Full version Riordan Manufacturing

Riordan Manufacturing

This print version free essay Riordan Manufacturing.

Category: Business

Autor: reviewessays 17 July 2011

Words: 1797 | Pages: 8

Gap Analysis: Riordan Manufacturing

This paper will begin with a situation analysis of Riordan manufacturing. It will identify the issues and opportunities facing Riordan Manufacturing. Second, it will list the stakeholder prospective and any ethical dilemmas that may be facing the organization. Third, it will identify the end-state vision for Riordan Manufacturing. Fourth, it will detail a gap analysis between where the organization currently is and where it needs to be at a future state to be successful manufacturing company. Possible solutions for the issues facing Riordan will be examined. If the solutions are successfully implemented, Riordan can look forward to some major turnarounds which included increased employee and customer satisfaction.

Situation Analysis

Issue and Opportunity Identification

Riordan manufacturing is a global plastics producer. The company produces plastic beverage containers in Albany, Georgia; custom plastic parts in Pontiac, Michigan and plastic fan parts in Hangzhou, China. In the past two years, sales have declined and the company has had uneven profits.

Recently, Michael Riordan made several strategic changes in the way it manufactures and markets its products, in hopes of increasing sales and customer satisfaction. Changes were made in the sales and manufacturing department. The company changed its sales processes by adopting a customer-relationship management system. Customers are now services by a sales team rather than a single salesperson. The teams are made up of a sales person, product-engineering specialist, and customer service representative.

The company changed its manufacturing processes by redirecting some work to a new facility in China, and plants have been restructured into self-directed work teams. As these changes have been implemented, employee retention rates have declined. An annual employee survey discovered a decrease in overall job satisfaction, mainly in the areas of compensation and benefits.

Performance data identified 25 percent of the employees as high achievers, 70 percent mid-tier performers and a small group of people not performing well at all. The current reward system is not based on performance; instead, it is based on cost of living increases, seniority, and position. This type of reward system gives little or no motivation to work hard.

Stakeholder Perspectives/Ethical Dilemmas

Riordan Manufacturing has a blend of new and old faces making up their employee and leadership team. The company needs to get all of those employees aiming for the same goals. Its stakeholders include stockholders of the company, the senior leadership, customers, and employees. In the last decades of the 20th century, the word “stakeholder” has become more commonly used to mean a person or organization that has a legitimate interest in a project or entity. In the decision-making process for corporations, the concept has been broadened to include everyone with an interest (or “stake”) in what the entity does. This includes not only its vendors, employees, and customers, but also even members of a community where the factory may affect the local economy or environment. The value of the stakeholder perspectives is to create and maximize joint outcomes. For example, programs that satisfy both employees’ needs and stockholders’ wants are doubly valuable because they address both sets of stakeholders at the same time. By addressing customer wishes in addition to employee and stockholder interests, both of the latter groups also benefit from increased sales. (Freeman, 1984).

There are several dilemmas facing Riordan Manufacturing. The current reward system is not based on performance and does not give the employees motivation to perform well. The employees are dissatisfied with the reward system in alignment with the new strategy. The development of a performance appraisal process to ensure clearer alignment between business strategy and employee rewards would give employees a clear understanding of what is expected of them and the rewards they can receive based on performance. Manager’s decisions about compensation and reward systems should attract high-quality employees to its firms, help them retain its valuable contributors, and help to maintain positive morale among employees (Dreher & Dougherty, 2001). In order to align pay with the average pay level offered by companies competing for employees with similar skills, a salary survey should be conducted. This survey will help in determining market positioning and salary adjustments will be based on the results of the survey. The result of this will enable Riordan manufacturing to maintain external competitiveness in compensation.

The second dilemma is the company has not provided a lot of detailed information about existing career options and paths, along with information about the knowledge, skills, and experiences needed to make career moves. Part of the results of the external analysis indicated employees felt the current system is secretive. Succession planning in business represents both training and development activity and a staffing activity ( Dreher & Dougherty, 2001). To be ready for future staffing needs, Riordan must forecast both the demand for and supply of talent for key job assignments such as research and development, information technology and sales. When forecasting supply, Riordan must focus on how many people will be available in the future and the knowledge, skill, and ability mix to be represented by these people. Riordan’s employees are currently baby boomers, and will be reaching retirement in the near future. GenXers and GenY employees have radically different perspectives on rewards and motivation, valuing everything from job satisfaction, job interest, and pay. If future skill shortages are predicted, and the current mix indicates this is true, one of two remedies may be called for. Either Riordan will need to accelerate training and development, or pursue a more aggressive external hiring strategy. The business strategy, labor market conditions, and technology need to be considered when making decisions about initiating succession planning.

