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Problem Solution Riordan

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Autor:  anton  05 July 2011
Tags:  Problem,  Solution,  Riordan
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Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING

Problem Solution: Riordan Manufacturing

University of Phoenix

Problem Solution: Riordan Manufacturing

The current globalization process has changed the game rules for thousands of organizations. Everyday changes in the economy, customer needs or customer wants, require organizations to adapt and modify their structure. Riordan Manufacturing is part of Riordan Industries, a Fortune 1000 enterprise with more than $1 billion in revenues is one of the top plastic producers. Even though it is one of the biggest protagonists in the market Riordan currently suffers internally. Its continuous to increase in turnover, decrease in employee performance and productivity, decrease in sales and low morale in stakeholders has alerted Michael Riordan and his leadership team. Because of diverse theories about what caused the problems, Riordan’s management hired Human Capital Consulting to conduct an analysis on employee satisfaction to obtain objective information from its stakeholders. With the audit results, Riordan’s management plans to generate a solution may resolve part or most of their troubles.

This text will provide the reader with an idea of the current situation presented at Riordan Manufacturing, its stakeholders, and an alternative solution, how to implement it and how to evaluate its results.

Situation Analysis

Issue and Opportunity Identification

Many companies believe that a person’s need for a job is enough reason for them to stay in the organization. The truth is that people are not as brainless as many employers think, and companies need to have a good compensation and reward system if they want to keep their employees. Retaining those employees is one of the principal tasks of management. "The old paradigm says that your primary focus should be keeping your customer happy. The new paradigm says the employee has taken over that spot. Keep her engaged and she'll keep your customers happy. Neglect her needs and she won't be so concerned about keeping her end of the bargain. In the end, not only will she go elsewhere, your customers may follow suit" (Sujansky, 2007).

Riordan Manufacturing is having internal issues such as decrease in sales, lowered morale, increase in voluntary turnover, and employee dissatisfaction just to name a few. And even though some of the leadership team believes the company needs to increase employee’s compensations, there are others that refuse to restructure the current compensation system stating that the problems are based on something different such as job design. In the search for the correct answer Human Capital Consulting was hired to conduct a satisfaction audit evaluation of all employees. The audit results showed the discomfort within employees in the areas of compensation, career opportunities, performance recognition and benefits. They think the company’s compensation system is not competitive against the industry’s standard and because of it they need to look for new opportunities elsewhere. They believe that pay is tied to seniority and not to work performance, which increases employees’ discontent. At the same time these situations and feeling have worried the leadership team. They know that if no change is made they may lose key people, a phenomenon that has already started to happen.

One good thing for Riordan’s leadership team is that it is not too late for them to generate a solution. There are several ways to increase employee satisfaction apart of a simple pay increase that will only resolve part of the problem. Most employees only want their performance to be recognized more often, they want to feel valued, and to have more career opportunities within the organization. This shows that they still have commitment towards the company and shows that they still want to be part of the organization. The business dictionary website defines job satisfaction as “Contentment (or lack of it) arising out of interplay of employee’s positive and negative feelings toward his or her work” (www.businessdictionary.com). Sujansky founder and CEO of KEYGroup also said about retaining key personnel “it isn't always cash that makes green pastures green. When salaries are commensurate with the marketplace, other factors take priority. Good people stay where they are challenged, where they have the opportunity to develop and contribute, and where their employers take care of those meaningful little things that make their lives easier”.

Stakeholder Perspectives/Ethical Dilemmas

There are different points of view about the problems inside Riordan Manufacturing. Michael Riordan founder, President and CEO believes that the company takes good care of its employees and this will help the organization to solve the current motivation problem. However, leadership team members like Kenneth Collins Senior Vice President of Research and Development or Maria Trinh Director of Human Resources are worried about the increase in voluntary turnover caused by an inadequate compensation system. They know the company can’t afford to lose more key staff members. Others like Hugh McCauley Chief Operating Officer or Dale Edgel Chief Financial Officer believe the problems inside the organization are not based on the compensation system but factors such as job design. Other employees also have their own point of view about what is happening at Riordan, and they expressed their dissatisfaction. Human Capital’s audit demonstrated that their morale is low and their reasons vary from poor performance recognition, no competitive pay rate against other organizations, lack of career opportunities and/or training, and also reprehensible reward system. Employees want to feel they are an important part of the organization, and because of it they need to be treated equally with a competitive compensation system and rewards for their work.

