Gap Analysis: Riordan Manufacturing

Gap Analysis: Riordan Manufacturing

This Gap analysis investigates the Riordan Manufacturing case where the Senior Management Team is facing financial and economical pressures. In response, Riordan made several strategic changes in the way it manufactures and markets its products. However, recent performance data shows that employees are not satisfied with the current reward system and the Senior Leadership also recognizes that is outdated and needs to be revamped. For any organization to be successful needs to identify gaps and find the right mix of compensation and benefits, and training and development programs that will help bridge those gaps, so employees can prepare themselves for greater responsibilities, higher salaries and more challenging roles to contribute to the overall success of the company.

This case analysis examines the problems and possible outcome of the Riordan Manufacturing Senior Leadership efforts to solve this predicament.

Situation Analysis

Issue and Opportunity Identification

From the Riordan Manufacturing, we learned that the company is a global plastic producer that employees 550 employees and has revenue in excess of $1 billion. The company has 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 a corporate headquarters in San Jose, California. Riordan’s major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers.

However, declining sales and uneven profits over the past two years forced the company to change its sales processes and adopted a customer-relationship system. In addition, the company implemented Six Sigma quality approach, some work was redirected to a new manufacturing facility in China, and plants were restructured into self-directed work teams. Unfortunately, as all of those changes were implemented employee retention numbers also declined. Moreover, recent annual employee survey showed a decrease in overall job satisfaction, especially in the areas of compensation and benefits.

The current reward system in Riordan is not based on performance but instead uses cost-of-living increases, seniority and position. Now, the company is facing declining morale and work ethic. At present, the sales management wants an improved commission structure that recognizes the new teamwork philosophy, while sales people fear their bonuses could be at risk if they depend on team, and not individual, performance. Other managers are concerned that with or without incentives, their employee base salaries are too low to retain good people and are urging the CEO to increase pay levels. Engineering and IT managers are particularly concerned that several employees with proprietary information may leave the organization for greener pastures. Research and Development seniors states that their employees who work on long-term projects would be best served by incentives that reward continued focus. They also want their contributions to the sales process to be recognized and acknowledged.

The CEO knows that something must be done and he is considering his options: Completely overhaul the reward system, use piece meal solutions to address the most critical issue or find new motivational strategies. Cost have to be carefully weighed against any benefits, especially because some of the company’s key customers are extremely price sensitive.

Stakeholder Perspectives/Ethical Dilemmas

The stakeholders in this scenario are the Senior Leadership Team, the Human Resource Department and the Employees. From the Management Perspective, they have a fiduciary responsibility to maximize shareholders wealth, to manage the company in a way that will bring future growth and profitability. In addition, it has social responsibility to its workforce. However, in this case it will require overhauling the compensation system and rewarding employees according to their performance and contributions to the company while balancing it with the current business environment. Moreover, it needs to create opportunities for advancement for the employees. Increasing employee satisfaction and motivation is another big hurdle that has to be overcome. Without a loyal and committed workforce, the benefits of the new strategy will be very difficult to sustain. The Senior Leadership Team has to generate a win-win solution for all parties involved.

The Human Resource department has responsibilities for job analysis; human resource planning; employee recruitment, selection, motivation, and orientation; performance evaluation and compensation; training