Gap Analysis: Riordan Manufacturing

Introduction

Riordan Manufacturing is a global plastics producer tat employs 550 people with projected annual earnings of $46 million. Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. Extreme precision and enthusiastic quality control are the hallmarks of Riordan Manufacturing. Riordan’s facilities are in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China. Riordan Manufacturing is wholly owned by Riordan Industries, a Fortune 1000 enterprise. Due to declining sales and uneven profits over the past two years, Riordan have made strategic changes in the way it manufactures and markets its products. Also, the company has adopted a customer-relationship management (CRM).

Situation Analysis

Issue and Opportunity Identification

Riordan conducted a recent annual survey that exposed a decrease overall job satisfaction, particularly in the areas of compensation and benefits. “The ultimate success of a company’s pay structure depends on how well the structure supports key employee behaviors and, possibly most important, the level of employee acceptance of the pay structure. The level of employee acceptance is critical for maintaining the firm’s ability to attract and retain valuable employees” (Dougherty, 2001. p. 88). Riordan has also outsourced some of the work to the new manufacturing facility in China. As the changes have been implemented, employee retention numbers have declined.

Job satisfaction is an important, readily available measure of the worker’s utility derived

from the job It allows the identification of those characteristics which have a differential impact

on the worker’s utility. The recruitment and retention of qualified, skilled employees is the

foundation of any business, small or large.

There is an opportunity for Riordan and senior management to motivate their employees to be involved in the decision-making process and setup a program that recognizes their skills and contribution the company. Equity theory suggests that a person’s degree of motivation can be affected by comparisons we make between the forces the person puts into the job and the rewards they get from it. Riordan can restructure its merit pay to increase motivation among the employees. Effect merit pay creates a strong connection between the employees’ level of performance and the subsequent size of their salary increase. (Dougherty, 2001)

Employees are motivated by both intrinsic and extrinsic rewards. To be effective, the reward system must recognize both sources of motivation. All reward systems are based on the assumptions of attracting, retaining and motivating people. Financial rewards are an important component of the reward system, but there are other factors that motivate employees and influence the level of performance.

Praise and recognition from management are useful motivators. Employees want to be recognized and feel their contributions are noticed and valued. It is important that supervisors recognize the value and importance of sincerely thanking employees verbally and/or in writing for their specific contributions.

Table 1

Issues Riordan had declining sales and uneven profits over past two years. Employee retention numbers have declined. Annual employee survey shows a decrease in overall job satisfaction, particularly in areas of compensation and benefits. About 25% of the employees of the high achievers, a large group of mid-tier performers, and a small group of people who are not performing.

Opportunities Riordan can make several changes in the way it manufactures and markets its products. Riordan can involve the employees in the decision-making processes and recognize the skills of the employees to improve retention of employees. Riordan can restructure its employee’s salaries and merit pay to increase motivation. Riordan must create a reward system that not only base on the cost of living, senority, and position. But it must also be base on job performance.

Stakeholder Perspectives/Ethical Dilemmas

Top executives and management at Riordan have concerns about the direction of the company. The CEO of Riordan, Michael Riordan, has a personal and financial interesting company because is the primary shareholder, owing 80 % of the company’s stock. Mr. Riordan firmly believes that the company takes good care of its employees and that employee loyalty would go a long way toward solving the company’s motivating problems. He worried about the value of his investment as he is near retirement age. The Senior Vice President of Research and Development, Kenneth Collins, is very worried that key researcher because of inadequate compensation. The Chief Operating Officer, Hugh McCauley, believes that most of the motivation issues are result of poorly designed processes. He also believes that the company should improve job design. The Vice President of Sales & Marketing, Charles Lacy, has been with the company for 10 years and is a strong advocate for compensating employees based on team performance. The Chief Information Officer, Maria Trinh, has been with company for two years. She is concerned about losing key staff members because of inadequate compensation. Ms. Trinh would like to see compensation level adjusted for IT professionals. The Director of Human Resources, Yvonne McMillan, has been with the company for ten years, but she has not been able to secure an active and strategic role. She conducted an annual employee survey . The Chief Financial Officer, Dale Edgel, has been with the company for five years and oversee all HR activities. He believes that the current compensation systems are adequate. The employees comprise of three major demographics; 1. Baby boomers- managerial and manufacturing staff; 2. GenXers- majority of the professional staff; and 3. GenY- newest hires. All groups have radically different perspectives on rewards and motivation, valuing everything from interesting work to bigger paychecks.

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