Riordan Manufacturing Problem Solution

Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING

Problem Solution: Riordan Manufacturing

Problem Solution: Riordan Manufacturing

Riordan Manufacturing is a global plastics producer that employs 550 people with projected annual earnings of $46 million. Due to declining sales in the past couple of years, Riordan has changed the sales process by creating a customer relationship management system (CRM) where the customer, classified by segment, is serviced by a team. The team includes a product engineer, sales agent, and a service representative. The goal is to increase sales by increasing customer focus. With this team format, employee motivational problems arose. This also highlighted weaknesses in other parts of the organization in terms of compensation and retention. This paper will frame a problem statement, proposed solution, end-state vision, and risk of the solution to Riordan’s management team.

Situation Analysis

Issue and Opportunity Identification

Riordan recently conducted an employee survey that showed a decrease in job satisfaction, particular in the area of compensation (University of Phoenix). The employees of the company fall into three general categories: the managerial staff made up of mostly baby boomers, middle-aged professionals, and the young, less skilled manufacturers. The compensation plan currently in place is based on individualism and seniority. Michael Riordan, the CEO, has acknowledged that something must be done to the rewards or compensation process currently in place. Each department manager has a unique and understandable self-serving perspective on how to address the problem. Most involve increasing the pay level of their particular organization. Dale Edgel, the CFO, has decided to employ a consultant to provide a recommendation to the staff. This recommendation followed three broad actions. The first being to conduct a survey of the current compensation Riordan provides versus the market and adjust salaries accordingly. The second is to develop an incentive program for the sales and research staff based on the strategy of the company. The third is to develop a process for appraisals and promotions that align performance expectations to a reward system. Michael Riordan has asked the management team to consider these recommendations and determine the next course of action. “The source of the lack of motivation could be (1) low expectancy for performing the behavior, or (2) a lack of high instrumentalities for (or connections to) outcomes, or (3) a lack of outcomes with high enough positive valence, or (4) all of these problems” (Dreher, Dougherty, 2001, p. 37).

Stakeholder Perspectives/Ethical Dilemmas

The key stakeholder is Michael Riordan, the president and CEO. He has a huge financial interest since he owns 80% of the stock. He is concerned about declining sales and the value of his company especially since he is getting close to retirement. His senior management is also a key stakeholder. The managers have various interests in how to retain and motivate its employees. They value seeing their individual organizations succeed to facilitate career progression especially Yvonne McMillan, the human resource director.

The employees, as mentioned earlier, fall into three categories and their interests differ depending on their individual values and status. Compensation and job security is valued by the baby boomers as they near retirement. Job satisfaction and opportunity is valued by the younger professionals as they seek adventure. All the employees value being treated in a fair manner and being paid equitably for their services. They are keenly interested in the direction of the company and how this affects them personally.

The customers, suppliers, and competitors are stakeholders as well. The customers value the products and services Riordan provides. The customers are not only interested in seeing this continue but also enhanced with either lower cost or expanded services. The customer and supplier relationship developed with Riordan will change as the company’s profits decline. The competitors have a keen interest as well. The competitors may view the turnover and loss of profits as a sign of an opportunity. They are interested in driving Riordan out of business and may take advantage by hiring away key employees.

Problem Statement

Riordan