Gap Analysis: Riordan Manufacturing
Length: 1554 words (4.4 double-spaced pages)
Riordan Manufacturing, a leader in producing plastics, is confronting a number of human capital challenges. The challenges are disrupting the work environment, which ultimately affects the bottom line of the company. In order to weather this storm, the company needs to identify these issues and convert them into opportunities. The executive team also needs to understand the major players who are being affected by these changes. After understanding the issues, opportunities, and major players, the executive team will create their end state vision to help serve as a roadmap to better define their end state goals. Finally, a short and concise problem statement needs to be created to allow the executive team to focus on the opportunities that it must use to achieve their end state vision.
Issue and Opportunity Identification
Riordan Manufacturing firm is confronting issues that are affecting its ability to maintain its performance standards as a global plastics producer. The executive team is dealing with issues regarding employee motivation, transition to a new customer-relationship business sales strategy, a diverse work staff, an ineffective benefit system, and a disagreement among the executive members on the next course of action regarding the overall compensation package. These challenges will determine the company's competitiveness in the marketplace and its ability to retain and attract top talent. These challenges when managed positively also offer opportunities in creating a balanced, team focused, loyal, and committed work force and a united executive team focused on meeting the needs of their employees and its customers.
Managers, employees, and the customers are the three stakeholder groups in the Riordan scenario. Each group has their own rights, interests, and values.
In response to trends in the company, the management is making policy changes to the company strategy. The major change is the transition from an individual based sales program to a team based, customer focused strategy. As the executive team, it is their right to make this decision in a time when there are decreasing sales and uneven profits. The switch to a team based sales program will also involve the teamwork of a sales person, product engineer specialist, and a customer representative. The interest behind the decision was to increase innovation, reach new clients, and create new products by using a team environment. The executive team values integrity. Through the private consultant and their own research, the executive team understands that there are employee issues that need to be addressed in order for the company to regain its competitive advantage.
The employees are suffering from a lack of motivation, which is a result of a lack of a favorable compensation package. It is the employees' rights to seek alternative sources of employment if they believe their needs are not being satisfied. The employees' interest is the belief that they should be compensated in the form of bonuses, commissions, or salary for their quality of work. There is also a value of fairness in compensation. The employees believe that they should be paid in relation to market value.
The customers of Riordan are affected by the decisions, depending on the strategy direction of the executive team. After the completion of the benefit package, the customers have the right to determine if they want to continue to do business with Riordan. Their interest is will Riordan still be cost effective after the benefit plan rollout. Certain benefits may require an increase in price to the customers in order to support the new compensation packages. Finally, what is the value of the customers. Will they value the price of the products or the services that Riordan will be able to develop under the new sales strategy.
Riordan Manufacturing's goal is to be a global plastics producer leader. It will be leader in the marketplace in recognizing and implementing solutions to satisfy the needs of its customers and employees. To support its employees, the company will have a competitive compensation package focused on the value of team work and customer-relationship management. The package will foster a loyal, committed, balanced and integrated work force. The long term benefit of this type of staff is that, "Loyal employees have greater opportunities to learn, thereby increasing their efficiency. The money these employees save you in reduced recruiting and training costs can be invested elsewhere" (Bryant, 2000). By implementing opportunistic solutions, Riordan will be a benchmark example in the marketplace.
Riordan Manufacturing will become a leader in global plastics producer by developing a highly motivated and committed team based workforce who will use their abilities to support the clients' needs. Through employee feedback and the consultant reviews, the executive team will make decisions regarding the internal and external alignment of its compensation system and how the new system will align with Riordan's future strategies.
Riordan Manufacturing can accomplish its vision of being a leader. By being receptive to the issues and trends in the company, the company can create a positive work environment that will support the employees. As the employees feel management support, the loyalty, commitment, and motivation will be transferred to the customers, which will result in growth for the company.
Bryant, Debi. (2000, June). The Economics of Loyalty. Retrieved May 5, 2007, from RDS Database.
