Riordan Manufacturing Situation Analysis

Situation Analysis

Issue and Opportunity Identification

Riordan Manufacturing is a global plastics producer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion. Recently, Riordan made several strategic changes in the way it manufactures and markets its products. Because of declining sales and uneven profits over the past two years, Riordan adopted a customer-relationship management (CRM) system. Primarily sales teams instead of single salespeople, with each team focusing on a particular customer segment, now service customers. Teams typically include a sales person, product engineering specialist and customer service representatives. The hope is that the team approach will improve sales. As changes have been implemented, employee retention numbers have declined. The company recently conducted an annual employee survey, which showed a decrease in overall job satisfaction, particularly in the areas of compensation and benefits. Recent performance data identified 25% of the employees as high achievers, a large middle group as average, and a small group as under achievers. The current rewards system is almost non-existent.

One of the issues identified is the absence of the organizational rewards systems. Riordan is facing declining morale and work ethics. Employees are not satisfied with their compensation by performance. One possible opportunity Riordan can do is create a performance management system that would reward employees by performance as opposed to time and grade. Considerations of creating a performance rewards system are in line with Riordans business strategy and their technology which determines their design and work processes which set the tone for employees behavioral and role requirements (Dreher.G & Dougherty, T . 2001). Three Key Research & Development employees have left within the past three months and there are an increasing number of employee complaints about compensation and decreased satisfaction. Identifying and understanding an individuals value system is an important step to deal with the employees dissatisfaction with compensation and to define adequate compensation. Riordan can develop their rewards system by interpersonal intelligence; analyzing their employee’s characteristics; Intelligence Aptitudes Knowledge Temperament Preferences Expectations. Once these attributes are understood, Riordan HRM can develop a rewards system that is best suited for the company and employees.

Riordan’s annual employee satisfaction survey results indicated a strong trend of employees possibly leaving for another company offering 10% more money. The survey in 2001/02 results was the complete opposite of the 2003/04 results which indicates a downward trend; leading towards a retention issue. An opportunity Riordan can consider is identifying components of effective retention initiatives. Riordan can develop and implement many retention and career development processes starting with various pay types; Merit, Lump Sum, Commissions, Individual Incentives, Stock Options. The effectiveness of these retention options are determined by interpersonal intelligence gathered during interviews and surveys (Dreher.G & Dougherty, T . 2001)

Riordan faces serious employee morale and possible retention issues; however, due to the various functional specialists, there are different issues within the company. R&D employees are not satisfied with compensation and decreased satisfaction. The IT group feels they are not being adequately recognized for their contributions. Riordan can develop a total rewards plan encompassing all employees, which includes all of the tools that attract, motivate, and retain employees. These elements are both monetary and non-monetary, and are intended to reward employees’ time, talents, and efforts to help achieve business results.

Because sales management wants to improve the commission structure that will recognize the new teamwork philosophy, sales people are concerned individual commissions will be negatively impacted. An opportunity Riordan can consider to deal with the sales groups concerns is to create a rewards compensation at both the individual and team level where there will be varying reward incentives that will not impact the sales peoples potential bonuses and at the same time recognize reward at the team level.

Stakeholder Perspectives/Ethical Dilemmas

Within Riordan there are stakeholders that have voiced their issues through the annual employee satisfaction survey along with other avenues of communication. Riordan’s Engineering Research & Development group have been led by Kenneth Collins developing many new innovative products. The