Riordan Manufacturing

Riordan Manufacturing is the industry leader in the field of plastic injection molding and using polymer materials to provide solutions to customer's challenges. With over 550 employees, the production of the organization is divided among three plants: plastic beverage containers in Albany, Georgia; custom plastic parts in Pontiac, Michigan; and plastic fan parts in Hangzhou, China. The Research and development department is located at the corporate headquarters in San Jose, California.

Due to declining sales and profits, Riordan has made several strategic changes in the way the organization manufactures and markets its products. To help increase sales and profit, Riordan Manufacturing has adopted a support business strategy--"strategy refers to the fundamental direction that an organization has chosen" a customer-relationship management system which customers are now served primarily by sales team rather than by a single salesperson. (Milkovich and Newman, 2004, p.31). The changes that have been introduced will "encourage behaviors that are compatible with organizational goals" (Dreher and Dougherty, 2001).

Since the changes in strategy, Riordan has experienced increased turnover rates, which appear to be related to lack in the areas of motivation, compensation, reward, and recognition. Higher employee motivation will lead to greater creativity, productivity, high morale, and minimal turnover within the organization. Sales teams rather than a single salesperson now service Riordan's customers, with each team focusing on a particular customer segment. The team approach is part of the strategic strategy to improve sales. After discussion of the issues and opportunities facing Riordan, alternative solutions to assist in making the implemented changes successful will be discussed. An assessment of the alternatives provided will then provide the optimal solution for Riordan with a proposed implementation plan.

Situation Analysis

Issue and Opportunity Identification

The first identifiable issue for Riordan is increased employee turnover. The employees believe that Riordan is paying under the market average resulting in employees leaving the company for higher paying jobs and better job satisfaction. This is a major concern for the research and development department losing key employees who have critical knowledge of product development. Riordan has an opportunity to design a compensation package that will result in retention of employees and recruit talented individuals to the company. A compensation package that includes incentives and career paths for employee advancement within the company will improve job satisfaction. Currently, the sales incentives are structured around an individual rather than a team and this issue has surfaced due to the change in the sales approach from individual accounts to team approach. Employees are not feeling challenged due to the lack of direction of the company's goals. Riordan can implement a strategically aligned incentive program to motivate employees to stay resulting in job satisfaction. "Good HR practices include establishing a variety of incentives oriented toward a long-term organizational focus." Satisfied employees will promote a positive organizational climate and lead to increase productivity for Riordan" (Dreher and Dougherty, 2001, p. 6).

Employee training and career development is another issue facing the company. Riordan has done very little to promote training and career development of its current employees. Developing career, paths for employees would be a positive strategic move for the company not only increasing the morale of the current employees but also for attracting potential candidates with the skills, and experience to move Riordan into the future.

Riordan has decided to hire a Human Capital Consulting firm to identify issues that are leading to the decreasing job satisfaction. The consulting firm will also recommend any potential actions to the issues. Management must then create a timeline to implement the plan. This action plan must identify action steps, individuals responsible, and completion dates for each action.

Stakeholder Perspectives/Ethical Dilemmas

Riordan Manufacture stakeholders consist of stockholders, management, employees, and customers. These groups have their own rights and responsibilities, but the Chief Executive Officer (CEO), Michael Riordan, has the final decision. Riordan believes that the company takes care of their customers. They also believe that employee dedication and loyalty can go towards solving the company's motivation issues and problems. These employees are seeking wages that are comparable to the industry average.

The stockholders have seen declining sales over the past two years. Michael Riordan should be looking for a strategy to strengthen the company and increase profits. Mr. Riordan believes the customer-focused team approach to selling their products is the way to improve the company's sales. The stockholders of the company expect a good return on their investment and Riordan must find a way to improve the current sales slump and increase employee morale.

The management team is faced with declining morale and work ethic; Riordan managers have been pressuring the CEO to do something about compensation. Management and salespeople are facing a dilemma of the new teamwork philosophy model. The sales department wants a structure that recognizes the new teamwork philosophy, but the salespeople fear that their bonuses could be at risk if they depend on teams rather than individual performance. Management must work to communicate the importance of changing the sales culture and ensure that all employees understand that this new system will increase opportunities resulting in profits and compensation increases for all involved.

Employees want to be treated fairly and have job security. A recent employee satisfaction survey showed a decline in employee job satisfaction and the management team cannot agree on correctives actions that need to be taken. Management of the company must focus on the whole company and not on their individual departments. To accomplish the goals of the company all departments must work together as a team. Employees believe that promotions are based on politics, and rewards are not connected to the company's strategy, management plays favoritism, there is no clear understanding of how to pay employees, and performance rewards do not always happen. "Procedural justice refers to employee's perception of the fairness of policies and procedures used in determining outcome distribution" (Dreher and Dougherty 2001 pg.44). Employees may interpret these actions from management as