Riordan Gap Analysis

Abstract:

Riordan Manufacturing Company has made several strategic changes in the way it manufactures and markets its products. Over the past two years, sales have declined and profits have been uneven. The declining sales and uneven profits is what caused the strategic changes that the company decided to make. Since the changes were made employee retention numbers have declined. This paper will analyze ways to improve sales and at the same time increase overall job satisfaction. The concepts that will be discussed are: incentive pay, transition management, corporate culture and the implementation and evaluation of the Human Resource plan (Scenario: Riordan Manufacturing Company, 2006).

Introduction:

Riordan Manufacturing Company has changed the way it manufactures and market its products. Over the past two years, the company has dealt with declining sales and loss of revenue this has caused Riordan to undergo a major strategic change. This change has also prompted the company to adopt a customer-relationship management system (CRM). Michael Riodan, Chief Executive Officer, is concerned with the value of this investment. He believes that Riordan takes good care of its employee and employee loyalty is the answer to the company's motivation problems (University, 2006).

Along with the strategic changes Riordan will have to implement an effective HR ststem, help employees manage through the transition, add compensation plan and encourage corporate culture in the organization.

Situation:

Riordan Manufacturing produces global plastics and has 550 employees divided among its three plants. Which are located in Albany, Georgia, Pontia, Michigan and Hangzhou, China. Riordan is a fortune 1000 enterprise with protected yearly earnings of $46 million and revenues of $1 billion. Because of the declining sales and uneven profits Riordan has made several strategic changes.

The company has adopted the CRM system which forces employees to work with a team rather than individually. Customers are now going to be dealt with by a sales team, with each team focusing on a particular customer segment. The new teams will include: a sales person, product engineer specialist and a customer service rep. Riordan hopes that the new CRM system will help the team improve sales.

On the manufacturing side, Riordan has implemented a Six Sigma quality approach and it is ISO 9000 certified (University, 2006). At the facility in China, work has been re-directed and plants have been broken up into self-directed teams. Since the re-direction, employee retention numbers have declined. The company has recently distributed an employee survey which showed a decrease in job satisfaction, mainly in the areas of compensation and benefits (2006).

Frame the Right Problem:

Problem Statement

Riordan Manufacturing Company wants its retention rates to decrease and wants to increase its sales. The company hopes to achieve this with the new implementation of the Six Sigma quality approach.

Table 1

Issue and Opportunity Identification

Issue Opportunity Reference to Specific

Course Concept

(Include citation) Concept

The Sales Management team at Riordan wants an improved commission structure, which recognizes the new teamwork philosophy. Sales people fear their bonuses could be at risk if they depend on their team. Top-level executives believe that without incentives it is going to be hard to retain good employees. They feel that several employees with valuable information might leave Riordan, to look for other jobs within the same industry. Riordan values its employees and if the company wants to keep its current employees, the company will have to offer new incentives (rewards, pay increase, or vacation days). Incentives depend on the performance of an individual, a team of employees, a business unit, or a combination of the three. Incentives tries to influence the performance of a worker and it is a matter of timing (Milovich & Newman, 2004). Incentive Pay

Riordan has made several strategic changes in the way it manufactures and advertises its products. This was mainly due to the declining sales and low profits over the past several years. This strategic plan has also forced the company to adapt a customer-relationship management system. Once the change was made an employee survey was given out to employees and the results showed a decrease in overall job satisfaction with the new plan.