/edu/agdm

Anonymous. (2008). Scenario: Riordan Manufacturing. Retrieved January 20, 2008, from http://ecampus.phoenix.edu.secure/resource/resource.asp.

Dreher, G., & Dougherty, T. (2001). Human Resource Systems. In M. Hill (Ed.), Human Resources Strategy: Reward and Compensation Systems. New York: Author. Retrieved January 21, 2008, from University of Phoenix, eBook Collection

McShane, S. L., & Von Glinow, M. (2004). Organizational behavior: Emerging realities for the workplace. New York: The McGraw-Hill Companies. Retrieved January 15, 2008 from University of Phoenix, eBook Collection

Milkovich, G., & Newman, J. (2004). Compensation 8e: The pay model. Retrieved January 23, 2008, from Univerity of Phoenix, eBook Collection

Pellegrini, G. (2007). Do You See What I See. Advisor Today, Vol. 120, Issue. 12, p. 60-60. Retrieved January 01, 2008, from EBSCOhost Database.

Riordan. (2008). Riordan Manufacturing Mission Statement. Retrieved January 22, 2008, from http://home.new.rr.com/dailydose/html/mission.html

(Zikmund, 2003). A Problem Resolution Method. Retrieved January 23, 2008, from http://blogs.msdn.com/deomel/archive/2005/10/25/484838.aspx



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