Problem Statement

Riordan Manufacturing will increase revenue and productivity by developing a competitive compensation and reward system focused in employee satisfaction and retention.

End-State Vision

Riordan Manufacturing will maintain its strong name and presence in the market as a global plastic producer. The development of a more satisfying compensation and pay system will lower turnover rate and will increase employees’ loyalty and morale. Also management will recognize individual and team performance, and create career opportunities in order to retain employees. These strategies will position the organization as one of the best places to work not only in the industry but in the general market.

Alternative Solutions

Riordan’s problems are concentrated on the lower level employees. These employees are the same ones who helped build the organization and have kept it at the top of the industry. It is very important for Riordan to generate alternative solution before implementing any changes that may increase the size of those problems. Riordan leadership team has valuable information from Human Capital’s audit that will help them generate possible solutions or routes to take. Riordan knows that key people are leaving the organization and there are many others thinking of doing the same. Sales decline and increase in voluntary turnover, are just some of the complaints members of the leadership team listen to. Having identified the different problems inside the organization is the beginning, know it is time to research and create answers.

Google the internet search engine giant, started as a small company with three employees. Now the company has more than 16,000 more than 30 times the number of Riordan’s employees, and is catalogued as the best place to work for three straight years. How does a company like Google keep employees motivated and have a turnover rate lower than any other organization in the industry? Well the answer is that Larry Page and Sergey Brin know that their best resource is their people, and that without them the company could not be the company what it is right now. They not only recognize their employees performance by increasing pay rate, they intend to make their life easier so they can concentrate on work instead of thinking about outside things like oil changes, laundry, gym or food. Google’s personnel is treated as family and is inspired to generate solutions. As Brin expressed to David Pogue CBS News journalist during an interview in 2004 about his organization, "Volleyball courts, masseuses, all these things -- these are all actually pretty well thought-out" "For example, our lunch and dinners that we provide for employees -- it really saves a lot of time. People don't have to drive off campus, park, go somewhere, wait for a long time for food. You can sit and chat with your colleagues and talk about all kinds of work projects. Learn about new things. And head back to the office." (Pogue, 2004). Riordan can learn a lot from Google about inside customer satisfaction. As seen in Google’s information, the most important thing for good employees is not the amount of money they receive but how they are treated. HR needs to involve and listen more to what employees say, it is important for any company to have good communication techniques. If Riordan’s HR department had intervened when some stakeholder expressed their discomfort and low morale, those key employees that left the organization would probably stay still with the company. Instead HR did not act and now good personnel are probably working for the competitor because his/her voice was not aknowledged. Wal-Mart is a good example of the other side of the coin. Wal-Mart possesses the highest turnover rate of the industry. Yes the company is profitable and keeps growing revenue and expanding its penetration, but what about its employees. Wal-Mart is a retail store whose strength is based on low prices. Currently the global economic recession helps Wal-Mart to keep its status of a super mega store, but most of their customers visit them because of low prices not for enjoyment. Inside stories from the company from websites such as www.walmart-blows.com or http://walmartsucksorg.blogspot.com show that their HR department does nothing for their employees and actually they look for ways to maintain them under paid and without benefits. Riordan is not in such a situation, but from these websites they can obtain information of what dissatisfies employees from other organizations. Milkovich and Newman said in their book Compensation that “Employee performance depends upon some blend of skill, knowledge, and motivation”. What organizations do not understand is that they are also responsible for developing these attitudes in their employees. Riordan needs to generate or restate its reward and compensation system to make it more attractive to stakeholders and competitive with the industry. Retaining personnel wants to grow with the company; the problem is that there is not an existing career development system. Providing a career development program will not only generate opportunity for those that want to advance and promote themselves, but will increase motivation and performance. It will also retain employees lowering turnover rate and increasing employee loyalty. Another alternative for Riordan is to create a more effective communication system between management and lower level employees. Their ideas and needs are also important and can generate new opportunities for the organization. It will also alert management when something is going wrong before personnel or performance is compromised.