End-State Vision

Riordan Manufacturing has successfully made organizational strategy changes that has increased innovation, recognized the value of teamwork, and reached new customers with new products. Sales have steadily increased. All executive leaders and team members have adopted the new reward and compensation system. Riordan Manufacturing redesigned its compensation and reward system by providing extensive communication about the overall structure of the new HR system. Riordan also encouraged employees to participate in the redesign effort. For example, if there is a need to move from individually oriented pay incentives to more of a team-based payoff rule, prospective team members could provide guidance on how the new plan will operate in practice. This newly aligned performance system supports Riordan’s business strategy and clearly identifies performance expectations. This process has and continues to keep everyone motivated. According to Dreher and Dougherty, “creating a vision of the future requires showing individuals and groups how they will fit into the future” (Dreher & Dougherty, 2001). The outcome has improved firm performance and the employee’s chances of being successful in contemporary labor markets.

Gap Analysis

Riordan Manufacturing has a tough road ahead in evaluating, designing, and implementing the new strategy for the organization. The decisions about compensation and reward systems will help to attract high-quality employees and retain valued employees, and to maintain positive morale among employees. Implementing this new pay system will enhance employees’ motivation, and therefore their productivity. Sales have been down for the past two years. The initial cost of revamping the reward and compensation program will be high, but research from similar high tech manufacturing companies has shown that the changes will increase motivation and job satisfaction. It will take commitment on the part of all departments and players on the leadership team.

In order for Riordon Manufacture to meet the end state goals, there will be many steps to lead the compensation and reward restructure system. This will require full time attention from key human resource staff. In order to attract and retain the best and brightest, a pay system designed around the objectives of the company is necessary. There are four policies, which are the foundation on which pay systems are built. These policies also serve as guidelines for managing pay in ways that accomplish Riordan’s objectives. They are (1) internal alignment, (2) external competitiveness, (3) employee contributions and (4) management of the pay system.

Internal alignment refers to comparison among jobs or skill levels inside the organization. Riordan has a mix of sales people, product engineering specialist, customer service representatives, and labors. Internal alignment pertains to the pay rates both for employees doing equal work and for those doing dissimilar work. Determining what an appropriate difference in pay is for people performing different work will be a key challenge. Pay difference is a major reason people are dissatisfied. This is an important policy because the pay relationships have a lot to do with decisions to stay with the organization.

External competitiveness refers to compensation external to the organization. What mix of pay forms, base, incentives, stock, and benefits? This will have a lot to do with the amount of money the company can invest in rewards and compensation and the types of incentives the employees have expressed. The salary survey will determine market positioning.

Employee contributions will be based on pay for performance. There are many pay for performance programs. This is an important policy decision because it directly affects employees’ attitudes and work behaviors (Milkovich & Newman, 2004). A pay for performance program should be chosen that is fair to the employees and understood by all.

The last building block to the pay system is management policy. This means ensuring that the right people get the right pay for achieving objectives in the right way. Management means understanding and communicating how the pay system works and doing so in ethical and fair ways.

Conclusion

This paper began with a situation analysis of Riordan Manufacturing. It identified the issues and opportunities facing Riordan manufacturing. Second, it listed the stakeholder perspectives and any ethical dilemmas that may have faced the organization. Third, it identified the end-state vision for Riordan manufacturing. Fourth, it detailed a gap analysis between where the organization currently is and where they need to be at a future state to be a successful and profitable manufacturing company. Finally, it concluded with three tables. If Riordan manufacturing goes along with the proposed changes for the company, they will see an increase in employee morale and employee satisfaction.

References

Dreher, G. & Dougherty, T. (2001) Human Resource Strategy. The McGraw-Hill Companies.

Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston. The Pitman Companies.

Milkovich, G. & Newman, J. (2004). Compensation. The McGraw-Hill Companies.