Riordan Manufacturing

RUNNINGHEAD: RIORDAN MANUFACTURING

Problem Solution Paper: Riordan Manufacturing

Introduction

The purpose of this paper is to recommend a solution to Riordan Manufacturing (RM) for problems they are experiencing. The key areas to be addressed are the issues, the opportunities, the problem definition, the alternative solutions and benchmarking validation. This paper will analyze the alternative solutions, and state the risks and mitigation techniques to these risks. It will then recommend a final solution to Riordan Manufacturing. Finally, this paper will conclude with a plan to implement the recommended solution.

Situation Background

Riordan Manufacturing (RM) is a global plastics producer with projected annual earnings of $46 million. RM employees comprise three major demographic groups, baby boomers, generation X's and generation Y's. Riordan's major customers are automotive parts manufactures, aircraft manufactures, the department of defense, beverage makers and bottlers and appliance manufactures. Riordan has recently made several strategic changes in the way it manufactures and markets its products. They have adopted a customer-relationship management system. After which the company conducted an employee survey which revealed a decrease in job satisfaction in the areas of compensation and benefits. For these reasons Riordan is losing sales and key personnel. They are in the middle of making important decisions on how and when to proceed with solving their issues.

Issue Identification

Many employees are complaining about compensation benefits. Riordan is also underpaying key employees below the industry average.

Opportunity Identification

Riordan can revise the current compensation plan to fit the needs of the organization. Riordan can also review the industry pay scale and base it on the performance of their employees.

Stakeholder perspectives/Ethical Dilemmas

The stakeholders are as follows: Michael Riordan, CEO for Riordan Manufactures, Kenneth Collins and the research and development team, Charles Lacy and the sales and marketing team, Maria Trinh and the information technology department and the customers.

Michael Riordan the CEO of RM and primary shareholder with 80% of the company's stock is concerned with the value of his investment. His perspective on the employee's complaints about the company's compensation plan is "the new generation is ungrateful and doesn't realize how good they have it" (UOP, 2007, p.11). His ethical dilemma is, he believes the "company is good to its employees and is concerned they are no longer as loyal as they used to be" (UOP, 2007 p.11). Kenneth Collins and the research and development team are concerned with inadequate compensation. His perspective is if he properly compensates key researchers they will continue to develop innovative products. The dilemma he faces is he has been with the company and Michael Riordan since the beginning and understands the company's current financial situation. Charles Lacy and the sales team are concerned with the modification of the incentive system. He believes that employees should be compensated as teams. The dilemma he faces is that he has only been in management for one year so he does not want to push his limits. Maria Trinh and the information technology department are concerned with being underpaid. She values maintaining key employees and compensating them fairly. Her dilemma is knowing that other employees are competitively paid and her department is being underpaid. Finally, the customers are concerned with the cost of the products. They value adequate professionals handling their products at a reasonable rate. Their dilemma is deciding to pay more for highly skilled employees who produce innovative products or paying less for uncertainty.

Problem Statement

The problem is Riordan Manufacturing's compensation process is deficient thereby causing a dissatisfied workplace and low morale among employees, which is resulting in declining sales and low productivity for the organization.

End State Goals

The changes expected if the problems are resolved are, reduced employee complaints about compensation and fairly compensate employees.

RM will fairly compensate employees and increase company approval ratings by 65% within the next six months. Many employees seek higher compensation for motivation to reach their fullest potential. Employees are being sought after and many have left the company during this difficult time due to the lack of challenges and low compensation.

In order for the company to reach its goals it must identify the goals of its workers. "The pay policy decision can have a major impact on the quality of a company's workforce--and therefore on company performance" (Dreher and Dougherty, 2001, ch. 2 p. 11).

Verizon promises excellent salary and benefits, performance based incentive awards, tuition assistance outstanding career and growth opportunities and a unique environment of talented, diverse people (www22.verizon.com). They are one of the most highly sought after employer. Riordan is more than capable of this achievement.

Alternatives/ Benchmarking Validation

Company #1 Perdue University (Performance based pay determination process)

Purdue University is divided into two entities one is the university the other is named Business Services. In 1997, Business Services introduced a compensation and staff development plan for administrative and professional staff. Since 1997, there have been changes and additions that are incorporated into the new "Business Services and You guide" (www.purdue.edu). This guide is intended for administrative and professional employees within Business Services and provides information for these staff in the areas of: performance management, position bands, compensation, posting vacant positions, and career management (www.purdue.edu). This segment of the paper will focus on the employee compensation plan.

Business Services believes that aligning an individual's performance to support team or organization goals will be very important if the primary basis of pay will be an individual's performance. To determine an individual's performance,