Problem Solution: Riordan Manufacturing
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Riordan Manufacturing
This paper takes a good look at the situation, opportunities and challenging issues that are facing Riordan Manufacturing Company. Through analyzing the situations, opportunities, and challenges the true problem with Riordans human capital is realized. The end-state goals will direct Riordan Manufacturing to improve human resource practices, which will give Riordan a sustained competitive advantage (Dreher & Dougherty, 2001).
Situation Background
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. 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 in San Jose, California. Riordans major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers (Scenario: Riordan manufacturing, 2006).
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 approach but also prompted them to adopt a customer-relationship management (CRM) system. Sales teams rather than single salespeople now service customers with each team focusing on a particular customer segment. Teams typically include a sales person, product engineering specialist and customer service rep. The plan is that the team approach will improve sales (Scenario, 2006).
Riordan Manufacturing has seen a consistent drop in employee satisfaction over the last 12 months and the increase of voluntary separations has doubled in the past year in every department. These numbers are alarming and speak of issues that could lead to disaster for Riordan if they are not recognized and quickly addressed.
Issue and Opportunity Identification
First, we need to identify the issues or opportunities for Riordan. The first issue at hand is employee retention. There have been several statements made that employees are leaving for higher pay. Is Riordan paying under the market average for these positions? This is a major concern for the research and development area in saving vital employee knowledge.
Second, the employee incentive program is an area of concern not only with management but with the current employees as well. The current sales incentives are structured for an individual salesperson instead of for a team approach. This is an issue with the changes which have already been put in place changing the sales approach from an individual account to a team approach incorporating a sales person, a product engineering specialist, and a customer service representative with support from research and development (Scenario, 2006). The sales process has changed but the incentive/bonus process has not aligned itself to the change.
Third is employee development and training. Riordan has done little in the promotion of training or development of their employees in recent years. One strategic advantage for companies is to provide and take part in the employees personal growth and development. Training and development not only helps to attract top performers but will also provide incentive for retention (Dreher & Dougherty, 2001).
Fourth, the human resources area has had little influence on the business plan for Riordan. The human resources department currently reports to the finance department with no direct influence with the CEO. In order for Riordan to realize and gain strategic advantage in the area of human capital, a superior human resource management system must be in place (Dreher & Dougherty, 2001).
Fifth is employee satisfaction that has dropped dramatically in the past year. The major contributors are employees not feeling challenged, lack of appreciation, and lack of direction tied to the companys goals. Riordan must realize that satisfied employees will promote a positive organizational climate and lead to increase productivity (Dreher & Dougherty, 2001).
Stakeholder Perspectives/Ethical Dilemmas
There are several stakeholders to consider when looking at the current situation at Riordan Manufacturing and it starts with the investors of Riordan Industries who have seen investments declining over the past two years. From their perspective, Michael Riordan should be looking for a way to strengthen the company and turn profits around as quickly as possible so as not to lose more shareholders. Mr. Riordan believes the customer-focused team approach to selling their products is the way to improve the company but there are some other stakeholders to consider when implementing a change that will completely revamp how Riordan Manufacturing markets and sells their products worldwide. Ethically, Riordan owes the shareholders a good return on their investment and must find the way to improve the current sales slump even if it means moving more of the manufacturing to the Hangzhou, China plant that has already begun (Scenario, 2006).
The next stakeholder to consider is the employees. A recent employee satisfaction survey shows a decline in employee job satisfaction and the senior management team cannot agree on the course of action that needs to be taken. The department heads are more concerned about their own employees and not the overall issue facing the company and the issue of what is best for all employees. There are issues with how the new customer-focused team approach to selling affects the morale of those involved with it and how it will change each persons role within the company. Compensation and incentives must be revamped considering that the sales teams now consist of a sales person, a product-engineering specialist, and a customer service representative. As these changes have been implemented along with moving more of the manufacturing to China, Riordan has seen a decline in employee retention (Scenario, 2006).
The next stakeholder to consider is the customers, current, past, and new and how they perceive the changes within Riordan. The customers want to purchase a top quality product at a competitive price from a sound company they can count on. Riordans job is to make sure these customers are satisfied and not worried about the internal issues, which can detract from the level of superior quality, delivery, and service they have been accustomed to in the past. From an ethical standpoint, Riordan