Rioban Problem Solving

Riordan Problem Solution

Comprehensive Motivation and Rewards Strategy

The Company

Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. The company employs 550 people and has projected earnings of $46 million annually, with facilities in San Jose, California; Albany, Georgia; Pontiac, Michigan; and Hangzhou, China. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers. (Riordan Mfg. Intranet, 2004) Riordan's mission is focused on being "an industry leader in using polymer materials to provide solutions to the customer's challenges as well as building long-term relationships sought by maintaining rigorous quality controls, innovative solutions, a responsive business attitude, and reasonable pricing; along with maintaining an innovative and team-oriented working environment and assuring that the employees are well informed and properly supported; while being focused in achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growth." (Riordan Mfg. Intranet, 2004)

Dr. Michael Riordan (Michael), the founder and President of Riordan, along with the senior management team has developed a major sales plan for 2006. The focus will be to reach the $50 million mark by increasing sales to existing customers and expanding sales to new customers. To reach this goal will require many organizational changes. The first option to facilitate these new goals will be to clearly communicate the goals and sales plan to the entire employee base. The next option may be to focus on the results of the satisfaction survey and implement goals and strategies to retain a strong and competent staff for current and future growth.

Riordan needs to outline the motivational and benefit changes to be implemented as it strives to achieve its future goals. The following topics will be addressed.

§ Identify the issues and opportunities faced

§ Consider the stakeholder perspectives and ethical dilemmas

§ Identify a problem statement

§ Develop an end-state vision

§ Outline alternative solutions and analysis

§ Provide a risk assessment, which examines the probabilities and consequences of negative outcomes or risks associated with the remaining alternative solutions

§ Develop an optimal solution and implementation strategies

The Situation Analysis

Riordan has been a leader in the plastics industry but has experienced a decline in sales and profits over the last two years, and has adopted a new customer-relationship management (CRM) system. The new system requires the salespeople to now operate in teams to service the customer. There is slight resistance to this new model and a concern from salespeople that their pay or commissions could be impacted based on other's performance.

The company is also faced with employee motivation issues that are currently causing turnover and lower job satisfaction. The employee survey noted a decrease in overall job satisfaction, particularly in the areas of compensation and benefits. Yvonne McMillan, Director of Human Resources, has also reported an increase in the number of grievances that are impacting employee morale.

Issues Percentage

Attendance 14.0%

Unfair discipline 25.6%

Wage dispute 7.0%

Unfair assessment of performance 14.0%

Unfair promotion practices 18.6%

Inadequate training 20.9%

Total Complaints 43

Percent of increase 33.3%

Total grievances reported in all 4 quarters

The following excerpt based on labor cost needs to be considered as Riordan considers strategies to implement in addressing the situation analysis.

"Labor costs are expected to increase during the course of the next two years. Continued economic growth will lead to higher payrolls and begin to exert greater upward pressure on wages. In addition, decreases in productivity growth to levels more consistent with long-term trends will lead to increases in labor costs per unit of output. Another important factor is the continued fact that the costs of providing benefits, especially health benefits, will continue to increase at an above average rate."

Economic Forecast for Riordan Manufacturing, June 16, 2005

Stakeholder Perspectives and Ethical Dilemmas

The Senior Leadership Team of Riordan is faced with many challenges in the improvement of employee motivation issues and the full implementation of the CRM system. Riordan has a vested interest in insuring its customers see the company as a trusted advisor and the relational sales process is going to meet their needs. By insuring a long-term trusted relationship with its customers and improving employee relations, Riordan should see an increase in sales and a gain in trust by the clientele and Riordan employees.

Another concern is employee turnover which has been high because the leadership team has not provided a clear understanding of the goals and attention to the compensation and benefits issues presented. Once the employees believe their issues are being listened to and strategies for improving these areas have been implemented, the turnover issues should decrease. The employees need to trust that Senior Management is hearing their concerns. Reference Table One for more specifics on these perspectives.

Problem Statement

Riordan will become a "World Class" organization and meet the 2006 50 Million Sales Goal by realigning their compensation and benefits to attract and retain top-level employees. The problem statement will help Riordan determine what it aspires to become and the major challenges they may need to overcome. They will be able to reestablish