Generic Benchmarking

Running head: GENERIC BENCHMARKING

Generic Benchmarking

University of Phoenix

Human Capital Development

MBA/520

Riordan Manufacturing

Riordan Manufacturing is a global plastics producer that employs 550 people divided among three geographically separate plant locations. Over the past two years, sales have declined and profits have been uneven. Senior level management has developed a strategy to both improve growth of the company and profitability. By adopting a customer-relationship management (CRM) approach, the company has changed their way of interacting with customers to a team-oriented approach. The manufacturing process itself has also been restructured into self-directed work teams. This has required organizational changes in the company's departments, integrating sales with engineering and customer service (University of Phoenix, 2007).

Current morale is low at Riordan Manufacturing. Employee retention numbers have declined and recent staff surveys reveal a "decrease in job satisfaction, particularly in the areas of compensation and benefits," (University of Phoenix, 2007). Current reward systems are not based on performance, but rather on seniority, position, and cost-of-living adjustments. The broad demographics of employees reveal that not all staff has the same expectations regarding what is acceptable compensation. Senior management is concerned, but does not have a unified vision of how to address these issues. Some, such as the Chief Information Officer, are focused solely on their own groups' needs, while others such as the Chief Financial Officer believes current compensation systems are adequate. Individual department's concerns are myriad, with managers and employees frequently emphasizing different issues. Many, especially in sales, do not believe they will achieve adequate compensation under the new team approach. Others argue that the current salaries are not competitive with industry standards, and therefore, incentives are not the true issue. Research and Development wants acknowledgement of their long-term commitment.

Riordan Manufacturing now faces the challenge of motivating their employees to effect the organizational changes necessary to enact the vision while improving overall morale. This paper will identify benchmarks from UMB, HEB, Bank of America, Bank of Oklahoma, Aviva Life Insurance, General Motors, Chrysler, and I.B.M, in order to explore solutions that human resources (HR) may consider to facilitate a successful transition. Potential solutions will be identified for managing human capital resources.

Effective employee relations program

Evidence clearly shows that how HR designs performance management practices influences how employees see the company. If employees find the performance appraisal system acceptable, they tend to have increasing trust in top management. An important principle is to design compensation practices that "...increase the likelihood that employees will behave in ways that help the organization achieve its strategic objectives," (Milkovich & Newman, 2004, p.258). Employee behavior is specifically linked to skill and ability, motivation to perform, and the knowledge of procedures and rules.

In designing a reward system based on performance, HR staff must consider compliance with existing laws and fairness to employees. In addition, the efficiency of the plan is important, meaning that "the plan should link well with HR strategy and objectives," (Milkovich & Newman, 2004, p.279). The amount of flexibility in the plan should be tailored to specific needs of the company. Finally, standards should be established that incorporate measures of performance, eligibility criteria, funding, and overall objectives. The benchmarking of India Inc.'s companies reveals an attention to these principles. The companies cited provided examples of pay-for-performance plans that were unique to their individual needs, while adhering to the generic trends of what employees currently demand. In addition, UMB Bank also prioritized an HR plan that linked well with the new strategic vision.

Career development planning model

In order to increase employee motivation, Riordan must develop a career development planning model. They must determine a pay-for-performance plan. Several types of performance plans are available. A merit pay system is a system that focuses on "base pay (called merit increases) to how highly employees are rated on a subjective performance evaluation," (Milcovich and Newman, 2007, p.287). Lump sum bonuses are compensation that is usually given at the end of the year. The bonus is based on the performance of the company, teams, or employees. Individual Spot Awards are rewards based on individual employees performance and are given for special projects or recognition. Individual incentive plans pay upon completion of a project. Team incentive and team compensation pay works with team based pay. Gain sharing plans are also team based incentives. The team shares some kind of profit depending on their performance. Profit sharing plans depends on the individual and the company. It requires that the company makes certain profit for the individual to benefit from. Earnings-at-risk plans depend on the productivity of the employees.

Compensation and motivation practices

"Employee benefits are that part of the total compensation package, other than pay for time worked provided to employees in whole or in part by employer payments," (Milkovich & Newman, 2004, p.400). Wanting to keep the employees satisfied and loyal to their companies the employers introduced the total compensation package. This particular growth in employee benefits started with the wage and price controls. "With strict limitations on the size of wage increases, both union and employers sought new and improved benefits to satisfy worker demands," (Milkovich & Newman, 2004, p. 401) Limiting wage increases contributes to the growth was the unions' views and changes to those benefits, employer initiatives, cost effectiveness of benefits, and government impetus.

According to surveys the value of employee benefits are in this order medical, pension, paid vacations and holidays, sickness, dental, long-term disability, and life insurance. The main value is that employees want the choice to decide on the types of benefits they want in their plans. Employees are willing to pay more for their choice.