Analysis of Alternative Solutions

There are different approaches to resolve the stated problematic at Riordan Manufacturing. The best alternative is the generation of a career development program. The involvement of employees in decision making processes and option of growth will increase morale, satisfaction and productivity. As a structured program employees will see that they are considered and their performance will be rewarded and appreciated. This will also decrease voluntary turnover and will maintain well trained and knowledgeable personnel in the organization. The second alternative is the creation of new internal communication channels where employees and management can have instant feedback of what is happening in the company. Employees will see that their opinion counts and will increase motivation and commitment. It will also keep management updated of employees’ behavior and attitude. This strategy can also be implemented after the first one or simultaneously. Another alternative is restructuring the compensation and pay system, however this alternative has shown to be effective only when other motivations are applied. In the case of Google for example, employees are satisfied more by the other benefits than from their payment. This alternative should be the last option in case the first two do not accomplish their objectives.

Risk Assessment and Mitigation Techniques

Changes normally generate conflict, in this case changes are meant to resolve an internal problematic that is bringing the organization down. Even though that many will be pleased about the career development program, there would be others that may reject the strategy. Not everybody wants the responsibilities that a promotion may carry. They may argue that they were not considered during the creation of new strategies to increase motivation and commitment, and that this is not the best alternative. However, most of the personnel will feel satisfied to know that they have the possibility of growth within the organization. It is very important to communicate the requirements for qualifications and what is expected from them after they accomplish the training, how long it will take for new hires to have this opportunity, and how long after the training will take for the person to be promoted. If this information is not well understood for employees, it can generate future conflict and loss of credibility toward the program. This may put the organization in the same place it was before implementing the program. At the time of creating the new communication channels, HR needs to consult employees in order to select the adequate ones. Communication channels without planning may increase the miscommunication. Employees and management also need to be trained on how to use the channels correctly. Again, the misuse of these channels may increase the lack of communication that already exists in the organization. When restructuring the compensation and pay system; employees’ leaders should be involved. How is management intending to satisfy the employee’s needs if they do not consult with them? In order to satisfy stakeholder and increase morale and loyalty, it is needed to have a close negotiation with employee representatives.

Optimal Solution

Riordan Manufacturing needs to create new strategies in order to motivate and retain employees. The development of a career program will benefit not only the stakeholders but the organization as well. As stated before, Riordan Manufacturing is suffering from several internal problems such as low motivation, unsatisfied employees, increase in turnover rate, and decrease in sales, between others. Knowing all these factors after the Human Capital audit, the optimal solution that will create a win-win situation for all the people involved is the development of a career system. Employees will feel their performance is being recognized by the promotion possibility. At the same time the organization will gain by having trained, motivated, satisfied and committed personnel, which at the same time will increase productivity and revenue. The company can also create the career program according to the organization and the market’s needs, developing a more capacitated human force. It is up to the HR department to evaluate which departments may need trained personnel in the future and create the corresponding training. Also with the training, management can specialize its workforce based on their own strength. In that way the employee’s will be happy, and will do his/her best in its position. Even if part of the personnel is not interested in getting trained, most of the personnel will like to have involvement with the company. It is also known that good and qualified people are the first ones to leave the organization, because they feel they can get something better. The career program will help Riordan to retain those that feel they deserve better by giving them the opportunity to do better. “Employees are more likely to stay with firms that provide them with what they value” (Dreher & Dougherty, 2001).

Implementation Plan

Riordan Manufacturing does not have a current career program, and because of it HR will need to spend time and resources in order to accomplish a program that will give the results the employees and the organization are expecting. First they need to evaluate which departments or positions are the ones that will be included in the training. Also they need a forecast of what a special labor force may need in the future if they want to gain the most out of the program. HR will have to meet with all the leadership team and employees’ leaders prior to develop the program. Again, it is very important to identify the areas that may require personnel so the organization does not spend time and resources in areas that do not need it. Management also needs to be trained on how review their employees and their performance. Not all the employees will qualify for the training, and it is important that management selects the person that deserves it. Management training will take between 1 to 2 months. After or simultaneously to this training it is key to understand the requirement the candidates need to fill before qualifying them to take the training. The definition of these will take 1 to 3 months. After all of this is complete and there are some employees eligible for the training it is imperative to evaluate those that complete the training and check the accuracy toward the objectives planned. In case the training does not satisfy the organization’s needs, HR will have to restructure it before going forward with the process.

