Problem Solution: Riordan Manufacturing

Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING

Problem Solution: Riordan Manufacturing

Richard Smith

University of Phoenix

Problem Solution: Riordan Manufacturing

Riordan Manufacturing is a successful organization looking to improve overall performance and position the company for future growth. The organization was initially founded in 1991 and has seen significant growth since its inception. Today Riordan Manufacturing is a global competitor in the plastics market with over 550 employees. Projected earnings exceed $46 million with a heavy focus in plastic beverage bottles, custom plastic parts, and plastic fan parts.

The following review will analyze various issues impacting the organizations operations. Identified issues will be used to determine business opportunities while connecting improvements to key human resource management concepts. Key stakeholders in the organization will be identified along with the establishment of strategic end-state goals that will help guide improvements at Riordan Manufacturing. Major gaps in Riordan Manufacturing's process will be analyzed using a standard gap analysis approach with accompanied alternative solutions that have a long-term focus. An optimal solution will be identified along with an implementation plan with meaningful end-state goals that support the vision of the organization.

Situation Analysis

Issue and Opportunity Identification

Riordan Manufacturing has developed various processes and procedures to manage the business. The organization maintains a heavy focus on research and development with a strong sales force to help distribute the various products. Manufacturing plants are situated in Pontiac, Michigan; Albany, Georgia; and Hangzhou, China with the corporate headquarters in San Jose, California. With rapid growth and expansion Riordan Manufacturing has begun to experience issues that will impact organizational goals and strategic plans. The key issues affecting the organization center on employee motivation, employee compensation, and a deficient career development process. These issues left alone will drive serious problems within the organization; however Riordan Manufacturing can benefit by acknowledging these issues and leveraging the new opportunities to promote the organizations overall strategic objectives.

Employees at Riordan Manufacturing are experiencing low motivation to perform at high levels. Motivational issues are driven by a lack of leadership within the organization and a deficient human resource management system. In addition to these shortcomings upper management personnel tend to focus on personal agendas and the importance of one department in the organization rather than banding together towards a unified vision or goal for the organization.

Riordan Manufacturing has the opportunity to optimize the Human Resource Management system and correctly diagnose the issues relating to a lack of employee motivation. Utilization of the expectancy theory in relation to human resource systems provides the optimal correction path for Riordan Manufacturing. Dreher and Dougherty state that "managers can use expectancy concepts to diagnose HR problems and recommend solutions. The expectancy theory also assists managers in understanding how changes in HR practices could have side effects on other behaviors in a way that was not anticipated" (2001, p.40). In addition to diagnosing and correcting motivational issues use of the expectancy theory will provide the management team with methodical approach for identifying trends that may lead to future motivational problems.

Based on various measurements both employees and outside sources, namely the Human Capital Consulting firm, believe that financial compensation is below market values. Employees also do not have a firm understanding of how pay is connected to job performance. According to the 2003/2004 employee survey employees believe that pay is mainly connected to seniority.

In addition to standard compensation individual incentives are not properly tied to performance. Departments such as IT and R&D significantly support the sales force and see little to no return. The apparent lack of alignment for financial compensation and work performance is driving misconceptions and compounding the current motivational issues. Organizations must realize that employee perceptions need to be considered reality for the employees; therefore the gap in understanding between the employees and the organization should be identified and corrected.

Changes to financial compensation can be costly. According to the consultant from Human Capital Consulting the compensation and reward system should be completely redesigned. The overall cost of the compensation and reward system improvements are estimated to be $175,000. Since the organization has been experiencing declining sales an investment of this nature would represent high risk. Despite the cost Riordan Manufacturing has the opportunity to compete more effectively in the market and reduce the risk of losing employees to other organizations because of the financial compensation structure. The potential issues can be mitigated if the management team at Riordan Manufacturing considers the impact of external competitiveness. Management should consider the following effects on objectives:

(1) To ensure that the pay is sufficient to attract and retain employees--

if employees do not perceive their pay as competitive in comparison to what other organizations are offering for similar work, they may be more likely to leave

(2) To control labor costs so that the organization's prices of products or services can remain (Milkovich & Newman., 2004, p.18)

Although employee motivation and financial compensation are recognized as major issues for Riordan the organizations ability to build affinity and promote overall career development has been lacking. The issues can be attributed to the lack of Human Resource Management in the organizations strategic human capital management along with a failure by leadership to create a thriving culture that supports the organizations overall objectives. As the organization aligns and changes strategy it will be important to effectively train employees and ensure that employees are ready for the challenges ahead. Unfortunately motivation problems are plaguing the organization and may impact the strategic