Problem Definition: Riordan Manufacturing

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