Problem Solution- Riordan Manufacturing
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Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING
Problem Solution: Riordan Manufacturing
Laura D. Nunes
University of Phoenix
Human Capital Development/MBA 530
February 27, 2008
Problem Solution: Riordan Manufacturing
Riordan is facing economic pressure in the manufacturing industry. The organization is looking to increase employee retention and profits. In order to increase employee retention, surveys must be taken seriously and action must be put into place. A strategy must be formed to ensure success. The plan consist of the following tasks: Riordan will focus on implementing a new pay structure that is competitive and based on job importance according to the company. Second, evaluations will be conducted every three months to increase productivity. Lastly, the Executive team will achieve alignment and become a team that concentrates on the future of the company.
Issue and Opportunity Identification Issue
Riordan is promoting on seniority and forgetting about performance. The company needs to take into account reviews that will validate promotion and raises. Riordan is having loyalty issues because employees feel that they have little room for promotion and are underpaid. People that produce and prove themselves have to be rewarded. Employees are going to find it difficult to produce if there are not any rewards for their efforts.
Riordan can install a new reward system that promotes productivity and an increased pay structure based on job evaluations
“A key aspect of compensation is deciding how to reward employees for their individual contributions in a way that best fits the unique circumstances of the firm. A variety of individual and group-based pay-for-performance strategies may be used to stimulate increase employee motivation and productivity. A new emphasis on identifying and paying employees for enhancing their knowledge, skills and competencies offers additional possibilities for moving the work force and the organization toward accomplishing critical goals (Dreher & Dougherty, 2001, p.21).
Human behavior and organizational rewards systems
Riordan wants employees to work together as a team. The sales teams are in groups an even certain departments are helping the sales teams. The problem is that there are not any rewards for teamwork. If Riordan wants the new system to be effective, employees need to be rewarded as a team. Each team should be rewarded for hard work with the pay structure clearly defined.
Create a new pay structure that rewards the teams and is clearly defined “Until wide bonus systems based on performance in comparison to some cost index” (Dreher & Dougherty, 2001, p.91).
Gain sharing plans Riordan has not established values for each position in the company. The pay scale should be established to importance to the company. The pay scale should also be comparable to other companies to help reduce turnover. Development of a new pay scale that is competitive and is related to the success of Riordan “A systematic technique for determining the relative worth or value of jobs to the firm in order to establish pay differentials” (Dreher & Dougherty, 2001, p.83).
Job evaluations at Riordan are non-existent. Employees need to be aware of what they need to improve upon. An outside perspective from a supervisor is necessary for an employee to develop. Employees need to feel that they are developing. In the exit interviews they are even finding that the staff feels they can be more challenged and paid more at competitive companies. Use evaluations to let employees know strength and weaknesses “People need information and would rather get it directly from the organization. Organizations must invest time and efforts in helping employees to identify areas for their individual career development, and working out action plans on how this development may be achieved” (Kumar, 2003, p.2).
Situation Analysis Issue and Opportunity Identification
Riordan clearly has several issues that need to be addressed. Sales have declined and profits have decreased over the past two years. Employee retention has also bee decreasing. Both issues seem to relate to the last issue of decreased employee motivation. These issues can lead to opportunities to make positive changes within the company.
Most of the Executives at Riordan believe that employees are underpaid. They understand that employees are leaving for jobs that are paying more. Executives need to address this issue immediately. In order to make adjustments that are needed, the Executives will need to conduct job evaluations. Job evaluations are “a systematic technique for determining the relative worth or value of jobs to the firm in order to establish pay differentials” (Dougherty & Dreher, 2001, p.83). Each position in the company will be looked at to determine the pay structure. Each pay structure should also be compared to similar jobs at other companies so that key talent can not longer be a troubled issued as it has been in the past.
The next issue is that the company is not providing employees with the tools needed to develop. Evaluations at Riordan are nonexistent. Employees need to be aware of what they need to improve upon. An outside perspective from a supervisor is necessary for an employee to develop. Staff should believe that they are developing so that they experience self-gratification. In the exit interviews Riordan is finding that the staff feels they can be more challenged and paid more at competitive company. “People need information and would rather get it directly from the organization. Organizations must invest time and effort in helping employees identify areas for their individual career development, and working out action plans on how this development may be achieved” (Kumar, 2003, p.2).
Stakeholder Perspectives/Ethical Dilemmas
Riordan is struggling with Executive alignment. Each stakeholder is looking out for the interest of his or her individual department and they are not concerned with the companys future. Michael Riordan, President, Founder and Chief Executive Officer (CEO) are the primary shareholder of the company stock.
Kenneth Collins is the Vice President of Research and Development (R&D). He is Michaels long time friend and had been with Riordan Manufacturing since the beginning. He is concerned with