Evaluation of Results

Now Riordan Manufacturing will see if the alternative really resolves its problems. In order to have a good evaluation there are different aspects that need to be analyzed. It is necessary to have quantitative measurement of the results, which is why Riordan will check its turnover rate, productivity, sales and stock price. Turnover rate will be evaluated the first quarter after the career program is implemented. Human Capital’s audit showed this as one of the major reasons for leaving the company, and because of the career program implementation it is expected to decrease turnover by 50%. At the same time motivation was part of the problem, and this should increase 25% after the program start if evaluated after the first quarter. The increase of sales should be of 10% after the first quarter and the share price should increase 5% in the first quarter after the career program graduates its first participants.

Conclusion

Riordan Manufacturing possesses the information and the personnel to implement a new career development program created to retain, motivate, and satisfy stakeholders and organizational needs. The benchmark gave examples of why companies are considered the best or the worst to work for, and what generates satisfaction or dissatisfaction in employees. Riordan also needs to improve its internal communication channels, currently the lack of communication is increasing the discomfort in the personnel. Challenges can become opportunities and vice versa, in this case Riordan’s management team and HR department have the last word.

References

Sujansky, J. G. (2007). 16 Ways to Keep Your Best Employees-Without Breaking the Bank. Retrieved March 1, 2008, from http://www.itworld.com/Career/nlscareers071008/index.html

Kinicki, A. &Kreitner, R. (2004). Organizational Behavior (6th edition). The McGraw-Hill Companies.

Dreher, G. & Dougherty, T. W. (2001). Human Resources Strategy. The McGraw-Hill Companies.

Milkovich & Newman. (2004). Compensation (8th edition). The McGraw-Hill Companies.

Pogue, D. (2004). Inside The Wide World Of Google. Retrieved February 23, 2008, from http://www.cbsnews.com/stories/2004/03/25/sunday/main608672.shtml

Google. (2008). Google Jobs. Retrieved February 23, 2008, from http://www.google.com/support/jobs/bin/static.py?page=benefits.html

Consumer Affairs. (2008). Customer Service. Retrieved February 23, 2008, from http://www.consumeraffairs.com/retail/walmart_customer_service.html

Wal-Mart Blows website. (2007). Turnover Rate. Retrieved December 17, 2007, from http://www.walmart-blows.com/forum/viewtopic.php?t=7315&highlight=&sid=5cbd0733b498d318c7000f9b3af6e1b9

Table 1

Issue and Opportunity Identification

Issue Opportunity Reference to Specific

Course Concept

(Include citation) Concept

Riordan Manufacturing is a successful company that is trying to accomplish its sales system to the current needs of the market. Internally many of its personnel believe their compensation does not equal their performance and because of it their productivity has been compromised. By creating a better compensation system, employee loyalty will increase and voluntary turnover will decrease. “Refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship” (Milkovich & Newman, 2004, p. 6). Compensation

One of the most notable problems within Riordan Manufacturing is that its voluntary turnover keeps increasing in different departments. Employees believe that the organization is underpaying them and does not generate a career system to maintain a good level of motivation and morale. Riordan can create a solid career system where employees can see that the company estimates their roles increasing motivation and decreasing turnover. “Succession planning would likely represent a key component of any good-quality career system. Teams of managers meet on a regular basis to identify individuals as replacements for current managers” (Dreher & Dougherty, 2001, pg.33). Succession Planning

Human Capital’s presentation about employee satisfaction at Riordan Manufacturing shown in section #7 “Focus Groups-What’s Not Working?” (Riordan’s scenario) that employees believe pay is tied to seniority more than performance, the performance reviews are not constant, and pay seems to be below the industry’s which is causing internal problems and a turnover rate increase. Riordan can develop a new pay structure based on job evaluation, in that way those that have been more productive and profitable for the company will receive a fair pay and will maintain their motivation. “A systematic technique for determining the relative worth or value of jobs to the firm in order to establish pay differentials” (Dreher & Dougherty, 2001, p. 83). Job Evaluation

