Problem Solution: Riordan Manufacturing

MBA/530 Human Capital Development

Introduction

Riordan Manufacturing, a wholly owned subsidiary of Riordan Industries, is a well-established global plastics producer employing 550 individuals and projected annual earnings of $46 million. The purpose of this paper is to provide a summary of Riordan's business situation, identify challenges and opportunities, suggest end state goals and lay down plan for realizing those goals. Realizing opportunities can help to take a long-term perspective while meeting immediate needs, and can help focus on creating value in the long-term for all stakeholders.

The process used to identify the above is the nine-step problem-solving process. This paper details all the nine steps of the process.

Describe the Situation

Riordan Manufacturing is a global plastics producer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion. Production 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 manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers.

Recently, Riordan made several strategic changes in the way it manufactures and market its products. Declining sales and uneven profits over the past two years not only forced the company to change its sales approach but also prompted them to adopt a new customer-relationship management (CRM) system. Sales teams rather than single salespeople now service customers with each team focusing on a particular customer segment. Teams typically include a sales person, product engineering specialist and customer service rep. The plan is that the team approach will improve sales.

Riordan Manufacturing has seen a consistent drop in employee satisfaction over the last 12 months and the increase of voluntary separations has doubled in the past year in every department. These numbers are alarming and speak of issues that could lead to disaster for Riordan if they are not recognized and quickly addressed.

Issue and Opportunity Identification

The first issue at hand is employee retention and motivation. There have been several statements made that employees are leaving for higher pay. This is a major concern for the research and development area in saving vital employee knowledge. Motivation plays a very important role in retaining employees.

A second issue is an employee incentive program, which concerns not only management but also the current employees. The current sales incentives are structured for an individual salesperson instead of for a team approach. With the new changes put in place, a team incorporating a sales person, a product engineering specialist, and a customer service representative with support from research and development will be taking care of customer rather than just a sales staff. The incentive is still being paid to the sales person but not to the other two members of the team.

Third issue is of training and development. Riordan has done little in career development of their employees in recent years. One strategic advantage for companies is to provide and take part in the employees' personal growth and development. Training and development not only helps to attract top performers but will also provide incentive for retention (Dreher & Dougherty, 2001).

A fourth issue is the human resources area has had little influence on the business plan for Riordan. The human resources department currently reports to the finance department with no direct influence with the CEO. In order for Riordan to realize and gain strategic advantage in the area of human capital, a superior Human Resource Management System must be in place (Dreher & Dougherty, 2001).

A fifth issue is employee satisfaction that has dropped dramatically in the past year. The major contributors are employees not feeling challenged, lack of appreciation, and lack of direction tied to the company's goals. Riordan must realize that satisfied employees will promote a positive organizational climate and lead to increase productivity (Dreher & Dougherty, 2001).

Stakeholder Perspectives/Ethical Dilemmas

There are several stakeholders to consider when looking at the current situation at Riordan Manufacturing and it starts with the investors of Riordan Industries who have seen investments declining over the past two years. From their perspective, Michael Riordan should be looking for a way to strengthen the company and turn profits around as quickly as possible so as not to lose more shareholders. Mr. Riordan believes the customer-focused team approach to selling their products is the way to improve the company but there are some other stakeholders to consider when implementing a change that will completely revamp how Riordan Manufacturing markets and sells their products worldwide. Ethically, Riordan owes the shareholders a good return on their investment and must find the way to improve the current sales slump even if it means moving more of the manufacturing to the Hangzhou, China plant that has already begun.

The next stakeholder to consider is the employees. A recent employee satisfaction survey shows a decline in employee job satisfaction and the senior management team cannot agree on the course of action that needs to be taken. The department heads are more concerned about their own employees and not the overall issue facing the company. The issue of what is best for all employees. There are issues with the new customer-focused team approach for selling, which is affecting negatively to the morale of those who are part of the team. Compensation and incentives must be revamped considering that the sales teams now consist of a sales person, a product-engineering specialist, and a customer service representative. As these changes have been implemented along with moving more of the manufacturing to China, Riordan has seen a decline in employee retention.

The next stakeholder to consider is the customers and how they perceive the changes within Riordan. The customers want to purchase a top quality product at a competitive price from a sound company they can count on. It is Michael Riordan's job is to make sure these customers are satisfied and not worried about the internal issues of the company. The customer should be getting the same superior quality,