Dougherty, T.W. & Drehar, G. (2001). Human Resource Strategy. New York: The McGraw-Hill Companies
Milkovich, G., & Newman, J. (2004). Compensation, 8e. New York: The McGraw-Hill Companies
Issue and Opportunity Identification
Issue Opportunity Reference to Specific Course Concept (Include citation) Concept
Employee Motivation:The employees at Riordan Manufacturing are a very diverse staff. The differences are in their backgrounds, generations, ethnicities, and family situations. Each groups needs are different resulting in lower job satisfaction and increased turnover. The result of these two factors is decreasing motivation. Riordan has an opportunity to identify the reasons for the decrease in motivation. By reducing the risk, the management can refocus on employee loyalty. "Motivation- the willingness to exert effect in a particular way- is an extremely important factor in understanding or predicting employee behavior" (Drehar & Dougherty, 2001). Employee Motivation
Customer Focused Strategy:The transition from a business sales strategy to a customer-relationship management has created friction between the sales management and the sales teams. The sales management team wants to institute a commission structure in line with their new strategy. The sales team is resistant to the change in that they fear their bonus will suffer if it's based on a team concept. The change of strategy has also resulted in an increase in turnover. The change in strategy will allow Riordan to better meet the needs and requirements of their clients. Having a fair compensation system to all parties involved in the process will increase motivation to perform and support each other. "Strategy refers to the fundamental directions that an organization has chosen. An organization defines its strategy through the tradeoffs it makes in choosing what (and what not) to do" (Milkovich & Newman, 2004). Business Strategy
Staff Diversity:The staff of Riordan consists of Baby Boomers, Gen Yers, and Gen Xers. Each generation has its own perspective regarding rewards, motivation, values, and rights. The difference in these groups creates difficulty for management to establish a program that will benefit and satisfy all the employees. Riordan can use the differences in its staff by bringing a variety of perspectives to the company. Each generation can bring its uniqueness to the company allowing them to appeal to a greater number of clients. "To cope with the turbulent competitive dynamics, focus on what factors in the business environment (i.e, changing customer needs, competitors actions, changing labor markets, changing regulations, globalization) are important today" (Milkovich & Newman, 2004). Compensation Strategy: Competitive Dynamics
Benefit System:The Benefit System of Riordan is based on recognizing costs of living, seniority and position, rather than performance. Playing down the importance of a benefit performance program is resulting in a reduction of employee motivation and job satisfaction. The employees believe that they will receive the same amount of bonus/ salary regardless of how hard they work. .This has also resulted in part of the staff being average performers and small group of poor performers. A benefit system based on performance would reward those hard working employees. It would also weed out the weaker employees and allow opportunities for more motivated and driven employees. "Internal alignment refers to comparisons among jobs or skills levels inside a single organization. External competitivess refers to compensation relationships external to the organization: comparisons with competitors" (Milkovich & Newman, 2004). Internal alignment/ External Alignment
Disagreement of Executive Team:The executive team disagrees on the direction of their benefit program. The members believe that changes are necessary to retain current employees and to remain competitive in the industry. However, there is disagreement on whether the changes should be in the form of commissions, salary, job design, or other factors. The executive team needs to be aligned and committed to the new strategy. This will allow better communication to the employees and increase loyalty and commitment. "Management means understanding and communicating how the pay system works and doing so in ethical and fair ways" (Milkovich & Newman, 2004). Compensation Objectives-Management Disagreement
Stakeholder Groups The Interests, Rights, and Values of Each Group
Managers Rights: policy changeInterests: increase innovation, change of strategy based on decreasing sales and uneven profits, departmental success; identify negative trendsValue: Integrity
Employees Rights: Seek other employment if needs are not metInterest: individual compensation; commissionValue: Fairness in compensation
Customers Right: Seek alternative supplierInterests: cost effectiveValue: Integrity