Riordan’s employees believe that their pay rate is below the industry and this is generating low productivity and increase in voluntary turnover. Some departments can’t afford to lose any other key employees if they want to accomplish the company’s goals, but the compensation system is not helping motivate or retain personnel. Employees believe they are not appreciated by the company, there is little performance recognition, and that the company has no opportunity for advancement. Riordan can equal its pay rates and incentives program according to the standard within the industry, showing its employees that their opinion is important and they are treated equally. “Refers to compensation relationships external to the organization: comparison with competitors” (Milkovich & Newman, 2004, p. 17). External Competitiveness

Riordan Manufacturing needs to improve or develop a new reward system in order to keep its employees. It takes more than 15 months to replace, train and make it profitable for the company when filling a sales representative’s position. The organization in this case Riordan also loses revenue until the new sales rep. is profitable. This is enough reason for Riordan to decrease its employee turnover rate. Riordan manufacturing can improve profitability and productivity with a well planned reward system. Retaining its personnel would also increase profitability and credibility in the company. “a good reward system should foster personal growth and development and keep talented people from leaving” (Kreitner & Kinicki, 2004). Reward System.

Big part of the employees’ dissatisfaction at Riordan Manufacturing is based on the uncompetitive benefits plan given to them by the organization. A restructure of the benefits plan will increase motivation and commitment from employees, retaining key personnel, increasing revenue and accomplishing sales’ goals. “are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments (e.g., life insurance, pensions, workers’ compensation, vacation)” (Milkovich & Newman, 2004). Employee Benefits

Table 2

Stakeholder Perspectives

Stakeholder Perspectives

Stakeholder Groups

The Interests, Rights, and

Values of Each Group

Michael Riordan Maintain its investment as primary shareholder. Direct the company to accomplish its goals. Keep the company’s continuous growth.

Leadership Team Most of the leadership team wants to retain inside and outside customers, maintaining productivity and profitability. However their opinion about the company’s problematic differs from one to another. Some believe the compensation system is right, and other think it is not.

Employees Have equal career opportunity and pay rate according to the industry standard. Recognition for their work. Training opportunities to grow inside the organization.

Table 3

Analysis of Alternative Solutions

Table 4

Risk Assessment and Mitigation Techniques

Risk Assessment and Mitigation Techniques

Alternative Solution Risks and Probability Consequence and Severity Mitigation Techniques

Career development program • Management will use it as a treat.

• Will not reach or target everybody.

• Employees are not interested

• Increase in dissatisfaction-High

• Increase in dissatisfaction-High

• Will keep the situation the same-medium

• State policies on how to qualify for training

• Generate training in different areas

• Involve employees during the development of the program

Creation of new communicational channels • HR will not pay the attention needed

• Employees keep unsatisfied

• Management does not use channels objectively

• Increase of miscommunication-High

• Increase in dissatisfaction-High

• Increase dissatisfaction-High

• Involvement of leadership team

• Feedback system employees-HR to evaluate channels

• Involvement of employees during creation and implementation

Restructuration of compensation and pay system • Spend of resources needed in other areas

• Employees morale still the same

• Employees still disappointed

• Company out of funds-High

• Increase in dissatisfaction-High

• Increase in dissatisfaction-High

• Company can offer more shares to public

• Creation of new incentives

• Involvement of employees during restructuration

Table 5

Optimal Solution Implementation Plan

Deliverable Timeline Who is Responsible

Management training for career development program 1 to 2 Months HR Department

Defining requirement for qualification to the program 1 to 3 Months HR Department

Leadership team

Employees’ leaders

Involvement of employees in decision making process Immediately HR Department

Leadership team

Creation of first new communication channel 2 to 3 Weeks HR Department

Employees’ leaders

Training of management and employees in the utilization of communication channels 3 to 5 Weeks HR Department

Evaluation of compensation and pay system with employees 1 to 2 Months HR Department

Chief Financial Officer

Employees’ leaders

Table 6

Evaluation of Results

End-State Goals Metrics Target

Decrease voluntary turnover Decrease of turnover rate by 50% First quarter after implementation

Increase internal motivation, morale and satisfaction Internal productivity increase 25% First quarter after implementation

Increase sales End User and new customer spend increase by 10% First quarter after implementation

Maintain the company’s position in the market Price per share increase 5% First quarter after graduation



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