Gap Riordan

Running head: GAP ANALYSIS: RIORDAN MANUFACTURING

Gap Analysis: Riordan Manufacturing

Kyle Abrahams

University of Phoenix

MBA/530 Human Capital Development

Gap Analysis: Riordan Manufacturing

Organizations of all size deal with issues such as low employee morale, motivation, and turnover due to inadequate job recognition by management and inadequate compensation and rewards. Riordan manufacturing is no exception. Declining sales and uneven profits over the past two years not only forced the company to change its sales process, but to adopt a customer-relationship management system. The company recently conducted an annual employee survey, which the results reflected that employee retention numbers, overall job satisfaction, particularly in the area of compensation and benefits have declined. Faced with declining morale and work ethics, Riordan management and CEO must make some quick and critical decisions to do something about the reward system. Their decision will drastically affect the interest of the various stakeholders. Management has a daunting task to maintain good relations with its own employees.

This paper will examine the issues faced by Riordan manufacturing by applying the first three steps of a nine-step decision making model. First, opportunities will be presented through problem identification. Then an end-state vision will be formulated after an assessment of the stakeholders' perspective. Finally, a gap analysis will be conducted by comparing the current situation of Riordan manufacturing to the end-state vision.

Situation Analysis

Issue and Opportunity Identification

Riordan Manufacturing is the industry leader in the field of plastic injection molding and using polymer materials to provide solutions to customer's challenges. With over 550 employees, the production of the organization is divided among three plants: plastic beverage containers in Albany, Georgia; custom plastic parts in Pontiac, Michigan; and plastic fan parts in Hangzhou, China. Research and development is conducted at corporate headquarters in San Jose, California. Riordan's major customers are automotive parts manufactures, aircraft manufactures, the department of defense, beverage makers and bottles, and appliance manufactures.

Declining sales and uneven profits has forced the company to change the way it manufactures and markets its products. To help increase sales and profit, Riordan Manufacturing has adopted a support business strategy-"strategy refers to the fundamental direction that an organization has chosen" a customer-relationship management system which customers are now served primarily by sales team rather than a single salesperson. (Milkovich & Newman, 2004, p 38). By providing customers with a team oriented working environment, Riordan has the opportunity to increase sales to existing customers by increasing sales force promotions, price discounts, and customer user group service. Riordan also has an opportunity to expand sales to new customers by implementing public relations activities, trade shows, brand development, and sales force promotions.

Unfortunately, for Riordan Manufacturing sales are continuing to decline, and the switch to customer-focused team is proceeding slowly. However, sales and uneven profits over the past two years are not the only issues the company is facing. The company recently conducted an annual employee survey, which showed that employee retention, job satisfaction, morale, and motivation-"the willingness to exact effort in a particular way is an extremely important factor in understanding or predicting employees behavior. It is a factor that often responds to change in HR system, particularly reward systems" has declined particularly in the area of compensation and benefits (Dreher & Dougherty, 2001, p. 27-28). Riordan employees are concerned with hygiene factors. Schermerhorn, Hunt, and Osborn (2003) state that Herzberg's two factor theory, "Hygiene factors in the work context, the work setting, and are source of job dissatisfaction" (p.114). For example, key programmers are unsatisfied that they are not being paid fairly for the work they do, due to unfair pay raises based on team performance rather than individual performance and unfair bonuses or incentives based on job position.

Riordan employees are concerned that the reward system is based on "cost-of-living adjustment gives the same percent increase across the board to everyone, regardless of performance" (Milkovich & Newman, 2004, p.8). Many of the employees all across the plants believe that Riordan Manufacturing should pay its employees based on merit pay. Milkovich and Newman (2004) assert that merit pay is "a compensation system that basis an individual's salary of wage increases on a measure of the person's performance accomplishments during a specified time period" (p.88). However, management in the sales and marketing are in favor in "profit sharing plans". Milkovich and Newman (2004) define profit sharing plans as "reward employees based on the entire organizations performance" (p.91). In this case Riordan, employees will be rewarded based on team performance.

Inadequate employee performance has caused an increase in both voluntarily and involuntary turnover among employees in all the plants especially in Albany, Georgia and Pontiac, Michigan. Employee turnover and inadequate employee performance has increased since 2001/02 7.0% to 2003/04 10.8% as only 25% of the employees at Riordan are performing to their level of standards, whereas a large group of mid-tier performers and small group of people are not performing well at all. The human resource department is not performing to its standards as the HR is not seemed to be as concerned about employee morale, and believes that most of the problems in the company are a result of HR being relegated to finance. The HR executive Yvonne McMillan lack of performance is also due to her belief that the executive team is not taking her seriously because of her gender, as she is one of the two executive level women in the company.

Finally lack of agreement about primary issues in each department has become an issue for the executives at Riordan Manufacturing. Riordan employees comprise of three different types of demographic groups which includes Baby boomers, GenXers, and GenY. Each group has different perspectives on rewards and motivation,