Riordan Manufacturing Gap Analysis

Gap Analysis: Riordan Manufacturing

Employee motivation is an issue that organizations face on a day to day basis. It can cause job dissatisfaction and turnovers for an organization. Organizations should develop strategies that would increase innovation, recognize the value of teamwork, and equally reward and motivate employees. How well an organization handles issues that may arise from employees can mean the difference between an energized, productive workforce and a languid non-productive one.

Riordan Manufacturing is a global plastics producer employing 550 people with projected annual earnings of $46 million. 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 processes, but prompted them to adopt a customer-relationship management (CRM) system. Customers are now serviced primarily by sales teams rather than single salespeople, with each team focusing on a particular customer segment.

This paper will address the issues that Riordan faces as well as opportunities that will address the issues, the stakeholders involved and their interest, rights and values, and end state goals that Riordan can implement to benefit all employees and the company overall.

Situation Analysis

Issue and Opportunity Identification

As changes have been implemented at Riordan, employee retention numbers have declined. The company conducted an annual employee survey, which showed a decrease in overall job satisfaction, particularly in the areas of compensation and benefits. Riordan’s reward system is not based on performance, instead the company recognizing cost-of-living increases, seniority, and position.

The issues at Riordan can be addressed as follows:

• Employee Pay - Riordan should incorporate a merit pay system. In the typical merit plan employees’ performance is evaluated using some type of rating scale, and their base pay is adjusted upward based on the level of their individual performance (Dreher and Dougherty, 2001)

• Incentive Plans - Riordan should offer group incentives such as gain sharing. Gain-sharing plans are unit wide bonus systems based on performance in comparison to some cost index (e.g., labor costs). Work teams or units must first devise ways to improve work processes, thereby reducing labor costs. Some proportion of the cost savings is then returned to the work group (Dreher and Dougherty, 2001)

• Career Development - Every six months Riordan can review employee’s skills relative to their career development needs, their personal interests and career plans, and the company’s need for management talent. In addition to helping people acquire job-related knowledge, skills, and abilities, employers have a stake in helping employees develop from a career and personal perspective. Senior managers need to develop the skills required to be effective career developers. This includes the ability to help subordinates make informed estimates of their strengths, weaknesses, and career aspirations (Dreher and Dougherty, 2001)

• Rewards Connected to Company Strategy - Riordan should share organizational information and use various forms of rewards. Organizationally oriented system would emphasize features such as economic education and sharing of organizational information about the products, financial condition, and strategies of the firm and use of various forms of profit sharing, stock options, and bonuses to tie individual rewards to organizational performance (Dreher and Dougherty, Ch. 9, 2001).

Stakeholder Perspectives/Ethical Dilemmas

Stakeholders are individuals or organizations that stand to gain or lose from the success or failure of a system and are often in conflict with one another which in turn can create ethical dilemmas within the organization.

Riordan’s stakeholders consist of Kenneth Collins, Senior Vice President of Research and Development, Charles Lacy, Vice President of Sales & Marketing and Yvonne McMillan, Director of Human Resources.

Kenneth Collins is concerned that he might lose key researchers because of inadequate compensation and would like to add incentives for Research and Development staff. Individual incentives and commissions are increments to an individual’s pay tied directly to the employee’s extra output, such as piece rate pay for production workers or sales commissions. Incentives and commissions can place significant amounts of pay at risk if they are the only element of pay. However, often they are an add-on to base pay. But base pay may be set at a low rate, thus making performance output or sales a critical