Riordan

Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING

Problem Solution: Riordan Manufacturing

University of Phoenix

April 3, 2006

Problem Solution: Riordan Manufacturing

Gone are the days when manufacturers could count on price increases to help boost profit margins. Today, manufacturers are faced with pressures to decrease prices for their goods -- which mean profits must be achieved through improvement in the development, production, and delivery of manufactured products. It is not a matter of luck -- today's top companies must out manage and out manufacture their competition. Employees who are satisfied with their jobs are more likely to stay in them, thus increasing productivity and retention.

Riordan Manufacturing (RM) is a global plastics production company headquartered in San Jose, California with an annual income of $46 million. 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. The production plants service many vendors from diverse market areas. Riordan's employees comprise three major demographic groups (a) Baby boomers, (b) GenXers, and (c) GenY. 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. The senior leadership of RM is faced with a difficult task of examining the declining moral and work ethic throughout the company.

Situation Background (Step 1)

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. Recently, Riordan made several strategic changes in the way it manufactures and markets its products. 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. Customers are now serviced primarily by sales teams rather than single salespeople, with each team focusing on a particular customer segment. (Riordan Scenario, ¶ 3).

Unfortunately, as changes have been implemented, employee retention numbers have declined. The company recently conducted an annual employee survey, which showed a decrease in overall job satisfaction, particularly in the areas of compensation and benefits. Recent performance data identified about 25% 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. Unfortunately, the current reward system is barely based on performance, instead recognizing cost-of-living increases, seniority and position. . (Riordan Scenario, ¶ 5).

All department heads want the rewards systems updated and each feels that his or her department is in need of the most attention. Other management personnel feel that they may lose key employees to competitors. The CEO knows that something must be done, and he is considering his options: Completely overhaul the reward system, use piecemeal solutions to address the most critical issue or find new motivation strategies. Costs, of course, have to be carefully weighed against any benefits, especially because some of the company's key customers are extremely price sensitive. . (Riordan Scenario, ¶ 9).

Dale Edgel, Riordan's Chief Financial Officer, is feeling the most pressure from departmental managers to address the issues of reduced pay, reduced morale and increased employee turnover. Dale has confronted Riordan's CEO, Michael Riordan, with the concerns of the staff. Dale has submitted an Employee Satisfaction Survey, Turnover Report, and a Summary of Employee Complaints compiled by Yvonne McMillan, Riordan's Director of Human Resources. After reviewing the employee surveys and input from the leadership team, Michael has decided that the best course of action is to hire an HR consultant to help analyze theses issues. After several interviews with HR consulting firms, Dale has hired Barbara Masterson; Human Capital Consulting's Senior Consultant.

The analysis objectives are: 1) Identify the underlying issues that are leading to decreased employee satisfaction and 2) Recommend potential courses of action to address those issues. Barbara has conducted interviews with the leadership team and has summarized the needs and issues of each department. She has submitted a proposal to redesign Riordan Manufacturing's compensation and reward system for review to the CEO of Riordan.

Now that the situation has been addressed, we need to investigate the issues at Riordan Issue Identification

As Riordan moves to improve the compensation and benefits available to its current employees, several issues exist. Barbara Masterson has conducted interviews with the Leadership Team and employees. She has shared these findings in a Power Point presentation.

The main issues are the decline in (a) job satisfaction (25%), (b) working conditions (29%), (c) compensation and benefits (26%) and a decrease in personal opportunity (25%). What this shows is that the rewards system at Riordan is lacking. 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, 2001).

The HR system is lacking at Riordan. Yvonne McMillan is Riordan's Director of Human Resources. In the 10 years she's been at Riordan, Yvonne has been unable to secure HR a more active and strategic role in the organization. Frustrated by her lack of success, Yvonne often complains that she is treated as nothing more than a personnel manager. She conducts the annual employee survey, but has never seen any changes implemented because of the survey results and doubts very much she ever will. (Riordan Scenario, The Players, ¶ 5). The business' goals--that is its strategic imperatives--sit at the heart of any HR strategy and in order to align business and HR needs one key question to be answered, "Can your organization's internal capability deliver its business goals?"