Gap Analysis: Riordan Manufacturing

Gap Analysis: Riordan Manufacturing

Riordan Manufacturing is a successful Fortune 1000 company in the field of global plastics production. The production is split between three plants, two in the United States, and one in China. Headquartered in San Jose, California, the company boasts "revenues in excess of $1 billion" (University of Phoenix, 2008a, para. 3). Riordan Manufacturing has made some strategic changes over the past couple of years to a customer-relationship management (CRM) system. The adoption of this new system has restructured the plants into self-directed work teams. Unfortunately, since the restructuring, job satisfaction and morale are down, and employee turnover up. Further, dissention among the executive team as to the cause and solutions to the problems is present. CEO and founder, Michael Riordan has his own idea of what the problem is, an ungrateful workforce, but realizes that in order to remain competitive in this global market, he will need to make many changes to the current human resource management (HRM) system to keep his valuable employees. Riordan understands that "...organizations with better talent will be more successful than those with lesser talent" (Brockbank and Ulrich, 2005, July, para. 4).

Situation Analysis

Issue and Opportunity Identification

Riordan Manufacturing is facing several human resource issues. After implementing a new customer-relationship management system, turnover is up from the prior year by an average of 50%, with the highest being an increase of 75% at headquarters (University of Phoenix, 2008b). Additionally, morale is down and employee complaints are up 33% quarter to quarter (University of Phoenix, 2008c). Various situations are the causes for these increases, but recognizing them allows opportunities for the company to improve the situations and turn the human resources issues around.

The Riordan employees complain of unfair promotion practices and therefore, feel little opportunity for career advancement. Succession planning, skill inventory, job rotation, and assessment centers are all motivational activities and provide employees with opportunities to move within the company. Riordan fills managerial positions mostly from external hires, which sets a tone that not much career growth is within the organization. In its employee handbook, the company states "we may also use [external] recruiting sources to fill open positions when it is in the best interest of the organization" (University of Phoenix, 2008d). This appears to be more of a regular practice than the exception. The employees also feel inadequate development practices exist within the company. "The career development process and the documents that constitute the career development profile can be used for many applications in the company" (Wilmott, 2006, para. 6). In particular, it can create long-term career opportunities and is part of a total rewards model promoting employee retention. Additionally, development practices lead to more direct and indirect financial rewards and more meaningful work.

Many employees at Riordan Manufacturing feel under-compensated monetarily, and that the evaluation and feedback program lacks consistency. Some employees have openly stated "I can make a lot more money elsewhere--and I would be more appreciated" (University of Phoenix, 2008a, Consultant report). Riordan employees are also confused with pay and job structure. "The perceived ratio of one's inputs to the outcomes received is an important part of [the equity theory]" (Dougherty and Dreher, 2002, p. 40). The employees do not perceive they are being treated and compensated fairly, as the current compensation philosophy is geared toward the reward of teams. Little evidence of individual incentives is present. This affects organizational performance as employees feel they are not being recognized for their contributions.

Stakeholder Perspectives/Ethical Dilemmas

The stakeholders for Riordan Manufacturing are the CEO, shareholders, and executives, employees including management, and its customers. The values, rights, and interests of each group vary. If the changes to the total compensation strategy are done according to the suggestions provided here within, all the stakeholders can benefit and be fulfilled.

The CEO, shareholders, and executives are interested in earnings per share (EPS), company growth and image, profit for the organization, and personal income. Companies are in business to make a profit. They have a right to make a profit, stay in business, grow, earn a return on investment, and good employee performance. Riordan Manufacturing values innovation, employee loyalty, customer retention, and growth. To avoid ethical dilemmas the company needs to set achievable goals, provide the organization with the tools and information it needs to reach organization and personal goals, provide a sound compensation package, and give the organizational members clear understanding of the HRM system and its alignment to the organization's goals. It is accountable and has a social responsibility to consumers, employees, shareholders, and the environment. "Corporate social responsibility (CSR) refers to an organization's moral obligation toward all of its stakeholders" (McShane & Von Glinow, 2005, p. 17). They "...have a responsibility for creating trust and cultivating cultural values" (Lassiter, 2004, para. 20).

Employees' interests are earning compensation, personal growth and development, and company growth because this will provide them the opportunities to advance and grow. They have the right to be respected, receive fair and equitable treatment, and they value intrinsic and extrinsic rewards. Conflicts occur when employee satisfaction is down and or when employee commitment is low. Unethical situations may arise when employees retaliate against a company when low satisfaction or perceived inequity is present. "On the job, feelings of inequity revolve around a person's evaluation of whether he or she received adequate rewards to compensate for his or her contributive inputs" (Kinicki & Kreitner, 2004, p. 291). Employees have a responsibility to provide quality performance.

Customers have the right to quality and fair prices for the products they purchase. They value advisement and total product solutions that align with their organization's goals and ethical issues can arise if the company providing the advisement is not trustworthy, educated and skilled, or is only concerned with its own profits and growth. They have the right to quality, knowledgeable, caring, and informative and individual service. Customers who perceive