Business Management

Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING CORPORATION

Problem Solution: Riordan Manufacturing Corporation

MBA/530- Human Capital Development

May 10, 2006

University of Phoenix

Problem Solution: Riordan Manufacturing

"Employee motivation is an issue that does not discriminate. Organizations of all sixes wrestle with it, and those who don't are at a disadvantage, faced with lower job satisfaction and increased turnover (University of Phoenix, 2006)." This is exactly the situation that Riordan Manufacturing is facing. Michael Riordan, CEO, is aware that a drastic change is needed, either to "completely overhaul the reward system, use piecemeal solutions to address the most critical issue, or find a new motivation strategy (University of Phoenix, 2006)." Beginning, by paraphrasing the situation background, a description of key issues and opportunities facing Riordan can be identified. The perspectives of stakeholder's needs as well as the values and rights that have lead to ethical dilemmas in the company will be identified. Thus, a definition of the problem statement can be developed that allows for multiple solutions, and future focused on meeting the end-state goals of Riordan. Let's begin by explaining the situation that is occurring with Riordan Manufacturing

Situation Background

Riordan Manufacturing is a global plastics producer that earns over 46 million annually and employees over 500 people. A fortune 1000 enterprise, Riordan receives a reported 1 billion dollars in revenue. Due to declining sales and profits over the past two years, the company has decided to implement "several strategic changes in the way it markets and manufactures and markets its products (University of Phoenix, 2006)." Michael Riordan, CEO of Riordan, has decided to start by revamping its sales process and adopting a customer-relationship management system. "The achievements of an organization are the results of the combined effort of each individual (University of Phoenix, 2006)." The CRM would mean that focus teams, consisting of sales person, product engineer specialist, and customer service representatives would service customer's not single salespersons.

In the manufacturing department, "Riordan implemented a Six Sigma quality approach (University of Phoenix, 2006)." This approach redirected work to other facilities as well as restructured work teams. However, these new changes have caused a decline in employee retention. According to Dreher and Dougherty, "Individuals will be influenced by the task demands and reward system from the organization and assigned job." Employee surveys also revealed a decrease in job satisfaction, compensation, and benefits. The current reward system is not solely based on performance, but recognizes cost-of-living increase, seniority and position. Thus, prompting managers to request that a new rewards system be created. " Job performance will likely be most effective when the person's temperament, preferences and expectations are congruent with the organizations reward system (Dreher & Dougherty 2001)." Riordan is now faced with a massive amount of challenges that must be identified in order to develop a solution.

Issue Identification

Consequently, changes within the company have left Riordan to cope with a mass of challenges. Current changes have led to a decline in morale, work ethics, and employee retention. The consistent two-year regression means that the company has to focus on increasing sales and profit, aligning the staff, reducing turnover rates and increasing job satisfaction. The R & D department has the challenge of developing three new products to meet the following year.

The strategic choice at the function level is "how should total compensation help gain and sustain competitive advantage (Milkovich & Newman 2004)?" The company is faced with creating a new rewards system that includes compensation, salary, and benefits. The cost of implementing such a plan is also a concern for Riordan. The problem is the company is divided into three groups that do not agree or have different perspectives on rewards motivation, how to disburse incentives and what department should receive compensation. Some chief officers do not agree that a compensation system should be implemented, which has lead to an even bigger dilemma. Ultimately, while the challenges are seemingly overwhelming, there is a silver lining of opportunities available to Riordan.

Opportunity Identification

The opportunities that exist to Riordan Manufacturing is the ability to create 3 new products, increase sales, and introduce new appealing incentives for employees. " Managing compensation strategically means fitting the compensation system to the business and environmental conditions (Milkovich & Newman 2004)." The CEO has allocated $50,000 to higher a consultant. This allows the company the opportunity to develop a solutions study survey that can help with job satisfaction, decrease turnover, and increase employee morale. This study will identify the underlying issues leading to decreased employee satisfaction and recommend potential mitigations for addressing the issues. Equally important, are the stakeholder's needs and ethical dilemmas that have developed with the challenges and opportunities.

Stakeholder Perspectives/Ethical Dilemmas

Particularly, the stakeholders are Riordan employees, which are divided into three demographic groups. These groups are often referred to as the "Baby Boomers". GenXers consists of the professional and some manufacturing staff. The GenY employees are the new hires that work in manufacturing, engineering and IT. Every group has a different opinion on the rewards system and motivation. The managers of the sales department feel as though their individual department bonuses could be at risk if the reward system is dependent on team effort rather than individual performance. Managers in other departments feel as though salaries need to be raised in order to maintain current employees, even with an incentive package. The Research and Development department agree that a new incentive program should be created, however the rewards should be for their department.

"Practices that link employees' behaviors to each company's specifics- knowledge