Riordan Manufacturing Benchmark

Running head: RIORDAN MANUFACTURING BENCHMARK

Riordan Manufacturing Benchmark

Riordan Manufacturing

Riordan Manufacturing is facing numerous problems. The problems are evident because of the recent high turnover at Riordan. Turnover is a symptom of a larger problem вЂ" low employee morale. In order to overcome the morale issues facing the company, Riordan must work on employee relations, career development, compensation and motivation practices, and ethics and compensation issues. Riordan can benchmark practices used at other companies and refine these ideas to make them suitable for Riordan needs.

Effective Employee Relations

Riordan Manufacturing faces a challenging human resources environment. Falling profits and low employee moral have combined to undermine Riordan's long-term prospects. The company needs to increase employee capability without increasing human resource spending. Salary increases are not realistic due to the company's financial situation. Therefore, Riordan Manufacturing can increase retention and regain its competitive advantage by implementing an innovative employee engagement effort. Two companies that have successfully utilized employee engagement programs are Fabick Cat and QUALCOMM.

Employee engagement strategies are designed to maximize the talent available to the company by empowering employees. Engagement may take the form of surveys, feedback loops, career path programs, training, education, or work improvements. Two-way communication and trust are critical. Employees who are empowered in a constructive work environment are more productive and easier to retain. "Social system stability reflects the extent to which the work environment is perceived as positive and reinforcing, and conflict and change are managed effectively" (Kreitner & Kinicki, 2003, p. 86). Employee engagement programs can create the foundations for a stable, positive work experience and can increase productivity and profitability without dramatically raising labor costs. Employee engagement can also help reduce conflict during company transitions.

Riordan Manufacturing can emulate other companies like Fabick Cat and QUALCOMM that have successfully utilized employee engagement to increase productivity and profitability. While Fabick Cat and QUALCOMM are in very different business lines, both have achieved positive results through employee engagement.

Career Development

Riordan is currently experiencing a high employee turnover rate. In a recent survey of 262 large United States companies, 23% of 1100 workers surveyed cited lack of career development opportunities as a reason for leaving a previous job (Endress, 2007). According to the consultant report to Riordan, Riordan employees are asking for career information and opportunities (University of Phoenix, 2005). Employees are asking for career development opportunities, which gives Riordan the opportunity to improve morale by implementing a career development program.

Riordan’s career development program should initially focus on providing a clear career development path for Riordan employees. If an employee is hired into customer service, for example, that employee should know what he or she can do to be considered for promotions to customer service supervisor, customer service department manager, and so on. If an employee has a better chance to be promoted because he or she attended all available customer service seminars, the employee needs to understand the importance of attending these seminars.

In addition to providing a clear career path for employees to stay in their respective departments, Riordan should offer opportunities for employees to cross train into other departments. If a manufacturing line employee wants to work in the legal department, the employee needs to understand how to transfer within the company. One way to handle this type of inner-company transfer is to ask employees for desired career outcomes during annual evaluations. The annual evaluation can be utilized not only as an evaluation tool, but also as a personnel career tool. During evaluations, supervisors can talk with employees about future goals and help employees meet contacts in other departments. A manufacturing employee desiring to work in the legal department could be introduced to a legal department supervisor. The employees’ current supervisor could simply put in a good word for the employee. These types of interactions are positive and show employees the company is taking personal interest in employee career goals.

Riordan’s career development plan does not have to be complex. Riordan just needs to show employees there are ways to be promoted within the company. Riordan can start by providing employees clear career progression paths within specific departments. Training opportunities can be offered to help employees learn more about the company and their jobs, which will later help employees to advance. Riordan can also use annual evaluations as an opportunity to discuss employee career goals and help employees to achieve those career goals within the company. The simple career progression program could help to reduce turnover at Riordan and to increase employee morale.

Compensation and Motivation Practices

Riordan Manufacturing policies state they have a team based incentive but in reality they are still paying on an individual basis. This conflicts with their new organizational strategy of being a team based business. In order to bring the compensation up to match the organizational strategy, Riordan needs to create a compensation plan that drives and motivates their goal of being a team based business.

There is growing evidence that employee performance depends on three general factors: Employee performance = f (SKM) where: S = skill and ability to perform task, K = knowledge of facts, rules, principles, and procedures, and M = motivation to perform. (Milkovich & Newman, 2004, p. 258)

An organization needs to hire employees with the necessary skills to perform and to make sure the good employees stay with the company. If a company can succeed with these two issues, then they can concentrate on training to improve skills and to motivate their employees to perform better apply their skills to improve organizational performance. “The compensation challenge is to design rewards that enhance job performance.”